Flagging Sales and Falling Margins Can Serve as Inspiration for Innovation

Globally, restaurants have barely — and breathlessly — outrun costs by increasing prices (at a rate that’s 3x–4x faster growing at restaurants versus grocery stores). The consumer has rather agreeably absorbed price inflation and also shelled out lavishly on the new freedom and relatively frictionless convenience of delivery.

However, we can all feel something building. Not everyone can quite put their finger on it, but the brightest people in the room are signaling that their sixth sense is picking up unusual rhythms and a hunch that the racetrack is about to reveal some unexpected new turns.

Will the global economy continue to slow? How much longer will the economic recovery last? Will there be a recession? 

There is uncertainty, but there is also opportunity.

Price increases have been growing far faster than productivity gains. 

This means, simply, that new formats, unit and system-level economic models, and evolved expectations for operating performance must be factored into the future of foodservice and those optimistic for its potential. 

 Please read the above again with emphasis on the optimism part (as this is not another doom and gloom sentiment or outlook). 

 What’s happening (and is required) of organizations and leaders, both shaping and being shaped by these new and dynamic forces, is a necessary transformation and transition from what was to what will, can, and should be. In other words, what doesn’t kill you makes you stronger (so long as your intent is thriving, not stepping — avoidably — into an oncoming truck in busy traffic). 

When looking at where the industry, competition, consumer, and smart money are headed, you will quickly discover new ways of evaluating and deciding how best to approach (in a tailored and brand-centric fashion): 

• Strategic capital allocations
• Acquisition and expansion plans
• International market opportunities
• Gaining (and growing) share
• Attracting and energizing advocates
• How board- and shareholder-level discussions are being framed

Not a single (historically important) horse-and-buggy-whip manufacturer heralded the automobile as the ordained arbiter of their demise. Nor did IBM willingly hand over the dominance that Microsoft and Apple gained while their brilliant leaders (and lumbering organization slept through a decade or two of change and innovation) were reshaping the world with greater relevance than their competitors.

The point? The point is that you can do it.

You can find and forge a new way forward — for your company and our industry. You wouldn’t have read this far if you weren’t one of the ones doing your homework, surrounding yourself with the best data, advisors, and pure ambitions about how to rally the resources and reinforcements needed to make a meaningful difference; swing a purposeful hammer determined to shape, forge, and fulfill a purpose beyond quarterly profits alone. 

 So, the next time you find yourself frustrated by a disappointing result, a prolonged period of sluggish sales or eroding margins, remember that reinvention is requisite for established companies to avoid disruption.

Disrupt yourself before somebody else does.

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ABOUT AARON ALLEN & ASSOCIATES 

Aaron Allen & Associates is a global restaurant industry consultancy specializing in brand strategy, turnarounds, and value enhancement for leading hospitality companies and prestigious private equity firms. Aaron, a third-generation restaurateur, has personally led more than 2,000 senior-level strategy engagements across 70 countries and 6 continents. Collectively, the firm's clients around the globe generate over $200 billion annually and span more than 100 countries.