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In this episode of Revenue Stream, Center Reach Communications’ Tracy Henderson sits down with RMS’ Francois Acerra and Justin Pridon to talk about where diners stand one year later, how the restaurant industry has evolved and how RMS is helping its clients now. Are consumers returning to their pre-COVID purchasing behaviors or are they sticking with their newly adapted habits?

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Tracy Henderson:
Welcome to the newest installment of the web series Revenue Stream with RMS. I’m Tracy Henderson, Founder of Center Reach Communications. Here with me today is Revenue Management Solutions’ VP of Consulting Services, Justin Pridon, and its Director of Analytical Services, Francois Acerra. Hi, guys. Thanks for coming. Today, we’ll be talking about insights from RMS’ latest consumer survey, and how operators can use these insights to predict and prepare for what the future holds. Francois, you’ve been gathering this consumer behavioral data since 2020. Tell us about the process and what you’ve found recently and throughout the last year.

Francois Acerra:
Sure. So, back in March of 2020, we decided to expand a little bit, our market research work outside of the work that we typically do with transactional data, and decided to ask questions directly to consumers through a series of quarterly surveys. Our first survey was fielded back in April of 2020, and since then we’ve done a few with the latest edition being fielded in February of 2021. Typically, these surveys have about 1100 respondents in them and follow quite closely the US population for census definitions.

Tracy Henderson:
So that’s interesting, so you started those in April of 2020. In this most recent survey, what was the most surprising statistic for you and your team?

Francois Acerra:
So, if I think about it, what surprised me was the fact that we did a survey in November of 2020, and then we did another one in February, and we asked whether people had a change in work environment over those three months, and we only found that 6% of people reported a change of working environment, meaning going from home to the office, or vice versa, and well over 50% of our respondents reported still working from home. So, I thought this was interesting, particularly to restaurant operators because it shows a real gradual return to, I would say, pre-pandemic routines, things like commuting and things like that, so I thought that was interesting.

Tracy Henderson:
Yeah, absolutely. Justin, you work with operators ranging from entertainment venues, to full-service restaurants, to QSR. How are they reacting or getting ready for what this work life looks like, going forward?

Justin Pridon:
Thank you, and it’s really great to have this data, basically because we’re really rooted in the data and what we look at for each of our operators and having this type of a response survey back helps us to add context. And a lot of it starts with the transaction level data, each one of the guest stories that come us on check and our operators are preparing for how this type of data is changing, how each of these occasions are shifting, and a lot of them are still in line with how Francois’s seeing the surveys and how we’ve seen the surveys come back to us, that can include the slower pace of return back to a normal pace of maybe workflow or working from home, so maybe continuing to see those larger shoulder periods or maybe spread out occasions from just the normal peaks. You might see commuter meal periods like breakfast and lunch.

Justin Pridon:
In addition, as we do see some of that return back, even incrementally, we’re also finding that the occasions are starting to broaden again, so the indulgent, the single locations returning and adding a little bit more business that you would see to those normal peak timeframes as well. So the normal peaks have breakfast, lunch, and dinner, along with some sustained other areas that folks have always used now, as we move from the most recent months. So, looking at delivery and a couple of revenue channels that still maintain, even though they might’ve come off their peak, that’s still a behavior that our operators are accounting for, and making sure that their adjusting for us might be a regular occasion.

Tracy Henderson:
So that’s interesting, Justin, so it sounds like some of these behaviors are here to stay. Francois, in the survey, were respondents reporting using different channels, now that restrictions are easing?

Francois Acerra:
So comparing the November results to the February results, we’re actually seeing a lot of habits sticking to your point. I think people that develop those habits over the past three or six months are reporting doing more of the same when it comes to dining out, taking out. The only channel we’re seeing, has been losing a little bit of steam is delivery, and that’s mostly driven by Gen Z using less delivery. But while those habits are sort of stagnating, optimism is increasing. Consumers are reporting higher level of optimism, they’re seeing the restaurant industry recovering much sooner than they did previously in November, about 44% then thought the restaurant industry would recover over the next six months, now that figure is 13% up. So, I think overall, yeah, people are staying in those habits that they developed, but optimism is there, and I think we’ll see some shifts down the road.

Tracy Henderson:
That’s great. Well, it’s always good to hear some optimism, especially after the year we’ve had. Justin, you’re aware the rubber hits the road, right? So are you seeing this optimism in client transactional data, or what are you seeing in that transactional data?

Justin Pridon:
And I really do like that rubber hits the road analogy, and where we see that optimism coming in is, again, we spoke a little bit to the occasions that we see coming through that transaction level data, so they’ve been changing in activities and behaviors. So, that optimism means that we’re seeing some of the behaviors that we might not have seen come back, so more of the indulgent type of activity, single occasions that might have been lost earlier because there’s more consolidation on the meal experience, or larger parties, or larger checks, so if somebody is starting to feel that-

Tracy Henderson:
Sorry to interrupt, that might mean… I’m a mom, and so April, 2020, that was go to the local Mexican restaurant and buy food for the next two days. Now, that might mean I’m actually going to go to Starbucks and get myself a cappuccino, extra shot venti.

Justin Pridon:
You’re exactly right, Tracy, and we all have the Starbucks order that, at least, is probably returning back to the fold as well. But again, as that activity comes in, that’s what our operators are really starting to get more adjusted for, and understand again how the business was settling out in this way. That positivity means more and more frequent type of transactions, even if it is in the peak periods we talked about earlier, or even some of the shoulder periods. Additionally, in some of the activity that’s here to stay, again, we talked about how some of those delivery pieces and how some of those other areas and occasions are still here to stay as well, so they’re now blending in with these other pieces and other indulgent occasions or single occasions as they come back. And all of this now interacts with menus that may have been more efficient or truncated during some of the timing that we would have seen previously, just for a focus on efficiency.

Justin Pridon:
So how those menus are evolving in the promotional space is evolving as well, as we’re seeing them be more focused to these occasions and some of these other areas so that the returning guests have something that really fits with their type of what they’re looking for in meals, but they’re looking for that concept of even the return of value. So, as they may have more occasions as they start to frequent more into restaurants, the return of what that everyday value means so that each occasion is well worth the price paid, which is an area we focus on a lot of understanding how, as the guests are telling us in these surveys, how they’re also reflecting into what that means for value for them.

Tracy Henderson:
That’s great. So, we have some optimism, but we also have some more value-conscious, perhaps, consumers. Francois, what do you think operators should prepare for, for the summer season? Is it going to be busy?

Francois Acerra:
Certainly busier than last summer, I would think. To go along the lines of this increase in optimism, what we noted between August and February is really the fact that people that want to dine out more post-pandemic is increasing significantly. So back in August, only 13% of respondents told us that they wanted to dine out more post-pandemic, now it’s up to 32%. So I think, again, as vaccinations are being rolled out, people feel more and more comfortable dining out, getting back to their old dining habits, I think these are encouraging signs for the summer, for operators. Another important thing to note as well is that over 50% of respondents now believe that it is safe to dine indoors at restaurants, so again, I think these are all encouraging signs, I believe, for restaurant operators and getting ready for a busier or summer season.

Tracy Henderson:
That’s great. So Justin, how are your clients preparing, both short-term for the summer, and long-term, as best we can figure out what the world’s going to look like?

Justin Pridon:
Our clients are approaching it with that balance in flexibility, and they really should. At the first time, we still… And I would focus on something Francois, I think, brought up even earlier, is that incremental change. We’re still seeing change, we’re still seeing those pieces to the data, and our operators are making sure that they’re still attuned and leaving room for change, but at the same time, with the positivity and return of transactions in opening markets, also being prepared. So there’s a real rush to make sure that as the business gets busier, especially for summer and beyond, that the models are also still well-staffed for that. I think that is actually one of the areas we’re seeing be a real headwind right now, is that labor supply and making sure that as they’re gearing up for that return of occasions and still keeping that flexibility for different guests that are there, that there’s enough staffing and pieces to make sure that’s allotted for.

Tracy Henderson:
Yeah, I’ve been hearing a lot about the labor pool, it shrunk, it sounds like. Other than what Justin just shared, Francois, as it relates to the consumer survey, what were some of the specific concerns going forward? So there’s optimism, but it wasn’t 100% optimistic, right? There was concerns.

Francois Acerra:
No, there’s definitely still concerns about COVID and the risk of infection. We find that the number of COVID cases at the local level is still the number one factor for deciding to dine out to restaurants. Close second, however, is the lack of safety measures adopted by others, which I think is really interesting as people get more comfortable to go out and dine out, I think it will be very important for operators to maintain a really safe and comfortable environment, right? Because people might feel comfortable to go out, but maybe I’m not as comfortable with sitting so close to someone who I don’t know, so I think there is an important point here.

Francois Acerra:
Also, what is interesting is, back in May of 2020, we asked general household concerns and what [inaudible 00:12:19] latest iteration of the survey is that household concerns are much less about the inability to travel, or the economic impact of the pandemic. It’s a lot more about not being able to do the things they want to do. Again, COVID is still up there with a member of the household becoming infected, but also people are more concerned about the mental and emotional health of their household, so that concern is also, I believe, quite interesting, right? Because it’s much less about the economy and the traveling and all that, and it’s much more about how can I do the things I want to do, and the people close to me also get to do the things that they want to do.

Tracy Henderson:
Yeah. I definitely understand that emotional wellbeing. Justin, so Francois laid it up for operators, “Hey, you need to be aware of this.” Right? Other patrons are a big concern. What can restaurant operators do, or what are you seeing as best practices that they’re already doing, to communicate these safety measures, or that they are concerned about the wellbeing?

Justin Pridon:
Exactly, of course. How great is it to get back to hopefully having the opportunity to eat in restaurant? There’s nothing more, in my opinion, from my family, good for mental health and being able to go out with family and friends and enjoy something in a meal that we haven’t been able to before, and I think through the survey pieces, that’s what the guests are telling us, and you’re seeing that through positivity, and you’re seeing that through these return to vacations. But with that positivity, and with folks now using that for the times that they’ve had, it’s understandable that you will have that diversity of folks now back in the restaurants, that concern about other guests and what they have for your health and wellbeing, becomes one of those important concerns for how operators enforce that.

Justin Pridon:
And so the best practices we are seeing from operators are holding that straight and narrow when it comes to communication of standards of safety, cleanliness, and all the pieces that they have established through the previous months to still be well-enforced, well-visible, physical signage, clear rules, clear demarcations, clear communication in restaurant, but not only in restaurant, but reaching out through their messaging through the other channels that you might have for delivery, curbside. So that, again, that message is not only very well-established on premise, but also helps when folks are making their decisions to go out now for that wellbeing, and being able to communicate that through their… In addition to the other messaging they’re making, whether it be through promotional pieces, websites, or other ways. So again, the main takeaway is not slouching on still making sure that’s a forefront communication principle, what your practices are, and why it’s going to ensure health and wellness for your guests as they return.

Tracy Henderson:
Yeah, absolutely. I want to shift slightly, all this stuff costs money, right? Justin talked about a shrinking labor pool earlier, we have minimum wage pressures, there’s a whole lot of signage that needs to be purchased to effectively communicate safety measures. Francois, as things pick back up, how are consumers going to respond if the menu prices go up slightly, if their favorite drink or a meal is a little bit more costly?

Francois Acerra:
Right. That’s a great question, Tracy. And it’s hard to tell, I think it’ll be individual response first, but from what we were able to measure with our survey, we can see that all the reasons you just mentioned, increased labor cost pressure with increased in minimum wages, new safety, and CDC guideline compliance when it comes to safety and hygiene in restaurants, all of these are really acceptable reasons, from a consumer point of view, to increase prices. It tends to be the older generations that are actually more okay with it. They have a little bit more forgiveness and tolerance when it comes to those sort of drastic events when we slice the results between younger generations, older generations, really the boomers that are more understanding of minimum wage is going up, some of it is going to be reflected in price. That makes sense, right?

Francois Acerra:
And I think the second interesting piece of information we’re able to measure is that perceived inflation between grocery stores and restaurants because we often believe that you sort of make that trade off decision between cooking at home, or having someone prepare a meal for you. And even though those two inflation metrics have been pretty much on par with each other over the past three months, food away from home inflation, versus food at home inflation, the perceived inflation from the consumer perspective is that grocery stores have increased prices much more than restaurants, right? So, they might need a little bit of forgiveness and tolerance there as well. That might [inaudible 00:18:04] favors to be able to increase those prices.

Francois Acerra:
I think Justin’s team would still need to take a close look at their transactional data before making the call, but we’re seeing, like I said, a little bit of forgiveness and tolerance from a consumer perspective when it comes to those minimum wage hikes, increased food cost, and things like that, but as well, feeling the price increases from grocery stores more than they do price increases from restaurants.

Tracy Henderson:
That’s great. Well, and Francois, you teed up my last question for Justin, what is the transactional data saying, and how are operators going to manage pricing going forward?

Justin Pridon:
Thank you, Francois, for relaying that right in. But I, and again, this is one of the wonderful things of having the survey data, because as we’d always say, that the guest is going to give you some credit as you’re moving forward with some of the headwinds. And wow, has it been a very difficult time to be an operator and continues to be, with the headwinds that we’re seeing. So really, our best operators are using their data to be guest-focused. They’re understanding what the guest is telling them and what they will bear, so something like in a survey saying that, “Hey, we’re more willing to give some credit for the health and safety measures that you’re having to incur cost on,” or the inflation between food away from home, and food at home in grocery stores.

Justin Pridon:
Our best clients are utilizing the data, hopefully historical data, as it’s evolved, and the data has currently evolved to understand where that tolerance is, and then they’re using that to be strategic and iterative. So strategic in the way of understanding where there’s flexibility to take some price on what products, what occasions, what areas, and then moving that forward, understand that pricing, when used correctly, is a good long-term strategy.

Justin Pridon:
So as you’re still seeing evolution of the guest in the market, you’re able to find where you can best leverage your pricing now and still make it a successful leverage hole in the future, and it’s the combination of all those activities, learning from both the history that you’ve had, the times over these last few months that it’s changed and what it’s evolving to, is really setting on the best client for the best path of reading their data, reading their guest, taking the right amounts of impact and not pushing too far, because that’s the challenge we’ll see with a lot of folks right now is if you push too far, we all know how hard it is to get a guest back. And if you go too far too fast, you’re always going to be playing catch up. So, a strategic reading from the guest and what they’re saying to the survey and have that’s thread through the data is one of the best client pieces, per se.

Tracy Henderson:
That’s interesting. So I don’t necessarily want to end on pricing, but we do have a lot of optimism in the market. It sounds like guests, I know I’m one of them, are ready to go back. Is there anything from the survey, or Justin, what you’re seeing with your clients that I didn’t ask?

Justin Pridon:
What a great thing, to see some of the positivity coming through the survey and seeing that reflected as to the type of verifications we’re seeing come back to the market. If there’s anything you’ve asked, great questions and giving us the ability to connect them, still remaining strategic and flexible. So, understanding that flexibility is still one of the best practices that we’re seeing out in the marketplace, so that way, even as the environment continues to evolve and we see what’s next, we’re still utilizing what the guest is telling us to be able to make our best path forward.

Tracy Henderson:
Absolutely. Yeah, I’m getting the sense that the new normal is going to change weekly, monthly, quarterly, as we go through 2021.

Justin Pridon:
And that’s one of the most things, is that normal has always been a dynamic piece anyway, so if anymore normal continues to be one of the more dynamic words we can have in our language.

Tracy Henderson:
That’s great. Francois.

Francois Acerra:
Oh, sorry. I was going to say, I don’t know if I mentioned this, but over 70% of respondents in our lead survey believe that vaccination will speed up the recovery process of the dining segment of the restaurant industry, so again, it will be an individual decision to feel comfortable again, to go back out there, but I believe there’s better days ahead, right?

Tracy Henderson:
Well, I think that’s a great way to end, better days ahead. Thank you so much for your time today, guys. And thank you everyone for joining us today. You can watch this whole webinar again, or get insights from industry experts at www.revenuemanage.com. Thank you.

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