U.S. restaurants score low on service
Survey says 7 percent of patrons won't return
URL: cbs.marketwatch.com
By Kristen Gerencher, CBS MarketWatch
Last Update: 11:21 AM ET Nov 17, 1999 Personal Finance News
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PALM BEACH, Fla. (CBS.MW) -- Restaurants across the country are losing their customers due to an unappetizing combination of bad service, poor quality food, and unacceptable value and atmosphere, according to a study released Tuesday.
"If you could get your average customer to make one more visit a month, you would double your sales."
Tom Feltenstein,
Feltenstein Partners
The report polled 50,000 customers who ate out in quick service, casual dining and fine dining restaurants over the course of three years. An average of 7 percent of patrons said they would not return because of bad service or food, according to the findings of Feltenstein Partners, a marketing firm specializing in the food service and hospitality industry.
"Service has continually declined over the last several years and it's critical that it gets fixed," said Tom Feltenstein, the firm's president, noting that restaurants need to examine their strategy beyond single transactions. Although a 7 percent loss may not sound like much, he described competition in the business as "fierce."
"When you have 800,000 commercial eating establishments in America and you're going to do over $350 billion this year, and 93 million people eat out every day in America and 90 percent of them (go to) the Mom-and-Pops and independents, it's kind of an interesting ball game out there."
Patrons dish
Survey patrons complained most about the value of their meals, with 15 percent giving all restaurant types low marks in the price category. An eatery's overall atmosphere -- including noise level, comfort, and available space -- checked in as the number two complaint. Five percent of respondents griped about customer service compared with the four percent who had a bone to pick with food quality.
Feltenstein described good service and value as a package of well-managed characteristics: presentation, cleanliness in all restaurant facilities, quality cuisine, and a responsive, friendly staff. He listed among his clients The Palm, Cracker Barrel, A&W, Ha„gen-Dazs, TCBY, Popeye's, Subway, and Wendy's.
The gospel of service hasn't been lost on all dining establishments. Consumers gave high marks to some restaurants, and the stand-outs include The Palm, Lawry's the Prime Rib, and Houston's. McDonald's (MCD: news, msgs) and Wendy's (WEN: news, msgs) scored high on service, and Cracker Barrel (CBRL: news, msgs) and Morton's (MRG: news, msgs) also fared well, according to Feltenstein.
The survey's message is anything but trivial to the bottom line, he said. "If you could get your average customer to make one more visit a month, you would double your sales. Frequency is everything. We've got to get our customers to keep coming in and become loyalists on a regular basis."
Showtime for employees
Feltenstein, himself a longtime restaurant worker, said he advises eateries to hold pre-shift meetings to inspire the mostly low-wage workers or "internal customers" to deliver their best performances, much like a play.
"Bad service happens all by itself, but good service has to be managed," said Feltenstein. "I've always said if we treated our external customers the way we treat our internal customers, we wouldn't have any customers. You have to look at it almost like Disney (DIS: news, msgs) does, that this is really our cast and this is theatre. We have to have fun."
"We have to honor our internal customers," he said, noting the turnover rate for fast food servers is 300 percent versus 75 to 100 percent for fine dining employees. "We have to treat them with respect. We have to give them flex hours. We have to be kind and gentle with them, and ... we have to reinvest in this intrinsic enhancement of the brand image."
Since most restaurant employees tend to be young, their training has to change to reflect their cultural norms, said Feltenstein. "We've got to train them in the way that they grew up, and they grew up watching television," he said. "Yet I walk into restaurant after restaurant across America and I see training manuals with print on them. That's not how they're used to learning. We need to create these video screenplays of what we consider the optimal experience when people go into the restaurant."
Word of mouth
Even in a good economy with lots of discretionary spending, restaurants can't afford to give customers a reason to talk badly about them, said Feltenstein. "Once that starts to permeate throughout the neighborhood -- because the majority of the business comes within a 10- to 15-minute drive time of each individual unit or restaurant in the United States -- this is very dangerous territory to embark upon."
"Say 'great quality' and a hundred companies and products come to mind. Say 'great service' and who pops into your head? Fed Ex (FDX: news, msgs), Nordstrom (JWN: news, msgs), Ritz Carlton (MAR: news, msgs), and Saturn (GM: news, msgs), but not many more. Very few companies have established a sustainable competitive advantage based on service."
The challenge is to make the service stand out, he said. "I think anyone can cook a steak, anyone can cook roast beef, anyone can cook a hamburger. But what is the unique distinction of why I should go to your place as opposed to going to someone else's place?"
Demographics and 'eat-ertainment'
Of course, creating a unique atmosphere can also work to repel patrons instead of attract them when it comes to age differences. The demographic group of 21 to 34 year olds, for example, is more inclined to seek out theme-based dining experiences, he said.
"When they go out, it's got to be 'eat-ertainment,' as we call it," said Feltenstein. "There's got to be a 'wow' factor."
But seniors may not necessarily value the same food-oriented fireworks. "When you get over the 45-plus (group), you want to go out and have a nice dining experience, and you don't want to have the whole themed, fast action," he said. "You want it to be a little more gentle."
Overall, the survey results offer a service plan from which the restaurant industry -- and consumers -- can profit, he said. "Clearly, differentiated service execution and internal customers' emotional connection to the guest will be the number one focus of the 21st century."
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