Restaurant And Hospitality News – January 9, 2017
By Christine Kern, contributing writer
In news this week, as restaurants ring in the New Year, they will need to work harder to capture larger market shares, research predicts; NPD provides four tips for garner larger restaurant market share; and the IHG hires a cybersecurity expert to investigate its latest data breach.
Restaurant Traffic Won’t See Improvement In 2017 According to NPD
The NPD Group predicts that restaurant industry traffic will remain stalled in 2017, with traffic continuing to shift from full-service to quick-service brands in the coming year, according to The Nation’s Restaurant News. This is not good news for restaurateurs, who have been fighting against weak sales and traffic in 2016.
According to NPD, traffic at quick-service restaurants is anticipated to increase 1 percent this year, while dine-in locations will see a 2 percent drop in traffic. The data shows that the majority of restaurant visits are currently at limited-service concepts.
“It’s just a battle for share,” Bonnie Riggs, NPD restaurant industry analyst, told NRN. “More restaurants than visitors. And we need to keep in mind that competition is no longer just restaurant competitors. It has become a very fragmented market, and consumers have many options available to them to obtain a prepared meal.”
The problem, basically, is that – as in retail – the market is “over-stored,” as this On the Margin blog post asserted. Jonathan Maze wrote, “Restaurant industry same-store traffic was weak or falling for most of 2016. It’s not a stretch to say that the growth in the number of locations, at least for the year, has outstripped market demand and contributed to that weakness.”
While industry options have increased for consumers, Americans have not increased their dining at a corresponding rate, which is creating greater competition for market share. NPD says that to succeed in 2017, restaurants will have to step up their game, get more innovative and use technology more strategically.
Four Tips To Attract Customers In Competitive Marketplace
The NPD Group offers four key tips to restaurant owners for attracting customers to their businesses in the increasingly competitive marketplace, according to The Nation’s Restaurant News. NPD analyst Bonnie Riggs explained, “It’s becoming more and competitive. [Operators] have to give consumers a compelling reason to visit.”
Employing these four methods can help boost customer visits and potentially offset the forecasted traffic future:
- Increase innovation. Restaurants need to keep up with the innovations in the overall restaurant experience. According to NPD’s 2017 Outlook, those that fail to innovate will risk being overlooked by a significant portion of their customers. “Nothing has been appealing enough to overcome the price issue and the at-home issue,” Riggs explained regarding restaurant menu prices that are higher than grocery prices. “We’re really going to have to step out of the box – be innovative – if we want to get customers back into restaurants.”
- Offer delivery. Riggs explained, “This is an opportunity for full-service operators to drive traffic, especially independents.”Delivery solutions vary from outsourcing to a third-party, using an on-demand service, or providing it in-house, but price-point is crucial: if costs are too high, consumers will not use it.
- Let customers have it their way. Order customization will increase as one way to draw a higher market share, spreading from fast-casual and casual-dining chains to more traditional quick-serve chains as well. Riggs said, “Fast food –traditional, especially – they’re big, rules are set. They’re not very accommodating, and they’re going to have to be.” One way to allow for greater customization is through the use of digital menus and touchscreen technology.
- Reward lighter users.Reward and loyalty programs will be expanded to entice all levels of customers, including lighters users who have historically been ignored. And customization of rewards programs is also a new trend, moving away from offering set rewards to offers that target what specific customers actually want.
Intercontinental Hotel Group Probes Possible Data Breach
The IHG has hired a cybersecurity expert to investigate a possible data breach of the payment card systems at some of its hotels across the United States, according to Dark Reading. The potential fraud was detected by KrebsOnSecurity, who were notified of a pattern of fraud on customer credit and debit cards surrounding Holiday Inn and Holiday Inn Express locations.
A spokesperson for IHG told KrebsOnSecurity, “IHG takes the protection of payment card data very seriously. We were made aware of a report of unauthorized charges occurring on some payment cards that were recently used at a small number of U.S.-based hotel locations. We immediately launched an investigation, which includes retaining a leading computer security firm to provide us with additional support. We continue to work with the payment card networks.”
IHG operates more than 5,000 locations across nearly 100 countries, and the brand includes Holiday Inn, Holiday Inn Express, InterContinental, Kimpton Hotels, and Crown Plaza. This breach follows four months after an investigation demonstrated a malware attack on Intercontinental’s Kimpton Hotels & Restaurants, and also follows similar attacks on Hyatt Hotels Corp and Starwood Hotels & Resorts Worldwide Inc.