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Customers have big hearts, but don’t like to be taken advantage of. COVID-19 has been very hard on the restaurant industry. I have family that works in the industry, so I know about the troubles. Too many restaurants are hurting themselves further, however, by lowering the quality of the product they sell, which damages their brand relationship with the customer.
I'm seeing the same thing in retail, and everything that follows applies to that industry as well. I'm using restaurants as my example, but the same mistakes are being made in retail in terms of the business relationship with customers.
This is hurting them in addition to coronavirus. This is destroying their brand value in the customers' minds. That is business suicide. The customer always notices everything.
Meeting customer expectations should always be key
Meeting customer expectations should always be key in every management decision whether you run a chain or a single restaurant.
Don't skimp on service or quality in an effort to save money.
Instead, it may be smarter to increase the prices of items in order to maintain a quality level that will keep the customer happy with regards to their expectations. It’s not good to reduce the quality of the food you serve.
This destroys the customer relationship and the brand relationship.
Don’t destroy the brand relationship with customer
As I have been visiting restaurants, I find too many of them have been changing their recipes, reducing portion size or significantly reducing the meat in many dishes.
They must think the customer won’t notice. I have news for you, they do notice.
No doubt, these changes are made to survive during the pandemic, but the way they are doing this is destroying the hard built and quickly destroyed brand relationship they have with the customer.
Two examples:
Ted’s Montana Grill used to be a favorite place to have a meal. Pre-COVID-19, it always gave the customers what they wanted with excellent quality. Ted Turner, who started CNN, could be very proud of his name in the restaurant industry.
However, post-COVID-19, the portion sizes of meat dishes have been cut way down and sold at the same or higher price. The French fries are now a lower quality.
They must think the customer won’t notice. Wrong!
The customer notices and does not like it. Some companies think they can pull one over on the customer. They can’t.
This is very disappointing and sends a clear message that the restaurant is taking advantage of the customer. That’s the quickest way to lose a loyal customer.
Cheesecake Factory was always an incredible experience. The food and the surroundings were to die for. However, now that restaurant, too, is disappointing their customers.
For example, the Asian Chicken Salad used to give the customer a big slice of delicious grilled real chicken, sliced thickly. Now, there are just a few slivers of deli slices. Deli slices! And not enough to even notice.
While this salad may cut it as a $7 side salad, as a $14 main meal, this is now very disappointing.
Unfortunately, many restaurants we loved in the past, just don’t cut it any longer in the COVID-19 recovery.
Management made the wrong decisions. And this will hurt them worse in the long term.
Don’t destroy your value proposition or you will lose customers
There is something called the value proposition. It is the deal customers have with the restaurant. It’s all about expectations. Meet the expectations and you may have a customer for life. Disappoint the customers, they don’t come back and the restaurant loses.
In these cases where restaurants devalue the product they sell, the value proposition that customers expect has been shattered by the company.
Unfortunately, too many restaurants are taking the wrong path. Many dishes patrons loved before are simply not that good anymore.
Increasingly, many are starting to think that it is just not worth it to be a customer of these restaurants any longer.
That means they won’t go back. That means the restaurant loses so much more in the long-term. And that makes the situation worse and worse for the restaurant.
Avoid the downward spiral that will suck life out of your restaurant
This creates a downward spiral that will suck the life out of every restaurant.
This will cause long-term brand damage for all restaurants. That’s a shame. It takes time to build a strong brand relationship with the customer. However, that valuable relationship can be destroyed overnight.
Restaurants should be honest with their customers. They should explain why prices are higher than before, but that the customer experience will remain the same.
That way the customer will know what they can expect and not be disappointed with their purchase.
The value proposition will stay intact.
This is a serious problem that was started by COVID-19 but made worse by bad management decisions. There is a right way and a wrong way to handle this crisis. Now is the time to carefully think through your strategy.
Handling this the right way will let your restaurant stick it out. Handling it the wrong way is a downward spiral that may never end. The choice is yours.
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst who follows Telecom, Pay TV, Cloud, AI, IoT, Tele Health, Healthcare, Automotive, Self-Driving cars and more. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and LinkedIn www.linkedin.com/in/jeff-kagan/
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Equities Columnist: Jeff Kagan
Source: Equities News
