RMS’ store-specific data enables QSR chain to recover traffic lost to new competitor

Our Client’s Challenge

Following a competitor’s entrance to the marketplace through
acquisition, our client began to see traffic drop significantly across all its
locations.

The Solution

RMS analyzed store-specific data on guest traffic, profit changes and variations in customer purchase behavior over a 12-month period to quantify the short and long-term impacts of the new competitor’s restaurants openings and to recommend competitive pricing changes.

Our top three key takeaways for the senior management team:

• The physical distance to competitor restaurants mattered. Locations with a competitor in close proximity saw traffic declines averaging 12 percent. When the competition was further away, declines were just 5 percent on average.
• On average, the negative impact of the new competitor weaned off after 12 months, indicating that customers were experimenting with the new choice.
• Overall, less premium menu products were purchased following the arrival of the new market entry, with distance again playing a role.

The Result

By quantifying the impact of the disruption, operators were able to define a localized combat strategy. Based on these insights, our client designed targeted marketing, promotion and pricing strategies for their locations. Slowly but surely, they recovered market share in their sectors.