Restaurants Claim Retail Builds Brand and Revenue

According to a recent study conducted by the NationalRestaurant Industry, restaurants are offering packaged food items as a retail stream and finding that such items help them stand out from the competition. In an industry that is facing increasing competition, such potential revenue streams are highly attractive and can serve to boost customer loyalty. Additionally, while providing an additional revenue stream, these items are also helping to build brand image for many restaurants who seek greater brand recognition for greater profits.  

The 2012 Restaurant Industry Forecast states that a majority of operators offer merchandise (e.g., frozen food, sauces, dips) for sale at retail outlets, big box stores, and within their own restaurants.  These items are generally placed for sale at the front counter or entryway into the restaurant, so that patrons see the merchandise while entering and leaving the establishment.  Restaurants are also placing ads for these items in their menus and on promotional material that is mailed or emailed to customers.  

Specifically, the numbers from the 2012 Restaurant Industry Forecast show that 54 percent of family dining restaurant operators have retail items, while quick-service and fast casual restaurant owners sell retail items at 37 percent and 41 percent, respectively.  The highest percentage of restaurants having retail items was in the fine dining segment, with 59 percent of operators saying that they sell retail items.  

Hudson Riehle, senior vice president of the NationalRestaurant Association’s Research & Knowledge Group, states that "Selling retail items generates additional sales and in some cases, licensing fees, and that's important considering that the average pretax restaurant profit ranges in the modest 3-percent to 6-percent range. It also expands a restaurant's brand and/or signature products. It keeps it more top-of-mind with current and potential customers and that's extremely important to operators given the highly competitive nature of the industry."