Bad News, Good News

February 28, 2012

The bad news was just announced this week: Restaurant visits have fallen across the country since the recession, and the bulk of those lost customers -- 87% in fact -- abandoned independent eateries.

According to research company the NPD Group, Americans ate out 60.6 billion times last year., down from 62.7 billion in 2008. Of the 2.1 billion visits lost, two billion were at the expense of independent restaurants.

Is that bad enough for you yet? There's more ...

The report goes on to say that consumers are patronizing larger restaurant chains, which have added 4,511 units since 2009. But since the fall of 2008, more than 7,000 independent eateries have closed. Last year alone, visits to chain restaurants were up 1% while meals at standalone businesses slumped 4%.

Small restaurant operations are now down to 27% of the US restaurant industry after steadily losing market share to chains.

An analyst for NPD said the reason for the decline was that independent restaurant operators had neither the money nor resources of the chains. She said, "They lacked the marketing power to drive traffic and the monetary buffer to get through the difficult times during the past several years."

Overall, I agree with her conclusions ... but therein lies a seed of good news.

You see, while independents likely do not have the financial depth and marketing muscle of a chain, they do have -- or can have -- a very real competitive advantage in the market, one that the chains are ill-equipped to counter. For the independent operator trying to hold their own against the onslaught of national chains, that competitive edge is the experience of hospitality.

National chain restaurants are focused on process and profitability over creativity and truly personal service. As a result, many industry experts note that the overall dining experience in the country is becoming increasingly impersonal and unremarkable. Chains equate hospitality with service, not personal connection.

In fact, because the individualized nature of the hospitality experience does not lend itself to top down, numbers-driven controls, chains don't know how to deal with it, let alone foster it ... and that is ultimately their Achilles heel when going head-to-head with a savvy independent.

The proof of this edge can be seen in the restaurants who have become certified Places of Hospitality -- all have reported that 2011 was their best sales year ever!

Now THAT is really good news!

What is A Place of Hospitality all about?