Will independent restaurants outperform restaurant chains in near future?
FIGURE A: Pentallect and Critical Mix
Are independents going to overtake chains and what are the key opportunities?Are independents going to be the benefactors of the increasing sophistication of consumer preferences and their positive rating by consumers in several key areas of performance? Can independents outperform chains in the near future? It’s not necessarily clear. Chain restaurants tend to be better capitalized and have more strategic prowess behind them. However, it is apparent that over-expansion within concept types and within the chains themselves continue to be a problem. Despite the strength and capitalization of chains, the number of chain restaurants did not increase in 2016, according to a report by NPD Foodservice, while independents restaurants decreased by 3 percent. Overall, the total number of restaurants actually decreased by 1 percent. In terms of shear unit growth, chains are still fair better than independent counterparts, but the story is not rosy. Regarding chain sales, the TDn2K report shows that fine-dining is the best-performing segment, followed by quick-service. Fine-dining was “slightly positive” in same store sales in May, notes TDn2K, and the only segment to post positive same store sales. A key finding of this report is that takeout sales were positive and clearly outperformed on-premise (in-house) dining sales. Takeout sales showed year-over-year comparable growth of 2.9 percent. Additionally, delivery, drive-thru and catering were also strong performers for chains. Independents clearly have an opportunity to emulate some of the takeout and delivery programs being launched by chain operators. As consumers increasingly favor convenience, and benefit from lower food prices at grocery stores, offering diners convenience options can boost revenue growth for restaurateurs. A 2017 report by AlixPartners indicated delivery as a key opportunity for restaurants based on consumer research and found that food quality and price were the key factors in consumers choosing delivery.