Restaurant Future Studies 233: Now is the time to focus on 'strengthening core product appeal' and 'increasing repeaters and shortening repeat intervals' with price increases as a premise

This is an article by Mr. Hisashi Kobayashi whom I respect. Not only restaurants, but the movements of food supermarkets at the consumer forefront are also useful for predicting future countermeasures for restaurants. ⇊

It is predicted that as consumer restraint and a savings-oriented mindset intensify in the future, an era will come where only 'valuable products' worth the price paid will sell, and that response has already begun.

Rather than large restaurant chains with stores nationwide, I analyze that small and medium-sized restaurant companies, food supermarkets, and some bento chains are accelerating this movement to review and bring products closer to a state that is one step more convincing.

★ Disappointing products that look like tonkatsu but are actually molded, mixed-ingredient tonkatsu imitations
★ Extremely light 'air' bentos with a strong sense of a raised bottom (even at a price in the 500 yen range)
★ Potato chips where 60% of the bag is just selling air
★ Chain store products that act like brand-name shops and have a stance of selling as high as possible

These will be gradually naturally selected over time. This is because they are product groups with only half the repeat power to make people want to eat them again. Stealth price-hike products, which are easy strategies for management to avoid price pass-through, will eventually become unpurchasable due to repeated price increases.

What do 'valuable products' bring?

There are five things that can be achieved by selling products that possess proper, inherent product strength.

1. Improvement of repeat power ➡ Increase in customer numbers

In an era of population decline and diversifying food purchasing opportunities, growth outside of lunch customers is limited. To turn walk-in first-time customers and new customers brought in by regulars (fans) into loyal customers (repeaters), this product strength that convinces you when you eat it is very important. <A sense of unity in taste, volume, and pricing>

2. Shortening of repeat intervals ➡ Increase in customer numbers

By slightly shortening the 'repeat interval' of regular customers (fans) and loyal customers (repeaters), this leads to a 10% to 20% increase in customer numbers. This can be achieved by replacing products with ones that have slightly higher satisfaction than before. <
If you raise the selling price by 10%, increase the overall product strength by 12% to 15%> *Where and how to strengthen product power depends on the product and the store's philosophy.

3. Proper price pass-through is possible

If the product value is at the same level as the price the customer pays, the customer will be convinced. Furthermore, if there is even 5% more satisfaction than the price, the customer will be impressed and repeat early. Incorporate the cost rate (profit margin) that can sustain the store into the creation of that product. <
Selling price = Product cost + Value-added provided by the store

Going forward, it will be an era where price adjustments once or twice a year are necessary. Except for lunch demand under 999 yen, mainly for noodles and rice dishes, I think it is better to consider this an era where eating out = a special meal. We have no choice but to pass on prices and raise them appropriately. What makes this possible is
solid product strength and high added value.

4. Maintaining an appropriate monthly profit margin

If the product selling price here is handled appropriately, the monthly sales of the store, which is the accumulation of those, will also have an appropriate profit margin. It is often said that the FL cost ratio (the total ratio of food and labor costs to monthly sales) should be 60% or less, but due to soaring rent and utility costs, it is now said that the FLRU (the total ratio of food costs, labor costs, rent, and utilities) should be 70% or less.

FL cost ratio of 60% means, in other words, a food cost ratio of 30% and a labor cost ratio of 30%, or depending on the store, a food cost ratio of 35% and a labor cost ratio of 25%. On the other hand, breaking down the
FLRU cost ratio of 70%, it is a food ratio of 33%, labor ratio of 22%, rent of 8%, and utility cost of 7%. Currently, almost no stores are achieving this. Rather, all costs are continuing to rise. The reason is that they have not fundamentally rebuilt the store's structure.

5. Improvement of monthly sales

In any case, to become a store that satisfies customers more, there is no choice but to improve the product strength of your own store's products while maintaining an appropriate profit margin. By achieving this and presenting it to customers, repeaters will increase, the profit margin will be reset to an appropriate ratio, and a foundation for secure management will be established.

From here on out, I believe it is the mission of restaurants to secure vital monthly sales by focusing on attracting new customers, gradually increasing the average spend per customer, increasing repeat customers, and shortening the interval between visits.

This was Audrey 7, the gluttonous uncle from Oita.
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