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Lisa Miller - Is it Worth it?



Is It Worth It?

 

Lisa W. Miller

President Lisa W. Miller & Associates

Author / Consumer Strategist

 

So, this morning I had breakfast with a friend at one my favorite breakfast places. We ordered two modest sized bowls of oatmeal with fresh fruit, a coffee, and an iced tea.  The service was friendly and attentive as expected, the food arrived promptly.   The social connection and conversation were center stage, not the meal. When the check arrived, I didn’t really look at the receipt. I simply handed the server my credit card and continued chatting with my friend.

 

And then it happened.  Sticker shock! 

 

The bill was $33, plus the $8 tip I added because the service was deserving.  So, that oatmeal breakfast stung at $41. 

 

I asked myself, “Was it worth it?” 

 

I share this story because moments like this are happening far too often every single day. The bad news is that most customers that experience this will say nothing; they just stop coming or come less often. These not so joyful moments of sticker shock will be inextricably linked to that brand.

 

And we wonder why traffic is down.

 

Let’s rewind a bit. Over the last 3 years, I have collected over 65,000 consumer interviews tracking consumer sentiment and the economic recovery.  I call this research The Journey Back to Joy which began in March 2020 with a simple thesis:  When joy was greater than fear, the economic recovery would begin.”  Turns out this data measuring joy became a leading indicator of restaurant sales and traffic.

 

Back to today, the reality, it’s just not that joyful out there at full service nor quick service. Of course, there are exceptions, yet increasing sales with declining traffic says it all. Digging into my data from last month’s national survey among 1,000 consumers 18+ years old, 59% of Americans agree/strongly agree that restaurant “prices have gone up too much.”  That sticker shock that I experienced, I guess I’m not alone  – 52% of quick serve and 47% of full-service customers were somewhat to extremely surprised with the check amount.  Think about it – half of restaurant customers have sticker shock! And if that wasn’t bad enough, the stinger is that only 31% say their last restaurant visit was “definitely worth it!”  That’s the 5 on a 5-point scale.

 

What does that mean? The industry value proposition is upside down.

 

Customers are shouting that it’s not worth it.  Did you know that the Bureau of Labor Statistics reports that quick service cumulative prices are up over 20% versus 2019 pre-pandemic levels and full-service prices rose 28%?  

 

The good news is that the value equation is simple math - the experience received must be greater than what was given.

 

  • The numerator: The total experience received vs. their expectation..

    • The good, the bad and the ugly of the experience, food, hospitality, ambiance

 

  • The denominator: What was given

    • Yes, it’s how much a customer pays.

    • But, today, it’s also customers’ time – was the experience worth their time -  that could be time inside a restaurant, waiting through the drive through or even waiting at home for delivery. Respecting their time is critical.

 

Easy right? We know sometimes simple is hard, so let me leave you with this to ponder. 

 

  • How much cumulative price has been taken since 2019? (the denominator)

  • What if anything has been added to the experience (the numerator) to offset the price? 

  • Are customers paying more for at best the same experience to pre-pandemic or maybe even slightly worse? 

 

Many restaurants took price without adding to the experience.  What’s happening today is more promotions and more discounting which won’t solve the problem. These short-term tactics create bad customer behavior leading to disloyalty, not loyalty.  Consider increasing the value of the experience versus just lowering the price with a promotion or discount. The total experience is what differentiates brands, without that we are selling commoditized products.  The experience starts and ends with our team members. We need to invest more, not less in training. Joyful employees’ equal joyful customers who are willing to pay the price because the experience is worth it! Many of the restaurants with positive traffic today have had below industry price increases and focus relentlessly on the experience.  The proof is in the pudding.

 

By the way, I will be back to that restaurant because I really do love it. But, I can confidently tell you, I won’t be ordering that bowl oatmeal! It wasn’t worth it!

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