Restaurants are blaming a downturn in per person meals on a flat or declining percentage of women working outside the home says AdAge. Adding to the pain are current mortgage woes and high gas prices which are spurring a migration of customers from casual restaurants such as Applebee's, Ruby Tuesdays and TGI Fridays to more affordbable quick service restaurants such as BK and McDonald's. The expanded menus and upgraded environments of some quick service restaurants also helps them to challenge casual restaurants for dining occasions. IHT
It's become common for brands to enlist value pricing as a tactic when competition is tight but it would be a mistake for casual brands to panic and fall back on value pricing as the sole tactic. To be competitive, casual restaurants need to focus on providing a true experience versus simply providing good service. Customers will expect more from a casual dining experience because for many it will become more of a special versus frequent dining occasion. Value pricing is important but casual restaurants must identify and innovate in areas of opportunity inaccessible to quick service brands.
If misery loves company then casual restaurants can take comfort in the sales declines of upscale brands such as Nordstrom and Coach, who are reporting weaker than expected sales in the most recent quarter. The "mass affluent," those consumers with household incomes of $75K-$150K, have curtailed luxury purchases by as much as 20% in the most recent quarter. That's a scary number when you consider that mass affluent shoppers are 23% of U.S. households. CNN Money
Updates:
"Affordable Luxury Stores Feel Economy's Pinch", Wall Street Journal, 11/9/07
"Casual Restaurants Resort to Coupons as Meal Tickets," USA Today, 11/12/07
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