Get ready. If you are responsible for delivering butts in seats for a large national chain, things are about to get a lot harder.
There is a perfect storm on the horizon, and it’s already starting to sprinkle just a little bit.
There are five factors that are going to affect you in 2017:
- Increased minimum wage in 16 states
- Increased food costs due to free trade revisions
- Increased consumer healthcare costs
- Increased consumer energy costs
- Rising interest rates
In a nutshell, that means it is going to cost more to serve fewer customers.
That sounds scary, doesn’t it? Well, yes, it certainly does. But, there is a silver lining here. And if your brand is willing to take the risk, now is the time to hit the gas. Here’s why:
In the very near future, these realities are going to hit the big brands hard. They have been trained to cut budgets or raise prices (or both) to make up for lost sales and maintain revenues and profits. However, that is the exact opposite of what should be done.
You must take the long view in these types of scenarios. Cutting advertising means you are absent from consideration in those fewer occasions that your customer is thinking of dining out. Then, if you raise prices for the same quality of food and your customer has less money to spend, guess what? You’ve guaranteed you won’t see that consumer again for a while, as you’ve firmly established your brand as missing the mark on value for the long term.
As advertisers and brands, we must remember that we (should) exist for decades, not for the next quarterly earnings statement. If you are reading this and you have a little bit of grey in your hair, you’ve lived through at least one recession in your lifetime. Are the brands you frequent now different? Probably, but maybe not. Likely you stuck with the brands who continued to give you value, even when you didn’t have as much discretionary spending options as before.
So, if your brand can look beyond the next quarter, you will have many potential customers who have been abandoned by your competitors. Media will open up because demand will go down. And just like stock and real estate speculators, brands with fortitude can realize a market prominence they may not have achieved otherwise.
Gina Lee De Freitas has 15+ years marketing the restaurant industry. She is the Chief Operating Officer/ Partner at IMM, a digital ad agency.