Full-Service Restaurants Are Under Assault

Whatever happened to full service gas stations? A gas station visit meant being greeted by an attendant as well-dressed as a police officer right down to the snappy hat and bow tie, who not only filled up your tank, but checked under the hood, checked your tire pressures, and even washed your windshield. It was all about service. 

These days there are literally no full-service gas station around anymore. Getting gas is a totally different experience. You swipe your card, fill up your tank, and drive off. No human interaction whatsoever. The gradual disappearance of full-service gas stations is not exactly a mystery. The main contributing factor was economics. As gasoline profit margins began to shrink, gas station owners were forced to cut their overhead and so the attendants simply disappeared. The 1973 and 1979 gasoline shortage further fueled the drive to self-service. The other factor was consumer behavior.

 

As our society became more fast paced, the demand for attendants diminished. Who has time to wait for an attendant who will probably chit chat with you while pumping your gas and then expect to get a tip. These days most drivers just want to get gas and go.

Full-service restaurants may run the risk of gradually becoming extinct similar to how full-service gas stations became extinct in the '80s.  Consumer data shows that Americans still love eating out and so the demand for eating out is still strong. But the question is what type of restaurants? Most of the restaurant growth has been in limited-service and fast-casual concepts such as Chipotle and Panera Bread. That explains why full-service restaurant sales have been weak during the past few years.

 

One obvious reason for this shift is economics: most people simply can't afford to frequent full-service restaurant as often as they used to. The second reason is consumer preference for convenience: people don’t want to sit, wait, and be served anymore. The third reason is competition: the food quality of limited-service restaurants is getting better, which is chipping way revenue from full-service restaurants. And lastly, running a full-service restaurant is becoming much more costly: labor being almost a third of restaurant cost has increased in many cities by 15%, which is three times the average 3-5% restaurant profit. In San Francisco, one of nation’s top dining cities, restaurant operators are running out of options as labor and real estate costs continue to climb resulting in restaurant closures outpacing openings. 

COVID-19 has also negatively affected restaurants across the board, but mom-and-pop restaurants will be affected much more than big restaurants and chains. I don’t want to cause panic but I think there is going to be a lot of restaurant closures during the next few months. I already noticed a few closures in my own neighborhood here on the Central Coast of California. Smart restaurant operators should look for ways to boost sales primarily through engaging their own customers. One strategy is to hire a professional menu design company to create a menu that utilizes proven menu engineering techniques. A well-designed menu can increase sales by up to 17%. Another strategy is using customer retention tools that boost customer return visits. One such tool is PocketMenu. The third strategy is using digital marketing such as Search Engine Optimization to boost website traffic or utilize email marketing to keep customers continuously engaged. 

 

Robert Hedayat

President/CEO

MenuClub, Inc. 

menuclub.com