Restaurant And Hospitality News – June 27, 2016
By Christine Kern, contributing writer
In news this week, Brexit could affect global restaurant numbers; a new survey finds the customer satisfaction gap narrowing between limited-service and full-service restaurants; and a recent study finds that Airbnb clients are more adventurous than their conservative hotel counterparts.
Brexit Could Have Significant Impact on Restaurant Chains
In the wake of Britain’s decision to leave the European Union, investors are running scared, which could have an impact on international restaurant chains, according to a post on the Nation’s Restaurant News blog. While the Dow Jones Industrial Average fell more than 500 points in just 24 hours, the restaurant industry did not feel quite so strong a blow. In fact, the NRN Restaurant Index was down just less than 2 percent through early afternoon on Friday, June 24. Although the initial impact on restaurant chains has been minimal, economists are uncertain what the long-term consequences of Britain’s departure from the EU will be for restaurants globally.
Restaurant chains have aggressively expanded into foreign markets recently, and large chains like McDonalds have sizable exposure, which could put them at risk. Sara Senatore, analyst for Bernstein Research, told the NRN that 7 percent of McDonald’s system-wide sales are produced in the United Kingdom, and 28 percent comes from Europe. Comparatively, Starbucks gets 3 percent of its system-wide sales from the UK and 8 percent from Europe, while Yum brings in 5 percent of sales from the UK and 10 percent from Europe. Burger King also sees an increasing share of its sales from overseas.
Because currency exchange impact corporate profits, a lower value for the pound would reduce profits made in those markets. A recession in the U.K., Europe, or both, could also have a detrimental effect on sales. Senatore explained, “The UK vote to exit the EU will likely have an impact on both the operating performance and currency translation.”
New Survey Finds Customer Satisfaction Gap Between Limited- and Full-Service Concepts Narrows
Customer satisfaction with limited service restaurants is on the rise, according to the results of the latest American Customer Satisfaction Index. The Nation’s Restaurant News reported that the ACSI score for limited-service restaurants improved 2.6 percent to reach 79. Meanwhile, customer satisfaction with full-service restaurants actually fell 1.2 percent to 81. Traditionally, full-service restaurants have enjoyed a higher customer satisfaction rating than their limited-service counterparts.
“The fast-food category itself in the late 1990s and early 2000s was nowhere close to where it is now,” said David VanAmburg, ACSI managing director. “The gap has been closing over the last several years as a result of the improvement in limited service and the rise of fast casual.”
“Fast casual literally set a new bar,” VanAmburg said. “They created a higher quality environment customers find more appealing. And their contribution is lifting the overall score. But the emergence of fast casual is putting more pressure on traditional chains that have been around since the 1950s and 60s, like Burger King and McDonald’s. If you’re McDonald’s, you’re not just looking over your shoulder at Burger King and Wendy’s. You’re looking over your shoulder at Panera, too.”
Among limited-service chains, the top scoring concept with Atlanta-based Chick-fil-A with a score of 87. The top-scoring concept among full-service chains was Cracker Barrel, which scored an 83, up 4 percent. And while the overall full-service category was weak, chains actually fared relatively well, with most of the chains listed receiving higher scores — including Ruby Tuesday, whose score rose 7 percent to 78.
Study Reveals Key Consumer Hotel Purchase Drivers
A new research study by iModerate examined the personas and expectations of guests to determine key consumer purchase drivers in the battel between Airbnb and traditional hotel properties. Airbnb is exploding as a challenger to traditional hospitality brands, pressuring large hotel chains to up their game to maintain their customer base. This study asked 1,500 consumers nationwide about their preferences and expectations regarding stays at an Airbnb rental versus a hotel, and found that those guests who choose Airbnb tend to be risk-taking extroverts, while traditional hotel guests are conservative moderates.
For Airbnb patrons, location is paramount for these adventurous, open and younger travelers who are willing to take risks to obtain localized and unique travel experiences. While Wi-Fi is a must-have, these travelers say they mostly want to be left alone.
Hotel guests, on the other hand, are conservative, private, and introverted, valuing predictable processes and consistent amenities over location. And while they do value experiences, they see the hotel itself as the adventure, rather than venturing out to find one in the local atmosphere.
“While there is considerable contrast between the personas and preferences of Airbnb and hotel guests, it’s a gap that’s getting smaller by the day,” said iModerate CEO Jen Drolet. “There’s an opportunity for Airbnb to lure more traditional hotel guests by focusing on the trust factor, and hotels can compete by adding more localized and distinctive experiences.”
One way for major hotel chains to compete more directly with Airbnb is through smaller, boutique brands that offer localized experiences and personal touches that break the mold of traditional hotel stays. “These chains not only have the potential to succeed, but could have a very strong foothold in the travel industry, as they offer the best of both worlds by uniting the more localized aspect of Airbnb with the trust and security that comes with staying at a hotel chain,” said Drolet.