How the Amazon Prime mindset has changed fast casual dining
When was the last time you ordered something from Amazon Prime? If you are anything like me, it’s probably where you did a fair amount of your holiday shopping over the last couple of months. In fact, I never set foot in a bricks and mortar store this holiday season. Every gift was ordered online from the comfort of my home or office. It was easy, convenient, and somehow the novelty of making a couple of keystrokes and having the item show up at my door a day or two later hasn’t worn off. But what was lost in the process?
According to PWC’s 2017 Total Retail survey, 37% of respondents said they shop less often at retail stores because of Amazon. Fewer retail visits mean shoppers aren’t stopping by fast casual restaurants for lunch or dinner nearly as often. Less traffic typically means less revenue, which results in less profit and we all know where this chain reaction leads…
The changing retail ecosystem
Like it or not, as restaurant operators trying to survive within the retail ecosystem, most of us are just parasites feeding off of our environment. That might be a distasteful analogy, but there is a reason that we focus on co-tenancy and synergistic generators during the site selection process.
We aspire to locate our restaurants within an environment that offers the highest probability for success. Historically, one of the best ways to accomplish this goal was to locate in a shopping center or area that was abundant in other brands and concepts that attracted a similar customer base to that which we hoped to attract. The bigger the brands and their associated customer draw, the better (think regional malls and “category killers.”)
But what happens when these monsters of retail go the way of the dinosaur (or the way of Amazon)? The ecosystem is changing in a dramatic and fundamental way. In a quest for survival, we too must adapt.
The Amazon effect
Since its launch in 2005, Amazon Prime has drastically changed online purchasing habits, on-demand services and expectations. And with the company’s push to innovate with services like Amazon Go and Amazon Restaurants, and with products like Dash, Amazon has set new standards in retail, which has created new challenges in the fast casual industry. Consumers are used to having services that make dining (and life in general) more convenient and fun.
True hospitality is hard to deliver
Amazon has even had an effect on food delivery services. Whether at home or work, catering for large groups or individual orders, food delivery services have become all the rage (usually charging a fee of 20% to 30% of the total order). But I know of very few restaurants that have profit margins that exceed the cost of these services. Unless the transactions created through delivery are purely incremental to the transactions done within the four walls of the restaurant (thereby leveraging fixed costs) or a surcharge is levied on delivery orders, these transactions can be detrimental to the profitability of the restaurant.
Without question, figuring out how to profitably get your product to your customer will continue to be a major focal point for fast casual restaurants over the foreseeable future. You simply can no longer sit and wait for them to walk through your door. But how do we preserve the in-restaurant dining experience and allow it to proliferate?
How to be in prime focus with consumers
Since its founding in 2007, our goal at Meatheads has been to engrain ourselves in the communities in which we operate. Our 16 locations are all located in family-friendly neighborhoods, selected because of the proximity to schools, parks and community gathering spots. It is more important than ever to look beyond traditional retail generators to find sustenance.
Although visits to retailers may be diminishing rapidly, the convenience of online shopping has allowed people more time to enjoy other aspects of their lives. School events, family activities and charitable endeavors are all opportunities to engage customers and create goodwill in the community. At Meatheads we have several programs designed to capitalize on the priorities and lifestyles of our customers.
One of our most popular programs is “Meathead of the Game”, which is available for all youth sports, and is designed for elementary school and junior high students. After each game, coaches can recognize a player who best displayed determination, hustle and hard work (our company motto), and award them with a certificate good for a free lil’ meatheads burger.
In the fall, we sponsor “Burger Battles” at local high schools and invite students to create a custom burger that’s on the menu for a limited time. The battles are often between rival schools, or between teams at the same school.
We host birthday parties, local author readings, cater meetings and sponsor charity events like community 5K races and golf outings. Not only do we provide food, but we’ll bring out family-friendly prizes and engage with the community in-person as well as on social media. I think our programs are successful because we are truly interested in being a partner with our customers and our communities. We’ve been serving customers for 10 years and have adapted to the changing retail landscape and customer needs along the way.
At Meatheads, we are trying to exceed the expectations of fast casual dining and attempting to create a true hospitality experience. After all, when was the last time you had hospitality delivered to your front door?
Tom Jednorowicz is a partner at Tartan Realty Group and the founder and chief executive of Meatheads, a fast casual, family restaurant with around 400 employees and 16 locations in Illinois and Northwest Indiana. Prior to Meatheads and Tartan, Tom was the chief development officer with Potbelly Sandwich Works and has worked with other top US food and retail concepts including Panera Bread, Einstein Bros. Bagels and Boston Market.
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