As the US and world economy comes continues to recover from the downturn in 2008, this next year provides some strong opportunities for the QSR industry. As these opportunities become available, the industry itself becomes a lot more competitive as more players present themselves with differentiated offerings: Food trucks, healthier menus, and more differentiated offerings. it’s going to be a changing game for restaurant owners, who have to stay on their toes to try to stay ahead of the competition.
On top of these market changes, the QSR market is being met with some pretty strong influence from a market that will largely dictate changes in the coming years.
Consumer confidence means increased consumer spending, especially among millennials
QSR Magazine recently reported The National Restaurant Association’s most recent Restaurant Performance Index, (which is a measure that tracks the industry’s health), was on the upswing after a late-2013 dip. In turn,
….Economic factors are supporting stronger consumer confidence…And there is a close correlation in consumer confidence and restaurant traffic.
While moms have been predominantly the target market for restaurants, millennials now continue to help shape demand for the QSR industry. Millennials in North America are more ethnically diverse and are also exposed to more cultural influences. So their interest goes beyond food and extends to the experience and that is what’s influences these other trends. According to Denise Lee Yohn, in her post about these two diverse groups
Millenials say, “Value me,” and moms say, “Help me.”
Denise Lee Yohn, references the rise of this highly influential group in her book, What Great Brands Do:
The rising generation of Millennials…is not just looking for tasty treat at a good value when it comes to restaurant choices. In the estimation of one food industry research firm, Technomic, what Millennials want is much more complex: an emotional connection to a brand that is socially responsible and sustainable… These consumers of tomorrow expect brands to inspire them and express their values so well that being a customer should be a source of pride and joy for them.
So, suddenly the entire customer experience, including the emotional connection with the company, becomes table stakes as millennials begin to demand more from a QSR.
Loyalty will drive repeat business
In an increasingly fragmented market where the definition of quick service has become more diverse – even creating varying experiences including fast casual like the Chipotle’s model, the low hanging fruit for QSRs is to build strong connections with their customers to keep them coming back. Loyalty, albeit, one component of the value drivers, must work in tandem with the entire customer experience.
What makes loyalty much more possible today for the local QSR owner, is the amount of information that can be collected from customers that come to your store. The rise of mobile data and social media information now makes this data available to businesses. What’s more, for QSR, the combination of real-time consumer perceptions about the service, the food, the experience now provides powerful insights to owners, who now have a mechanism, to optimize the customer experience.
What’s more, greater understanding of individual revenue contribution by customer at a local level provides stronger fodder for strong local loyalty programs, which has been challenging for many QSRs historically. We, at Virtual Next, understand this is powerful and make this capability available to enable QSRs
Social Media will be a stronger contributor to revenue
For Millennials, who are heavy users of social media, want to be listened to and they, unlike any other generation, have higher expectations of engagement with brands. This goes beyond promotion on Facebook or Twitter. The data found on social media will be an impetus to develop a strong loyalty program.
Imagine being able to use social data to “listen” for customers who love your restaurant, who frequent your restaurant and order the “usual”. Imagine being able to use this information to anticipate their needs to draw them in more often, or surprise and delight them when they do return.
Millennials will not only be your most loyal customers, they will also drive strong advocacy to your business – the strength of word-of-mouth that leads new customers to your door.
Mobile is already here
Mobile is the differentiation for any QSR business. It not only positions a business as an innovator but it provides strong opportunities to streamline and create more efficient operations. Millennials are already strong users of mobile. According to comscore,
Over four out of every five Millennials own a smartphone, compared to just two out of three 35-54 year-olds and two out of five 55+ year-olds. While smartphones have gradually become a mass market product, Millennials have been especially eager to adopt this now essential gadget.
Millennials are more open to innovations that come with mobile applications. They will not only embrace it, they’ll expect it.
In this recent article, The top online ordering trends restaurants can’t ignore the three most common mobile payments options for restaurants, were highlighted:
- Mobile commerce, or paying online via an online wallet;
Mobile payments that use in-app technology, where consumers download an app that has their information stored; and
- Mobile wallets, which replace the complete wallet and offer more security
It’s clear that the future sustainability of any QSR business is to develop and maintain a deep understanding of the Millennial generation, their current and future customers. Are you ready?