Restaurant And Hospitality News – April 17, 2017
By Christine Kern, contributing writer
In news this week, restaurants get some disheartening news from consumers; and WestJet looks to boost its profit margin with a new booking engine.
New Survey Reveals Some Disheartening Results For Restaurants
A new study rom AlixPartners has shown that consumers are planning to cut back on their spending at quick-service and fast-casual restaurants in the coming year as a response to concerns about costs. Turns out, these customers want to spend their money elsewhere, according to The Nation’s Restaurant News. The poll of 1,000 U.S. consumers suggests that the current sales and traffic challenges faced by the industry in 2016 could in fact be part of a longer-term trend.
In fact, according to the press release, “the turbulence in the chain-restaurant industry of late – from underperforming results to an uptick in bankruptcies to renewed shareholder pressures – might not be just a blip but rather a sign of structural changes besetting the industry, and that the industry right now faces a defining moment.”
The survey found that 57 percent of those polled intend to keep the number of times they dine out consistent with the past year, and the average spend per meal ($15.38) was the highest in the history of the AlixPartners’ survey. However, the survey also revealed that consumers anticipate deep cutbacks, particularly among higher-frequency diners. When asked why, diners cited “saving money (50 percent), and “eating healthier” (44 percent). In a nod to the travel industry, among those who are aiming to squirrel away money said they plan to use it for travel (32 percent), though they also identified hotels as the type of non-restaurant establishment most in need of doing upgrades (24 percent).
“There’s a significant percentage of us thinking of their dining dollars differently,” Adam Werner, a managing director with the firm, told NRN. “You’re thinking of dollars you may have allocated toward restaurants and are thinking of spending them in other ways.”
In the release, Werner also explained, “While lower fuel prices have helped operators by putting more money in consumers’ pockets, that’s become a two-edged sword as cheap gas and the lowest air fares we’ve seen since the recession seem to be enticing consumers to allocate at least some of their restaurant spending on travel and other experiences. Meanwhile, the all-important Millennial consumer, enabled the most by social media and other technologies that allow them to stay in close touch with friends even when they’re traveling, is the cohort most fundamentally shifting spending to experiences. Clearly, the challenge for the industry is to reinvent the ‘restaurant experience’ in order to compete with all the other experiences out there today.”
“These findings beg the question of whether casual-dining and other players have put too much focus on bringing down prices, offering lunch, flooding the menu with healthy options, etc., in their efforts to compete with fast casual, eroding the opportunity for their own ‘special-occasion’ dining experience,” said Werner. “Clearly, there is still room for indulgences by diners at almost every segment level. The challenge for operators is to zealously find and exploit the opportunities that do exist.”
WestJet Adopts Farelogix Technology To Enable Dynamic Pricing
WestJet has become the first airline in production with FLX Shop & Price, an NDC shopping engine from Farelogix that enables dynamic pricing. According to the Farelogix blog, the platform provides “substantial cost savings opportunities, significantly improved response times, flexibility, as well as the ability to dynamically modify ATPCO fares.” The new shopping engine is also in production for a number of travel agencies and technology providers that shop and book WestJet content via WestJet Direct.
When WestJet entered the market, it was faced with the challenge of reexamining its offering strategy to differentiate itself from the competition to become even more profitable while not losing sight of their promise of value.
"WestJet is the first airline in production with the FLX Shop & Price solution, following our launch of this technology last year," said Jim Davidson, CEO of Farelogix. "By taking control of its offer using next generation technology for shopping, WestJet is better positioned to compete for customers, react to competition, and improve revenue management through dynamic pricing strategies. It's great to see an innovative airline like WestJet work towards being a single source of truth for its offers."