10 ways to steal market share

This story is an excerpt from a Nation’s Restaurant News in-depth special report, “Grabbing a bigger slice,” available for subscribers only in the Oct. 1 issue. The report includes case studies and deeper dives into market-share building strategies restaurants are using today. Subscribe here.

With restaurant-traffic growth predictions at less than 1 percent each year through 2019, the industry is forced to find sales volume from within — meaning competition is as fierce as ever.

Restaurant brands that expect increased customer counts and rising sales will in fact be taking customers from competitors, whether through the introduction of new dayparts, craveable menu items or value-driven pricing. It is a zero-sum game.

“The market share battle is won one unit at a time, one market at a time and one daypart at a time,” said Wally Doolin, founder of restaurant industry market research firm Black Box Intelligence, and former restaurant chief executive. “You really have to get that granular to have an impact.”

Nation’s Restaurant News collected ten strategies restaurants are successfully using to steal market share and drive sales.

1. Building a more relevant menu: Taco Bell has cited its Doritos Locos tacos as successfully driving sales, and may be counting on its celebrity-chef driven Cantina Bell menu to entice customers of competitors, like Chipotle or Qdoba.

2. Making new marketing moves: Perhaps one of the most important tools used to defend or drive market share, marketing efforts have helped restaurant brands like Wendy’s, Smashburger, and first-time national advertisers like Panera and Chipotle maintain or build customer bases.

3. Upselling current customers: Pricing menu items at value levels to drive guest traffic is one way to get people through the door, but upselling items is the needed step to drive sales. At the casual-dining Red Robin Gourmet Burgers, the restaurant chain’s new Big Tavern burgers and Tavern Double line are priced close to fast-casual burger prices, but include an option to “style” the burger with add-ons for $1.

4. Driving sales from the curb: Once just an option at quick-service restaurant brands, the drive thru is gaining ground among new players as a way to attract on-the-go consumers. Fast-casual brands like Panera and Einstein Bros. Bagels, as well as family-dining chain Shoney’s On The Go are testing drive thru locations.

5. Reimaging the restaurant: Maintaining a fresh, welcoming restaurant is a key element of attracting — and keeping — customers. Wendy’s and Burger King have aggressively stepped up their restaurant remodeling efforts to catch up to McDonald’s, which underwent remodeling efforts years ago.

6. Speeding up service and throughput: Making certain customers experience a seamless dining occasion, from ordering to eating and then exiting, can determine whether guests plan a return visit. At Cosi, a fast-casual, bakery-café concept, operational changes to speed up service and improve guest satisfaction is priority No. 1 as it sets its sights on Panera, Au Bon Pain and others in the segment. Cosi is looking at whether guests should pay first before the meal, or last, after they receive the meal, as well as changes to line execution, including station specialists and dedicated ingredient stockers.

7. Spinning off full-service brands: Inspired by the solid growth in the fast-casual segment, many full-service restaurant chains are opening smaller, limited-service spinoffs to reach a broader customer base. Johhny Rockets is testing JR’s Burger Grill and Red Robin Gourmet Burgers is testing Red Robin’s Burger Works.

8. Expanding into new dayparts: Whether late at night or early in the morning, restaurant chains are looking to reach new consumers, or garner more visits from loyal customers, with the addition of dayparts. Applebee’s has found success with late-night programs surrounding beverages, appetizers and a change in ambiance, while Taco Bell and Burger King have focused on building breakfast menus.

9. Building off-site options: Catering, branded retail opportunities and carryout sales not only drive revenue for many restaurant companies, but also keep brands top of mind among consumers during various eating occasions. Einstein Noah’s catering business was restricted in 2010 to include online ordering, an outsourced call center and restructured management team. The efforts drove double-digit growth in off-site sales.

10. Using technology to build loyalty: Restaurant brands are using technology to build brand differentiation and customer loyalty, often at the expense of competitors that may not be as tech savvy. Wingstop Restaurants is testing a new point-of-sale system that can retrieve a user’s account and call up previous orders, speeding up phone transactions. In addition, the chain is looking at tablet terminals that would allow seated guests to order more food without waiting in line.

The full special report is available only to Nation’s Restaurant News subscribers in the Oct. 1 issue.