According to a recent report from Russell Reynolds Associates, the turnover trend experienced by retail a year ago has spread to the Quick Service Restaurant category. 35% of CMOs have turned over at the top 20 QSRs in the last 6 months.
As is nearly always the case, there is no single answer ‘why’? Competition is fierce-- particularly from formerly alt-formats like Salads, Juices, and every kind of Ethnic fast-feeder (including the formerly inconceivable ‘Sushi Burrito’). Nestled between a stodgy and tired looking traditional burger or chicken concept, it’s easy for these upstarts to steal share and become the new norm in bustling downtown locations. With their intuitive apps increasing speed of service and customization of orders, paradoxically, it’s easy to see why they’ve fast become go-tos among the time-strapped and ‘made to order’ crowds. On top of that, even tried and true burger concepts have been upgraded with the Shake Shacks and In-and-Outs of the world.
They’re getting it from all sides!
But there’s always been competition.
Two other major pressure points contributing to the ‘hot seat’ phenomena are fickle markets and the pressure public companies feel to grow comps now and wanton, craven intellectual plagiarism.
That may be a bit harsh. Let’s just say imitation is the sincerest form of flattery holds particularly true in the restaurant industry.
These factors all come together in the form of playing it safe. If the competitor next door runs a BOGO, then we’ll run a BOGO. In doing so, you can tell your boss, your Board… “we’re doing the same things the other guy’s doing!” It’s a restaurant twist on, “no one ever got fired for buying IBM.” No one ever got fired for buying some traffic with an offer.
Until they do. When the CFO complains about margin erosion and the franchisees complain about this being fleeting traffic, not enduring customer count growth, the CMO often faces the music (despite others actually calling the tune).
Then the CEO tells the Board someone with ‘deep category experience’ will be brought in to right the ship. That person will inevitably come from the same pool as the predecessor-- and be versed in the same tactics. The circle begins anew.
And generally ends the same.
It’s not uncommon for a Restaurant CMO to work for three different concepts in five years. The pressure is that great.
How can the industry get the order right?
Step out of line.
Category experience is helpful. Understanding penny-profit, consumer preferences, menu innovation, and the franchisee-corporate dynamic (if appropriate) are hugely constructive to surviving and thriving.
But in the end, it’s about marketing. The ability to find new customers, grow the frequency of existing ones, and make the brand shiny for market development...and do all this profitably is where the Sushi hits the Burrito today. My best advice is to find someone practiced in these arts, who fits your corporate culture and aesthetic, and then see if they can pick up the industry rather than the other way around. You might find fresh ingredients make all the difference.
The freshest ingredient of all is data as it occurs. The customer is in your store, on your site, opening your app right now. How do you choose to respond? It probably depends on what you know about that customer. Super Heavy User? High, Medium or Low LTV? In a market where you need to buy some share or are you already on top of the mountain? Factor all these in the way that makes the most sense for you and her. If every transaction she’s made involves a vegetarian entree, it’s probably not your Carne Asada rice bowl.
By blending an understanding of what the customer’s doing right now with what he has done historically, you stand an amazing chance of making that customer a regular-- and no concept can have too many of those. In fact, give him the tools and he may move from one side of the ledger-- acquisition cost-- to the other-- marketing asset-- as he recruits friends and contacts to your concept instead of to your competition’s.
That’s when the business really starts to sizzle.