Tuesday, March 27, 2012 | Edited by Daniel Moores
||Annual Report Details Signs of Improvement in Chain Restaurant Growth Rates
The 500 largest U.S. restaurant chains registered a 3.4 percent annual sales increase in 2011, a sharp improvement over 1.8 percent the prior year.
According to data released last week by Technomic Inc. in its annual reporting on the top U.S. restaurant chains, the foodservice consultancy found that U.S. systemwide sales for the Top 500 chains grew to an estimated $242 billion in 2011, up more than $8 billion over 2010.
"It is certainly encouraging to see overall industry growth rates nearly double in one year," said Ron Paul, President of Technomic. "On a chain-by-chain basis, however, performance varied substantially, reflecting the fact that many organizations are still redefining their value propositions for today's economy and tackling various industry challenges."
Among limited-service restaurants, growth came from the coffee and tea, other sandwich and Mexican categories with Starbucks, Subway and Chipotle Mexican Grill posting 2011 estimated sales growth of 7.5, 7.5 and 23.4 percent, respectively.
McDonald's, the largest U.S. restaurant chain, boosted sales 5.5 percent in 2011, with total annual sales of $34.2 billion. Subway continues as the second largest restaurant chain in the U.S., followed by Starbucks, Wendy’s and Burger King.
As a whole, limited-service restaurants saw a sales bump of 3.7 percent. Bakery café chains, which grew 7.1 percent, represented another limited-service subsegment with above-average sales growth. Within this group, Panera grew 10.1 percent with 2011 sales of $3.3 billion.
Other fast casual chains also contributed to stronger 2011 performance. A standout in the fast casual burger segment was Five Guys Burgers and Fries with sales growth of 32.8 percent.
Full-service restaurants experienced a 2.8 percent sales increase in 2011, following a flat year. The full-service seafood and steak categories showed healthy growth, with increases of 5.2 and 5.1 percent, respectively. Red Lobster, the category leader among seafood restaurants, outperformed the average, with a 6.2 percent sales increase. Among steak chains, LongHorn Steakhouse and Texas Roadhouse drove sales with increases of 13.1 and 9.2 percent, respectively.
In total, the top 10 fastest-growing chains' sales accounted for $8.2 billion, a 22 percent increase over 2010. Unit counts grew 15 percent.
More than 60 percent of the Top 500 restaurant chains posted at least nominal sales increases; only 193 of these chains suffered sales declines in 2011 compared to 231 in 2010.
Both winners and losers appeared in every segment and menu category. These widely-mixed results demonstrate the overall competitiveness of the industry and the need for suppliers and operators to carefully identify and focus on the winners.
International performance by the Top 500 restaurant chains continued to outperform their domestic counterparts in 2011. International sales (up 6.4 percent) outpaced U.S. sales (up 3.4 percent); international unit growth was also up 6.5 percent versus 0.7 percent for U.S. units.
The Ten Fastest-Growing Chains with Sales Over $200 Million
Ranked by Percentage Increase in Sales in 2011 vs. 2010
1. Five Guys Burgers and Fries, $951 million (+32.8%)
2. Chipotle Mexican Grill, $2.261 billion (+23.4%)
3. Jimmy John's Gourmet Sandwich Shop, $895 million (+21.8%)
4. Yard House, $262 million (+21.5%)
5. Firehouse Subs, $285 million (+21.1%)
6. BJ's Restaurant & Brewhouse, $621 million (+20.9%)
7. Buffalo Wild Wings Grill & Bar, $2.045 billion (+20.1%)
8. Raising Cane's Chicken Fingers, $206 million (+18.2%)
9. Noodles & Company, $300 million (+14.9%)
10. Wingstop, $382 million (+14.7%)
(Source: Technomic, 03/19/12)
||Power Equipment Sales Boom Amid Early Spring
An early spring across much of the U.S. has boosted outdoor power equipment sales, in some cases leaving dealerships and manufacturers such as Ariens Co. scrambling to keep up.
It's not a bad problem to have, especially after some recent years when the weather and the economy left the industry in the doldrums.
Some dealerships are already reordering lawn and garden equipment after they sold what they thought would be several months of inventory.
A large Ariens dealership in Louisiana sold more than a month's worth of products in one weekend, said company president Dan Ariens.
In early January, Wisconsin-based Ariens Co. switched from making snow removal equipment to lawn and garden machines -- about a month ahead of schedule. It will keep making lawn and garden gear well into the fall, Dan Ariens said.
That's partly because inventories are tight, and consumers have returned to more normal spending habits after several years of not making equipment purchases.
"They're buying more than they did last year, regardless of the weather," Ariens said.
Briggs & Stratton Co., the world's largest manufacturer of small gasoline engines, says it remains cautiously optimistic about outdoor power equipment sales this spring.
Last week, Briggs announced layoffs at its Poplar Bluff, Mo., factory that makes engines for the European market and has too much manufacturing capacity for the current level of business.
The company expects global sales to be up 4% to 5% this year, with strengths in developing nations.
An early spring in the United States, while encouraging, doesn't always boost lawn and garden equipment business in the following months, according to Briggs & Stratton.
The good weather can end quickly, said company spokeswoman Laura Timm.
Sales lost from poor weather in April aren't necessarily made up in May, Ariens added.
Privately held Ariens Co. does not release annual sales figures but is considered one of the market-share leaders in two-stage snow throwers and is a smaller player in the lawn and garden equipment business with larger competitors such as Toro and John Deere.
The company's independent dealerships compete with Home Depot and other retail chains, some of which also sell Ariens products -- although they are different models.
Increasingly, online shopping has changed the marketplace for outdoor power equipment.
"We try not to have our product on Amazon.com, but sometimes it will show up there," Ariens said.
In some ways the Internet has made it easier for salespeople because they don't have to spend as much time explaining their products.
"About 90% of consumers who walk into our power-equipment dealers have already got all of the information they wanted, gathered from online," Ariens said.
Power equipment dealerships usually don't compete with large retail chains and online businesses based on price. Instead they emphasize service, parts and repairs. Speedway Sales & Service, a dealership in New Berlin, WI, has been inundated with service work in recent weeks.
"Hopefully, spring doesn't hit a brick wall like winter did," which slowed snow thrower sales, said Speedway owner Rizwan Ahmad.
The nearly snowless winter in some areas hurt landscape contractors who rely on snow plowing for their winter income. Many of them use some of that money to buy commercial lawn equipment in the spring.
"Given their tight cash position, some may not buy as much equipment early in the season," said Tom Cromwell, president of Kohler Engines, a division of Kohler Co.
Hopefully they can make up lost income through a strong lawn-cutting season.
"April and May are really the critical months for this business, so we would love to see continued warm temperatures and enough rain to keep things green and growing," Cromwell said.
(Source: Milwaukee Journal Sentinel, 03/22/12)
||Salons See Uptick in Business as Economy Improves
One sure sign that the economy is starting to hum: Women are ditching do-it-yourself dye jobs and heading back to the hair salon.
Who cares that the economy is still a tad frizzy? Beauty salon sales grew 5.4% in the last two years, vs. a 2.3% sales increase in 2009, according to an analysis of more than 960 financial statements from beauty salons, released last week from financial analysis company Sageworks.
Apparently, it's one kind of satisfaction to clip coupons, but a far different kind to get your hair clipped -- and permed and dyed.
"One thing we may be seeing now is people are feeling the economy is a little stronger and going to the beauty salon more frequently," says Greg Mulholland, a Sageworks financial analyst.
While salon visits may have dropped off as consumers looked for ways to save during the economic downturn, the data show that now they may be visiting salons more frequently, opting for more expensive treatments when they visit or buying more products from the salon, Mulholland says.
And while sales growth slowed in 2008 and 2009, salons have continued to experience a steady profit rise as they reap the benefits of cutting costs during the recession. Profits grew 6.4% from 2008 to 2009 and 7.8% in the last two years, the Sageworks data show. Combined with the recent sales increase, salons are now "making more sales and keeping more money from each sale," Mulholland says.
Just ask 'em.
Barb Shaeffer-Perrigo, co-owner of the Studio B! salon in Huntersville, N.C., says starting in 2008, many customers who typically came in every five weeks started coming in every seven weeks and that clients were dying their own hair. In the past year, business started to return to pre-recession levels.
"Services for each individual stylist have increased tremendously in the last year," Shaeffer-Perrigo says.
And there's hope for salons beyond the recovery.
U.S. News and World Report last month listed hairdresser as one of the best jobs of 2012, citing a Bureau of Labor Statistics projection of 15.7% employment growth for hairdressers by 2020.
After all, while income may stop growing in a bum economy, hair doesn't.
(Source: USA Today, 03/21/12)
Daily Sales Tip: Handling Price Objections
You would think every salesperson would be proficient at handling price objections, considering how often customers push back on price.
In my experience, though, most salespeople can strengthen their skills in this regard. Sorry to be blunt, but too many salespeople are quick to leave profit on the table when they really don't need to.
Here are 3 ways skilled salespeople handle price objections:
1. They don't respond. "What?!" you may be thinking. It's true, though! When a customer first asks for a reduction in price or makes a comment that the price is too high, skilled salespeople simply ignore this. The goal is to determine if the customer is serious.
It is not unusual for customers to ask for a lower price simply because they think that's what they are supposed to do as a customer. They haven't genuinely given any thought to whether the price is accurate or not. Knowing this, skilled salespeople will not even entertain a conversation that focuses on price reduction the first time the customer brings it up.
I have found that this one tactic alone is often enough to move the customer off the price issue.
2. They ask "need-based" questions. Your goal as a salesperson is to always bring the customer back on track to focusing on what they want and need. Through effective questioning, not only will you uncover surface needs, you will discover needs and desires the customer possibly hadn't even considered.
The more you can do this, the more likely it is the customer will see value in what you offer -- and be willing to pay for it. I know it sounds obvious, but it is ridiculous how many selling situations end with a salesperson offering a discount because he or she didn't take the time to understand the customer's needs.
The key to effective questioning, of course, is body language that clearly conveys your confidence in your product and price. If your words are saying one thing, but your body language is conveying hesitancy, the customer will gravitate toward the message from your body language.
3. They don't waste time on customers who aren't willing to buy. This sounds harsh, but let me explain. Skilled salespeople develop an almost uncanny ability to differentiate the customers who are serious about buying from those who perpetually prolong making a decision.
If a customer is persistent in pressing for a price reduction or seems stuck in an unwillingness to buy, your "go to" method should not be to sabotage your profits. You should stop investing time and resources in this customer and instead turn your focus toward prospects and customers who are willing to buy.
The only way this point works is if you have a pipeline full of prospects. I always tell salespeople that if they start banking all their sales numbers on one or two big customers, they are headed into dangerous territory.
The most profitable salespeople are wise about who they spend time with -- and they make sure they have plenty of solid prospects and customers with whom to invest that time.
Source: Sales trainer/consultant Mark Hunter