Out (of pocket) for a byte to eat

“One cannot think well, love well, sleep well, if one has not dined well”, wrote Virginia Woolf. A friend of Zeitgeist’s is coming to town on Friday for what will surely be a sybaritic weekend. For the first time, Zeitgeist found themselves on Toptable booking dinner at a very nice restaurant nestled in London’s Mayfair district. The reservation came with an offer of 50% off the usual a la carte menu price. What had Zeitgeist done to deserve this? Nothing. So what is in it for the restaurant? See previous answer, perhaps. As any Toptable devotee knows, offers like this are plentiful, and reflect the state of the restaurant industry as a whole, particularly in the premium sector.

Zeitgeist was walking in Notting Hill about eighteen months ago with, as it happens, this same friend. We happened to pass Nicole Farhi’s restaurant, which sits next to a Daylesford Organic. Both were teeming with people literally overflowing into the streets enjoying their expensive brunches. “Credit crunch, what credit crunch?” my observant friend quipped at the time. It was hard to disagree. The numerous plates of food and cups of coffee being consumed by these Chloé- and Zegna-wearing denizens were totally out of sync with the times. Perhaps what these people had been doing though is downtrading. Instead of going out somewhere special for a dinner, they had instead chosen to go somewhere more informal for brunch. Or perhaps instead of going away on holiday for a weekend break, they had decided to stay at home and enjoy the fruits of London. This is an anecdotal example but the argument is supported by the reams of analysis conducted by those boffins at places like Forrester and Datamonitor; JWT’s AnxietyIndex wrote in May “Ostentation is out, practicality is in.” Witness brands like Starbucks and Louis Vuitton.

It’s this lack of ostentation and sense of frugality (which, for the most part, still pervades) that perhaps explains why, writes The Economist, “Visits to posh restaurants in America declined by 15% between May 2008 and May this year… Fast-food restaurants, on the other hand, saw traffic decline only 2%.”. It would be nice to know how a “posh” restaurant is defined, but otherwise it makes for an interesting statement. The decline at both ends of the dining spectrum lends credence to the notion that there is a “cocooning” going on where people are quite happy to order in or to cook their own meals, surrounded by their HDTVs and microwaves. Clearly though it is the high end that is fairing particularly poorly.

The article notes that Restaurant Week – held during the dog days of summer in Manhattan, when the city fills with tourists and any sensible residents have escaped northward – lasts for six weeks this year, and notes that the 21 Club “usually sees its business increase by around 25-40%” during the Week. So, similar to Taste of London, the event must attract those who would not usually consider dining at such a place (for such a price). Are these the customers the restaurant wants though? No mention is made in the article as to retention rates. As pointed out in the Wall Street Journal, (which contains details of several interesting promotions),

“‘Having dollar menus and value menus has become unsustainable, from an operating profit standpoint, so restaurants need to be able to establish consumer continuity with loyalty programs. Instead of getting customers in three or four times per year for special events, they need to get them in two to three times per month,’ says Burt P. Flickinger III, managing director of Strategic Resource Group, a consumer consulting firm.”

The industry has had to adapt though as the Internet plays an increasingly dominant role in people’s lives, not only exposing the consumer and restaurant to every bad review detailing every morsel of undercooked food and every supercilious waiter, but also forcing the establishments to adapt to people’s psychology when shopping online, which mostly falls under the category of ‘bargain hunter’. A similar thing has happened with high-end fashion. Members-only sites offering significant discounts on luxury brands have sprung up everywhere. The Economist reports that two of these, Gilt and Rue La La, have begun offering restaurant discounts as well:

“Gilt, for example, recently sold a four-course meal at the Tribeca Grill, a restaurant owned by Robert De Niro, an actor, for $160 (36% off). Shopping sites like these attract image-conscious restaurants, because only the site’s members can see that the restaurant has started to offer leaner prices.”

The other lure for the restaurant in this case is knowing that those whom the offer will be seen by are likely to be a suitable target audience for your establishment; at the very least a more specific one than might be found on somewhere like Toptable. These restaurants are innovating (mostly because they have to). The prospect of drawing crowds is an attractive one. Sites like Groupon offer significant discounts on meals, but which only become active once enough people have signed up to the offer. Foursquare similarly relies on encouraging a group of people doing virtual battle in order to obtain a mayorship that grants them free coffee at Starbucks or free champagne and a great seat at Galvin’s Windows. In the long term, having offers that keep the customer loyal (and accustomed to a consistently-priced menu) will hopefully, for the sake of the restaurants, trump the savage discounting some have become imbroiled in. For Zeitgeist, value-add to the proposition is far more attractive than saving on a regular meal. Let’s hope others think the same.

Surf’s up: Toward shopper marketing integration

Forrester estimates that $249b will be spent on online retail in 2014 in the US of A. (Great until you consider what Roland Emmerich estimates will happen in 2012.) When we think of people shopping online, our tendency might be to think of a housewife at home, at her desktop computer, slightly less bewildered than perhaps the average housewife would have been five years ago, clicking away at Tesco or Amazon. However, as a brand’s presence online is effectively communicated and merged with in-store comms, people are increasingly shopping online while in-store, as typified by last year’s notorious Dixons campaign.

As eConsultancy reports, while previously there may have been a fluid, predictable path to purchase, since the arrival of the Internet things have changed. “People research online and buy offline. They research offline and then buy online. And in both cases the brands and retailers are likely to vary. And in both cases satisfaction with the experience impacts repeat purhcase likelihood across all channels.” The risk is that someone might use the bricks-and-mortar store as a mere window, an experiential exhibition to test and get a feel of the products before buying them online. This is exactly what the article goes on to detail, albeit anecdotally. It calls the situation “apocalyptically galling” for offline retailers. Some high-street stores are responding. HMV for example has POS comms suggesting people buy the product just as easily from their website (a precarious strategy as somone might defer their purchase while in-store and for one of many reasons not go through with the online purchase). These online alternatives will be judged against the John Lewis et al. of the world by cost, convenience and service. Many will not be able to tick all three boxes.

More recently, eConsultancy wrote about the recent publication of a survey entitled “Respect the Shopper: Harmonizing the Cross-Channel Experience”. The survey revealed,

•    88% said they had shopped that retailer’s web site
•    75% said visiting the brand’s web site helps them to shop in-store
•    85% compared prices online
•    44% visited a competitor’s web site
•    26% will visit the retailer’s web site to continue shopping after leaving the store

This level of integration bodes well for promotional activity and awareness opportunities. However it also leaves the shopper open to exposure to competitive retailers while in-store, instantly. One way to combat this challenge will be to make the shopping experience – from specific promotions to the retail environment – more personal and engaging, to create some sort of an affinity for the store they are in and the brand as a whole, taking away the relatively bespoke nature of the online environment.