The pressure of inflation | Fast food restaurants that are looking for each other

With prices having increased, sometimes significantly, and competition coming from all sides, fast food chains are under pressure and are searching: is it better to focus on a strong personality or develop new traits?

Boulevard Rosemont, Friday morning. The restaurant’s music is vaguely reminiscent of bossa nova, a few customers sip their coffee in the dining room. The place is peaceful. Not the idea you would have of a Montreal McDonald’s located right next to a high school.

That’s because it’s around 11am. At 12:30 p.m., it will be furious madness, confides Denis Théberge, met by chance on site while he was distributing survey cards to measure appreciation of the experience. The employee is responsible for customer service at this Golden Arches address.

You had to have a really critical mind not to give good marks — and thus be entitled to a free fries and a drink on your next purchase.

“Things are going well,” said Denis Théberge unequivocally, particularly because the “values” articles are very popular.

If food inflation has reduced the “outing” budget of consumers, it has also increased the production costs of restaurateurs, including those of fast food, which is sometimes difficult to swallow for regulars.

Maryse Côté-Hamel, professor in the consumer sciences department at Laval University, notes that the price of the Big Mac has increased by 13% in the last five years — or 139% in 20 years.

If we considered fast food as a refuge for the wallet, that is no longer always the case and the big chains have to deal with competition that comes from everywhere: bakeries make a buttered ham for the price of certain burgers and restaurants of world cuisine manage to sell lunches for much less.

Opposite the McDonald’s on Rosemont Boulevard, you can have a banh mi sandwich in a Vietnamese café for $8 and much more economical options in the neighborhood convenience stores which transform into caterers at lunchtime, to the delight of the high school students. .

Because alongside McDonald’s economical menus, there is the new Grand M which costs $10, just the sandwich.

At Subway, a 12-inch spicy chicken sub costs more than $15, before tax — and it’s not the most expensive item on the menu.

The chain also added $4 “value” products, but Subway had its heyday touting its $5 subs with an earworm slogan that has stood the test of time: the image is brutal and reactions were knee-jerk on social networks.

What to do then?

According to Maryse Côté-Hamel, two strategies stand out in this niche: focusing on your star products or presenting new products to attract customers who want to eat well, at a good price.

“We want to make your mouth water,” explains the professor. So we offer new recipes, pizzas, bowls. We’re seeing a lot of innovation these days. »

By including new features that deviate from their initial offering, aren’t certain channels at risk of losing their identity?

“Yes, there is a risk,” replies Maryse Côté-Hamel. But there is a risk of doing nothing and seeing declining sales. They are at a crossroads and they have no choice but to try something to remain interesting. »

This is also the opinion of the president of the MTY group.

“The pad thai will not leave Thaï Express nor the poutine or the steamé at Valentine’s,” says Éric Lefebvre. Because that’s what people go there for.

The MTY group includes 7,000 restaurants under 90 brands, mainly in the United States and Canada, in several niches: from Baton Rouge to Sushi Shop, of course Valentine and Thaï Express.

Including something new is important, says the president, but not just anything or in any way: Éric Lefebvre speaks of “evolutions of the theme” when he speaks of new products, in order to avoid anachronisms on the menu which do not would only complicate the task of franchisees without providing interesting income. We will therefore expand the poutine offering in a chain that has made it famous or we will add a poutine with oriental flavors in an Asian restaurant.

“We need to focus on what we do well,” says Éric Lefebvre, who insists that by wanting to do a little bit of everything, we risk “becoming ordinary in everything.”

The same goes for low prices. The strategy is only interesting if it brings new customers, explains Éric Lefebvre. If regulars start spending less, the return decreases. And this is not the time, especially in certain niches.

These exceptional outings

Éric Lefebvre considers that, overall, the restaurant industry is experiencing a period of post-pandemic stability, which follows this small moment of euphoria when people spent more easily on high-end products. “People are now more disciplined in their spending,” he says.

So, consumers who decide to go out to restaurants despite a tighter budget will want to have an experience out of the ordinary. “Ultimately, the customer who spends $15 or $20 wants it to taste good! », says Éric Lefebvre.

Across MTY’s broad portfolio, burger chains are facing tougher times. “People say that rather than spending $20 on a burger, they will make it at home. And they’ll take their $20 to go to a different type of restaurant. »

Something unthinkable not so long ago, for some of the clientele, fast food can become an outing with lovers or friends, believes Maryse Côté-Hamel.

“Fast food can take on this role as a special event or activity,” she says.

The president of the MTY group gives this amusing statistic: “In the United States, the channel with the most premieres date, it’s Cold Stone Creamery,” emphasizes Éric Lefebvre. The Cold Stone creamery, one of MTY’s American addresses, generates around two-thirds of its revenues in the United States.

That being said, according to him, it will not be tomorrow that customers will replace an outing in a table service restaurant with an evening under the arches, but those who opt for a restaurant with service and a dining room will go there spend less.

“The difference between a casual dining, table service, and fast food has tightened a lot in the last ten years, confirms Éric Lefebvre. The quality of the food that we can get in fast food restaurants is getting closer and closer to the quality of the food that we will find elsewhere. We have to find a way to differentiate ourselves in our restaurants that offer table service. We must offer a different experience, which we cannot offer in a fast food. »

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