|
PUBLISHER'S VIEWPOINT
May 2003
The Next Big Thing, Part I
I’ve
figured out the next big thing. Or rather I’ve been listening
closely to some of the industry’s leading figures, and they’ve
told me what the next big thing is: remodeling and replacement.
Let me give you
some history, by decade. The 1950s and ’60s saw an explosion of
school and college building as we erected the infrastructure for
the Baby Boomers. Lots of kitchens. The ’70s and ’80s witnessed
an explosion of chain restaurants, QSRs and family dining
concepts first, followed by what we used to call dinner houses,
now casual dining. We filled the country with hundreds of
thousands of such units.
In ’87, at a
FEDA meeting, I predicted the industry would tank in the ’90s
because in the United States, at least, we’d built everything we
needed. I failed to recognize “concept churn” or how many units
would be built in
Singapore
and Duesseldorf. Exports drove E&S in the ’90s.
So what have we
now? Many chains pulling back on new U.S. store openings and
easing the brakes on global development, at least for now. As
many of you are aware, McDonald’s cut its 2003 capital budget by
$700 million, which makes it $800 million less than 2002. But
interestingly, the Big Mac reduced spending for new stores by a
lot more than it did for remodels and renovation. The new
numbers are $560 million for new stores and $490 for renovation.
This pattern is being repeated by older chains across the board.
The simple fact
is there are kitchens and dining rooms in hundreds of thousands
of commercial restaurant units built in the ’70s and ’80s that
need to be redone. And it’s no different in the noncommercial
world. Consultants have prospered in recent years reviving
school and college and healthcare cafeterias and dining halls.
There’s a lot of work yet to do.
A panel of
leading operator equipment folks at the recent NAFEM Executive
Summit confirmed this trend. “Replacing existing inventory is
the job over the next few years,” said Martin Cowley of Disney.
But they also made it clear they want more than another fryer.
“We never want to just replace like for like,” McDonald’s
Bernard Morauw said. “You must give our partners and us a reason
for something new,” added Yum! Brands’ Dave Brewer. “And if you
can make it fit in a multibrand environment, all the better.”
No one said it
would be easy, just that it’s an opportunity. Next month I’ll
discuss how this new environment might change the industry
structure.
Peace,
Robin Ashton
Publisher
|
