How the Weak Economy Is Changing the Food Industry

More particular about the restaurants they frequent, diners have their own ideas about what a value meal is.
Faith in Focus Columnist, The News & Observer Publishing Company
March 12, 2012

The economic crunch of the past few years has changed the food and beverage industry. Diners are particular about the restaurants they frequent and have their own ideas about what a value meal is.

Dining dollars

"There have been drastic changes in people's dining habits," says Dean Ogan, owner of Rocky Top Hospitality, a group of six restaurants and a catering operation. "We are huge on feedback and put a comment card in front of every customer and the biggest feedback we get is on price," Ogan said.

Because of the economy many diners have reduced how often they eat out.

"Casual dining has struggled to retain the visitation they were getting prior to the recession, says Paul Clarke, Vice President of Sandelman and Associates, a market research firm for food service companies. "There are just fewer people going out for casual dining."

Rising gas prices also pose challenges for eating establishments. Transporting food becomes more expensive for the restaurant owner, consumers may not be willing to drive as far to get something to eat, and paying for gas cuts into disposable income that might be used for dining.

Looking for excellence

Customers may be making fewer trips to restaurants, but they are expecting more while they are there.

"Mediocre will never work in this industry ever again," said Ogan. "You have to get it 100 percent right or you'll hear about it."

Ogan says small things diners might have forgiven five years ago they won't hesitate to complain about now.

The dining experience

The search for excellence has helped strengthen the segment of the industry known as fast casual restaurants.

Fast casual restaurants are places like Panera and Chipotle Mexican Grill that have no table service, but are perceived to have higher-quality food and more attractive surroundings than fast food establishments.

"Fast casuals have upped the ante on the ambience," said Clarke. "They pioneered improvements in the dining room that have raised the bar."

Clarke says the atmosphere improvements have spilled over into the fast food market where many McDonald's have updated their dining rooms.

Darden, the restaurant conglomerate that includes the casual dining chains Red Lobster and Olive Garden, says that consumers are making restaurant choices based on the total experience. Food, service, affordability and the decor make up that total experience.

Adapt to the market

At Rocky Top Hospitality, Dean Ogan isn't afraid to change things up and reinvent his restaurants as times change. He describes his current line-up as casual and more family-friendly than before.

He is also responding to consumer demand to "eat local."

At one of his locations that used to be a seafood restaurant and is now an upscale tavern, he offers a burger made with grass-fed beef, on a locally-baked bun, topped with locally-made gourmet cheese and organic vegetables.

"Our mission now is we want to proudly tell people where their food is coming from," Ogan said.

The tall order

While consumers remain selective about spending their dining dollars, the challenge for restaurateurs is balancing great food at the right price along with excellent service in an attractive space.

"Dining is not a three day a week event for most people," Ogan said. "When people go out to eat they have a much higher expectation now because they are so concerned about their money."

Carla Turchetti is a veteran print and broadcast journalist who likes to break a topic down and keep her copy tight. That's why this bio is so brief! Carla blogs via Contently.com.

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