Article
Holiday retail sales projected to improve
As holiday shoppers hit the streets, restaurant operators remain cautiously optimistic.
November 22, 2009 by Valerie Killifer — senior editor, NetWorld Alliance
Last year's economic bust created one of the worst holiday sales seasons in nearly 30 years and impacted every customer-service sector in the United States. Restaurants were no exception.
This year, retailers and restaurant operators are optimistic that sales for the holiday shopping season will be better than the last; however, it remains to be seen if those sales will pull the industry out from its slump.
"We're using numbers and establishing points of comparison that are dramatically different than two years ago," Deborah Dowdell, president of the New Jersey Restaurant Association, said. "We're just barely touching upon recovering from the worst economy in most of our lifetimes. We can only hope we're trending upward."
Although the quick-service segment fared better than much of the restaurant industry, operators in the industry as a whole are learning how to communicate and market to a new kind of consumer.
"I think consumers have learned to pace themselves and to spend differently," Dowdell said. "Consumers are looking for value; that's what they want. There's no room for error in this new age."
According to a report retail industry research firm IBISWorld, the overall retail outlook this holiday season is positive. This year, Black Friday weekend sales are expected to reach $42.9 billion, a 2.8 percent increase over 2008 figures. And Christmas sales are expected to grow 0.19 percent this year across four traditional categories:
- Food and Drinks - $27.73 billion in projected 2009 sales
- Decorations - $8.25 billion in projected 2009 sales
- Gifts - $81.91 billion in projected 2009 sales
- Other (such as flowers) - $10.23 billion in projected 2009 sales
"Retailers will look to generate sales in any way possible, with more emphasis on Black Friday, mid-December sales, and a strong online presence offering free shipping," said Toon van Beeck, a senior analyst with IBISWorld. "It's all about exposure as shoppers look to snatch bargains, while still getting what they want."
Some restaurant operators can use the holiday shopping period to drive customer traffic through marketing partnerships with retailers. Those partnerships can include a lunch tie-in with retailers or the offering of an all-you-can-eat promo where, for one price, customers can access the menu items of several restaurants. "Samples will help drive traffic, but restaurants will have to think of some other creative ways to increase traffic," said Susan Pecuch, retail-industry consultant. "It's really all about standing in the customer's shoes and offering them something more. It might take some shifting to make things happen. But, it comes back to cooperation between restaurants and retailers."
New menu items
To help drive customer traffic, restaurant operators also are relying on seasonal menu items.
Frozen yogurt chain Tasti D-Lite recently introduced its Apple Pie, Caramel Apple, Pumpkin Pie and newly launched Pumpkin Cheesecake for the holiday season. And in December, the company will roll out Eggnog and Peppermint flavors. Each new flavor can is between 70 and 90 calories per 4-ounce serving.
"One thing with the cake and pie line is it does well when the off-season kicks in so it's a great time to be promoting additional flavors," said Bill Zinke, Tasti D-Lite's chief marketing officer.
Tasti D-Lite launched its lower-calorie cake and pie line a little more than a year ago to give customers a take-home option for its products.
To drive sales, the company is first featuring its seasonal and take-home menu items, second giving people a low-calorie treat alternative and third, offering its cakes, pies and saucers at a 20 percent discount.
The ideas are to bring customers into the store looking for those seasonal flavors, to have new customers try the items, and/or to keep them coming back on a regular basis throughout the holiday period.
Consumers and businesses also are looking for more reasons to celebrate this holiday season.
"When you think about where the mindset of both businesses and consumers are, once you get past the sticker shock of unemployment and the number of individuals unemployed, there's pent-up demand for restaurant services, and particularly in an environment where the consumer has traditionally spent more dollars on a seasonal basis than at any other time of the year," said Hudson Riehle, senior vice president of research at the National Restaurant Association.
"Operators with smaller check averages tend to be more optimistic when compared to operators with higher check averages. How those operators fare will be a function of how they market themselves."
As we head into the holiday season, operators are cautiously optimistic.
"We're projecting sort of improvement going into holidays, but it's hard to predict off of numbers – our data is not as strong as we'd like it to be and we have a lot more locations. We definitely expect that going into peak season, now that we have a year under our belt with cakes and pies, a better springboard for the holiday season," Zinke said.
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