The three things restaurant businesses need to do to restart revenue growth
Simon-Kucher & Partners offers its take on how chains can navigate a world after COVID-19.
Amidst varying degrees of social distancing across the globe, restaurant businesses need to augment their promotions, pricing, delivery and digital services to restart operations after the pandemic, experts from Simon-Kucher & Partners said.
Promotions, loyalty management
Promotions, they explained, need to be “executed smartly” to boost any restart plan, ensuring that businesses are able to set their goals and objectives and ensuring the targeted guests, occasions and need states are properly determined.
“Once these aims are defined, you can then move on to design the optimal promotion. In designing the promotions you need to carefully consider the occasion targeted, the products included and the finer details of the offer, for example how deep the promotion will be and how it is communicated,” the consulting firm said.
Ideally, restaurants will also be conducting daily performance reviews and reporting results to the management team at least twice a week, adapting and changing as the market moves.
Augmenting price architectures
Initial studies from Simon-Kucher revealed that willingness to pay is going to decrease after the pandemic, but not to levels seen at present.
“Understanding core psychological price thresholds will be critical to improving post-COVID-19 value perception and avoiding volume loss, not all price points are viewed as equal by consumers so you need to ensure you move prices to a level where customers see the change and react,” the firm explained.
“In reality, price architectures designed previously may now be inadequate and prevent upselling,” it added, recommending businesses to adjust product offerings to be more “functional eats or value ranges? to adapt to shifting needs. This could possibly impact different parts of your estate in different ways, so chains are told to “be ready to redesign” pricing clusters.
Improving delivery and digital business models
The firm also noted a continued demand for delivery and need for more digital sales, encouraging chains to “drill into your customers’ needs” and ensure delivery and digital strategy meets these particular needs.
“We see that customers are less likely to churn from delivery platforms due to menu prices, versus delivery fee as an example, so don’t hold back on adapting price levels to the segments using these platforms. Digital sales platforms also provide you the opportunity to develop and refine your upsell path in a way which wasn’t possible before so don’t shy away from reviewing the opportunities in this area,” the firm explained.
In a global webinar run by the pricing and marketing strategists, two-thirds of participants indicated their demand had decreased by at least 60%, with half seeing at least 80% of their revenue disappear in the last weeks and months.
“No one knows exactly what the ‘new normal’ will be, or how it will develop, so you need to be ready to identify what is working and adjust accordingly. This will likely vary by consumer segment and being ready to pivot in a differentiated way will be critical for success,” they advised.
