Food sales are in a crisis. Chain restaurants’ growth formula of selling hamburgers, fries and soda at promotional prices has hit a profitability wall. Promotional pricing continues to spike sales but at the cost of eroded profit margins.
Another part of the chain restaurants’ revenue crisis is that they are having limited success selling healthier food. McDonald’s points to the successful launch of “Premium McWraps” as causing a slight uptick in same store sales. However, McDonald’s eliminated Chicken Selects and Fruit & Walnut Salads due to poor sales results. Industry-wide, research by the Hudson Institute found an increase in sales of low calorie menu items at chain restaurants during the same five year time period that higher calorie menu items suffered decreased sales. But the sales growth in healthier foods is not sufficient to compensate for lower margins created from selling higher calorie items at promotional prices.
Healthier chain restaurants are industry’s revenue-growth leaders
Chipotle and Panera Bread are two national chains that have figured out how to achieve sustained sales growth by convincing customers that their food is healthier and that their businesses are operated in a more sustainable manner. Chipotle points to the sourcing of half of their beans from organic farms and their implementation of a buy local plan as two examples of their growing adoption of sustainable best practices. This commitment has successfully connected with the millennial generation most especially through Chipotle’s award-winning short movie called “Back To The Start” that has over 7 million YouTube views. This success connecting with the millennial generation has enabled Chipotle to triple sales since 2006. One Chipotle executive summarizes their sales growth strategy as “Good Food Wins!”
Panera Bread Company has grown to over 1,600 locations and $2.1 billion in annual sales by marketing themselves as having shared values with Concerned Caregivers. Their My Panera customer loyalty program has won over 13 million members by successfully connecting to their customer’s interests in good food and socially conscious behaviors. Examples of how Panera connects with their Concerned Caregiver clients include their “Community Breadbox” that gives cash donations to local charities and the “Day-end dough-nation” program that distributes unsold bakery items to local food banks.
Food industry’s challenge: Aligning value with values
The consumers search for “in me, on me and around me” solutions has made brand and product authenticity the “little black dress” that every company must wear. Yet, knowing that and doing that is a challenge facing the restaurant and food service industry. To date, just adding healthier food to a menu built on sugar, salt, fats and chemicals has produced more consumer confusion and mistrust than sales.
The consumer search for authenticity also includes their desire to buy from genuine people that can articulate values that align with their own. Local businesses are now realizing what a competitive advantage this offers to them compared to food chains with financial pressures that often result in their managers and work associates being viewed as a commodity cost that needs to be minimized.
Finally, consumers are demanding ingredient and sourcing transparency. Their emerging awareness of how restaurant meals are connected to their weight gain and growing health concerns are driving them to avoid specific restaurant chains or even restaurant dining. The ultimate revenue challenge for the food industry is that they now have to slash price (and profit margins) to sell more industrial foods that have lost their values-connection with consumers. The industry’s struggle to align value with values has effectively placed a lid on their revenue growth.
Three keys to authenticity and revenue success: Blue Heron Catering
Restaurants and food service companies that are authentic in the eyes of the consumer are being rewarded with exciting revenue growth plus attractive profitability. Blue Heron Catering is one such company. Under the leadership of owner Debbie Pfisterer, the company is achieving 300 percent revenue growth. Blue Heron Catering’s commitment to authenticity has won them major corporate customers that include Chevron and Hewlett Packard. The keys to Blue Heron Catering’s authenticity and revenue success are:
- An unwavering commitment to being green. As Debbie defines it, “It is who we are!” This commitment is so strong that even when a client does something unsustainable like buying plastic helium balloons, Debbie will find a sustainable recycling or repurposing solution, even if it has to come out of her profits.
- A green supply chain. As Debbie explains, it would be a lot easier and cheaper to order from a wholesale distributor. What she offers her clients is a green supply chain that has taken years to develop and nurture. This green supply chain is now core to her business’s authenticity and a competitive advantage that cannot be quickly duplicated by competitors.
- Transparency. There are no secrets between Debbie and her clients. In fact, she goes the extra mile to educate her clients on sustainability. For example, she explains how organic food can, in fact, be sprayed with pesticides. She takes the time to educate her perspective clients on how she only sources food that is fresh, local and pesticide-free. A client that buys from Blue Heron Catering knows what they are buying and that Debbie is insuring it is sourced sustainably.
Exclusive Video With Debbie Pfisterer, Owner Of Blue Heron Catering
Watch this exclusive video interview with Debbie Pfisterer, owner of Blue Heron Catering, on how they have grown their revenues and won new business including a zero waste event attended by 1,200 people for President Barack Obama:
Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017