As most of you have noticed, I often reference (or adopt) articles of interest I see from the many daily feeds I receive. Today is no exception.
R&I published a study today by Booz & Company reporting that “...consumers plan further spending cuts as economy worsens.” That is certainly not a surprise. If you are like me and my family, virtually every purchase brings thoughts of your last brokerage statement to mind…
So, what does this mean in the larger sense of our businesses? Dining out is cited in this report (and anecdotally in numerous recent news reports) as a key discretionary item that has been impacted by the economic downturn.
The report details the impacts, and they aren’t pretty. As a manufacturer, what should you do to assist your customers in weathering this softness in traffic? (While keeping YOU in business!) At our family-owned sports tavern operation, we have initiated a few steps:
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Tuesday is now family night, with specials, including some “off the menu” kids specials. Our taverns have never focused on families, but the launch of our family night allows our regulars to suggest a night out to their families --- one that is NOT at a fast food joint, but somewhere that might be fun. We try to make it that way, with a family-friendly trivia contest, and drink specials for Mom and Dad. So far that has significantly improved our Tuesday business (typically a very slow night for us), and has provided a little incremental profit as well.
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Improved --- and heavily promoted --- takeout business. For those working in the neighborhood, they can either give us a takeout order when they are in for lunch, or fax it to us in the afternoon --- and we will have it ready to go for them as they leave work. We get a lot of business from a nearby hospital, so we are even exploring the transport of these meals to a central location at the hospital at the end of the workday. We require payment by credit card, so it’s literally ready to go. And we also par-cook the food and package it in ovenable containers so it can easily be reheated at home. This seemingly simple little step has helped us offset the loss of after-work traffic of late.
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I explained in a previous blog that we polled our customers and they told us NOT to alter our recipes or reduce our portions in an effort to lower prices. However, we have developed value-centric off menu specials every day at lunch and dinner, for those who are interested in a less costly meal. We use our distributor rep to identify hot deals from suppliers to help us decide what to set up for our daily and weekly specials, and then order just enough to allow us to offer those items.
Getting the drift? Your mission (should you decide to accept it) should be to figure out how to help your chains and operators:
- Temporarily lower the cost of using your product
- Develop promotional ideas that will increase traffic AND sales
- Create Take Home and Take Out ideas to help fill the gap
Work closely with your distributors to make sure they are not taking the discounts to their bottom line, but passing them along in total. One way to do that would be to establish a direct-to-customer rebate program, but you had better have your TPM process buttoned up and pay it out quickly, with an effective auditing function. (That is a subject for another blog…)
Your non-commercial accounts need help also, but your programs here should focus on their unique needs (Traffic? Volume? Gross margin? Merchandising?) Now is NOT the time to reduce your spending on trade promotion, but to FOCUS its use where it can make a difference in these major accounts. (Again, do not increase it unless you have your TPM process properly structured, or you will negatively impact YOUR bottom line, which defeats the purpose!)
The coming months and quarters will be a challenge for the best of us. Don’t panic… get greedy (see the previous blog entry if you think I have overstepped my bounds).
We are continually faced by great opportunities brilliantly disguised as insoluble problems."
-- Lee Iacocca, American industrialist