Archive for December, 2006

Conflicting Rulings on Noncompetes

Each state offers its own complexities for companies seeking to enforce noncompete agreements. Courts in California and Texas recently ruled — in opposite ways — on the issue.

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Wringing Out New Year’s Eve

There wasn’t a word about this on the major news sites, but this is big, people: In some parts of the country, revelers will have to remain stone sober this New Year’s Eve, even if they plunk down some serious coin for one of those fancy dinner-and-dancing restaurant packages. Which means the establishments in those areas are going to lose all those high-ticket Champagne, wine and cocktail orders that give them a nice start to the next 12 months.

The party pooper is the calendar. New Year’s Eve falls on a Sunday night, and many areas prohibit the sale of alcohol on the Christian Sabbath. So if residents of those areas want to toast 2007 with a glass of champagne at midnight, they’ll be doing it in their homes.

This is the first time this has happened since the year 2000. But there is a bright side: There won’t be a similar time warp back to Prohibition for another decade.

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FREE Coaching!

Go to my main website at Restaurant Coaching Solutions and register for my FREE weekly Coaching Updates!

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Caribou Coffee Wi-Fi Usage Up 450%

Wandering WiFi, a wireless technology solutions provider, said Caribou Coffee has had phenomenal success implementing its wireless fidelity (Wi-Fi) service as a free amenity to customers nationwide.

In just one month, Caribou’s Wi-Fi customer usage has increased from approximately 20,000 to more than 90,000 (a 450-percent increase) log-ins per month.

“Offering a secure, reliable service was Caribou’s primary focus in developing this offering for its customers,” said John Marshall, president of Wandering WiFi. “Many cafes and coffee shops offer wireless hotspots, but very few invest in the security and offer such a high-level of technical support and customer service.”

More than 340 of the Caribou locations are live with the Wi-Fi service, featuring a Caribou Coffee branded network page where customers can register and opt-in to receive coupons and premium items from Caribou Coffee. Currently, Caribou is offering free Wi-Fi during the first hour, and then customers are asked to make a minimum $1.50 purchase to receive a code to access additional time.

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What Waiters Can Teach Marketers

Waiters (either gender) interact with paying customers in a more freeform way, more often, than most service professionals. Here’s one thing the good ones know:

If a customer tells you something, there’s probably a reason.

“I’d like a water, with no ice please.”

Now, while some people like to talk just to hear their own voice, there’s probably a bigger reason the person said, “with no ice please.” If you’re going to be a great waiter, you realize that every single time a customer says something, you need to listen.

You don’t have to do what they ask, but you do need to acknowledge it and respond to it.

Bringing ice in the water and hoping they will forget they asked is not good waitering. Or good marketing.

Source: http://sethgodin.typepad.com/seths_blog/2006/12/what_waiters_ca.html

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Same-store Sales Remain Positive for Restaurant Industry

The outlook for the restaurant industry remains optimistic going into 2007, despite a modest decline in the National Restaurant Association’s comprehensive index of restaurant activity.

The Association’s Restaurant Performance Index (RPI) — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 101.1 in November, down 0.1 percent from its October level. However, the RPI remained above 100 for the 43rd consecutive month, a level that represents expansion in the Association’s composite index of eight key industry indicators.

“The Restaurant Performance Index remains in a positive position heading into the new year,” said Hudson Riehle, senior vice president of Research and Information Services for the Association. “Restaurant operators are optimistic about sales and economic growth in the coming months, as well as prospects for new capital spending.”

Restaurant operators reported an overall net positive same-store sales performance for the 40th consecutive month in November. Forty-seven percent of restaurant operators reported a same-store sales gain between November 2005 and November 2006, down from 49 percent who reported a sales gain in October.

Thirty-four percent of operators reported a same-store sales decline in November, down from 37 percent who reported similarly in October.

Customer traffic was relatively flat in November. Thirty-five percent of restaurant operators reported an increase in customer traffic between November 2005 and November 2006, matching the proportion of operators who reported a traffic decline. Thirty percent of operators said traffic in November 2006 was about the same as it was in November 2005.

Forty-seven percent of restaurant operators expect their sales volume in six months to be higher than it was during the same period in the previous year, down slightly from the 49 percent who reported similarly last month. Fourteen percent of operators expect to have lower sales in six months compared to the same period in the previous year, while 39 percent of operators expect their sales to remain about the same.

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Gift Cards Change Way Retailers Do Business

Remember when the holiday shopping season ended when the holiday was over?

No more.

“It never ends!” laughs retail analyst Wendy Liebmann of WSL, a retail analyst firm. “It just goes ooooon and ooooon and ooooon …”

In January, the nation’s retailers used to rake out the aisles, restack all of the unsold sweaters and throw the sheets on a big table for the biannual White Sale. But now January is growing in importance. Retail sales rose 10.5% in January this year vs. 2005, when they rose 7.5%. In 2004, January sales rose 6.1%.

Retailers are restocking shelves with fresh merchandise and selling early, early spring fashions before most consumers have tossed their Christmas trees out on the curb.

All because of a small plastic card — the gift card.

“January is no longer a dead month,” says Dan Horne, a marketing professor at Providence College in Providence. “Now, retailers are holding back hot items to entice consumers coming into their stores in January bearing their Christmas gift cards.”

This year, consumers bought $24.8 billion in gift cards, 34% more than in 2005. That growth is phenomenal. Gift card sales rose only 7% from 2004 to 2005, and 0.5% the year before. There’s no end in sight. “We’ll be buying more gift cards next year, there’s no doubt,” says Malcolm Fowler, general manager of Ernex, a company that manages card programs for more than 1,000 U.S. and Canadian retailers. “The only question is: Will sales rise 30% or 20%?”

The holiday shopping season used to end by New Year’s Day or later that week when people exchanged their presents and maybe snagged a sale item or two. Retailers held their breath when counting up sales for the key month of December, when 40% to 60% of a retailer’s sales can occur. If they didn’t sell their stock at full price or near it in December, they’d have to sell it deeply discounted — and less profitably — in January. Retailers begin announcing their December retail sales on Thursday.

But the popularity of gift cards is transforming the retailing industry.

Most people spend their gift cards in January and February. And because retailers can’t count gift card sales until the cards are redeemed, those sales dollars are pushed out of December into the next year. Gift card sales now represent 5% of total holiday sales, so those dollars are having a significant impact on retailers’ business in the months after Christmas. About 40% of card redemptions are made in the first week after Christmas. But the rest comes in January or early February.

“Retailers have finally learned that even if they don’t get all the business by Dec. 25, they don’t have to panic,” says Marshal Cohen, chief industry analyst at NPD Group, a retail consulting firm.

“January used to be a throwaway month, but it’s not anymore.”

A new ‘late-holiday season’

That could be good news this year because retail sales projections for December have been lowered recently by some key trend watchers, including MasterCard Advisors. It said this week that holiday retail sales would rise a “disappointing” 6.6% from last year compared with 8.7% in 2005. (The period is from the day after Thanksgiving through Dec. 24.) The National Retail Federation says sales will rise 5% in December, “not phenomenal but modest,” NRF spokesman Scott Klugman said earlier this week.

Analysts have been worrying that a slumping housing market and higher gasoline prices have put a damper on consumer spending. But Cohen of NPD says retailers can blame gift cards for muted December sales. People haven’t stopped shopping, he says. They’ve just delayed shopping.

“Everyone is worried about what happened to the holiday season this year. It was the retailers’ gift cards,” he says. “They shot themselves in the foot.”

Retailers also continued to push this year for an earlier and earlier start to the holiday shopping season and so offered deep discounts on the Friday after Thanksgiving on some sexy electronics, such as high-definition TVs and new video gaming systems.

That strategy backfired, Cohen says. The problem was people used those sales to shop for themselves; the number of “self-purchasers” rose 40% on the day after Thanksgiving, surveys showed. They also bought gift cards for family and friends.

The combination meant there wasn’t as much “impulse” shopping as retailers expected, or needed. “Twenty-six percent of holiday shopping is an impulse buy. You’re shopping and you see something you didn’t expect to want, and you buy it,” he says. But if you’re shopping big, “door-buster” sales the day after Thanksgiving, you already know what you want. You’re not wandering the aisles looking for something that catches your eye.

If you buy gift cards, you can just “buy them at the counter, turn around and leave the store,” Cohen says. Or worse for retailers, you download a gift card certificate from the Internet on Dec. 24.

Gift cards: Boon or bane?

Others disagree. They say gift cards help retailers.

That’s because consumers spend about 20% more than the value of a gift card when they go shopping, according to the Purdue Retail Institute.

And if a consumer uses his or her card to buy something that’s marked down, the buying power of the card can be 25% to 50% more than the card costs. That can be good for the consumer but also good for the retailer. It can lure people to spend even more since they got such “a good deal” when they spent the gift card.

In fact, the gift card phenomenon is forcing retailers to view holiday spending in a new way, and to shift new merchandise to store shelves earlier than they used to, retailers and analysts say.

“January is all about newness,” says Deniz Anders, a spokeswoman for department store chain Nordstrom. She said the retailer is offering brightly colored handbags and stretchy headbands in spring colors in its stores this week.

Fashion designers and apparel manufacturers are coming out with “Spring 1, Spring 2 and Spring 3″ lines of clothing now, because “Consumers don’t want the same old stuff they’ve already seen,” says Liebmann of WSL. “They don’t want what’s been dragged around and stepped on already.”

Consumers have become more demanding about what they want, when they want it, Cohen says.

In the past, Cohen says, “Retailers had us convinced that we wanted to buy our spring wardrobe in February, but wait a minute, it’s just getting cold out.” Now, he says, consumers want to “buy it now, wear it now.” So retailers have more and shorter “seasons” of clothes.

Retailers have also gotten much better at not overstocking their shelves, says John Rittenhouse of KPMG consulting firm. That means they don’t have as much left over that has to be discounted.

Gift cards have been one factor that has helped J.C. Penney keep track of what people buy and, thus, keep store inventory fresh, says Mike Taxter, executive vice president of stores.

The company is a leader in computerized point-of-sale terminals that track spending trends and inventory. Five years ago, it moved to centralized inventory control, and that’s led to fresher inventory in all stores, he says.

“The industry is much more about having the right thing at the right time in the right place,” he says.

For shoppers, gift cards are all about choice.

“I like them because I can pick out what I want instead of getting a gift and not liking it,” 15-year-old Samantha Slaybaugh told The Indianapolis Star. “Like my dad. He got a singing tie.”

Source: http://www.usatoday.com/money/industries/retail/2006-12-29-gift-card-usat_x.htm

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Report Says Sandwich Market Worth $121 billion

The sandwich market is worth $121 billion and there is room to grow, according to U.S. Foodservice and Retail Market and Trends from Packaged Facts.

Packaged Facts projects the sandwich market will continue to grow exponentially, riding partly on the major success of sandwich chains, which have successfully risen beyond hoagie heaven to reach new realms of sandwich bliss. Adding fresh hearth-baked artisan breads grilled into panini, filled with other-worldly creations often inspired by well-known chefs, the business of sandwiches is booming.

As varied as the sandwiches themselves are, the outlets where they are purchased are even more diverse. From retail outlets and warehouse clubs to convenience stores, restaurants and institutions, sandwiches continue to be a dominant force, making up 25 percent of the total U.S. foodservice sales.

Sandwich chains, while trumped in overall sandwich sales by burger joints (which accounted for 45 percent of the sandwich market), realized the greatest revenue growth from 2003 to 2005, while at the same time adding units faster than any other sandwich segment.

“With the introduction of panini and international flavor profiles, the opportunity to raise sandwiches to a new art form has taken place as even local delis and convenience stores have begun to upscale and add health-infused ingredients to their sandwich arsenals,” said Don Montuori, the publisher of Packaged Facts. “Sales in retail outlets now surpass sandwich chains, and restaurants sales, which dominate the market with more than half of sandwich revenues, show now signs of slowing up.”

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December Is Best Month For Catering Business,

Food-consultancy Technomic’s new study of large-order programs for chains is now being presented to restaurant clients, yielding valuable business-building insights.

Among the findings, more than 50 percent of survey respondents, representing medical organizations, pharmaceutical reps, law offices, real estate firms, advertising and public relations agencies, and numerous other business users, indicated that they will order in food for work occasions during December, significantly higher than for any other month of the year.

The research also disclosed seasonal usage patterns among the various types of companies that place large business orders, providing an important blueprint for targeted marketing efforts.

Representatives of pharmaceutical companies, generally considered the “big spenders” among catering users, did top the list for total spending. However, it is interesting to note that advertising and public relations firms, often a less-targeted group, were in a not-too-distant second-place position.

“Operators have told us that catering is a top priority for them because it provides a steady stream of business,” says Melissa Wilson, Principal at Technomic. “Large-order accounts truly help restaurants leverage their fixed assets, while boosting incremental sales. And often, labor efficiencies can be increased since much of the catering prep work can be accomplished during off-peak hours.”

The study, titled LOOP: Large Orders Off-Premise, focuses on the most lucrative targets: office and business meetings, training sessions, hospitals and medical offices, and business promotional events. It provides restaurant operators with vital decision-maker insights and best-practices research for tapping into this attractive opportunity to build same-store sales.

To learn more about the study, please contact Melissa Wilson at 312-876-0004, extension 3707, or mwilson@technomic.com.

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Breakfast business to reach $83 billion by 2015

The business of breakfast is booming, according to The Revolution in Dayparts: Breakfast in the Foodservice Market, a new report from Packaged Facts.

The report says the current breakfast market is $65 billion, and it estimates it will grow to $83 billion by 2015.

Success in the gourmet coffee and tea bar channel, while eating into the market share of doughnut shops, has been instrumental in upscaling breakfast fare throughout foodservice, making breakfast a more appealing option, particularly for the 15 percent of Americans who don’t eat breakfast at all.

No channel has benefited more from growth in the morning daypart than quick-service restaurants. According to the report, 15 percent of all American consumers buy breakfast in QSRs, a proportion that has grown steadily since 2001.

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