-- Business has gotten so bad that the nation's restaurants are being forced to step waaaaaay outside the box to try to lure folks inside — or even online.
Ruth's Chris Steak House ruth has begun mailing out $25 — yes, $25 — gift certificates. McCormick & Schmick's mssr this week launches a website to sell many of its menu items uncooked and ships them overnight anywhere in the U.S. And Cold Stone Creamery is testing a big change in seven stores that devotes about half the sales space to chocolates.
"There's almost nothing the industry hasn't already tried. I'm not sure they know what to try next," says consultant Ron Paul, president of Technomic. But they must keep trying. For the third quarter, sales at Ruth's Chris stores open at least a year fell about 7%, and McCormick & Schmick's were off 5.3%.
Bad as it is now, 50% of restaurant owners say the economy will worsen over the next six months, says a National Restaurant Association survey.
Chains are responding with:
• Eye-popping coupons. So much for $5 coupons. Ruth's Chris is mailing out gift certificates in many markets worth $25. The mailer says, "Tough times calls for tender steaks." A similar offer in March produced a nine-point traffic jump in some markets, says CEO Mike O'Donnell.
• Unlikely partnerships. Cold Stone Creamery is testing a partnership with Rocky Mountain Chocolate Factory that will devote up to 40% of its space to chocolate. "As a mature brand in a struggling economy, we need to come up with strategies for incremental sales," says Dan Beem, president.
• Unusual brand expansion. The McCormick & Schmick's plan to sell its food online has been in the works for a while, but the tough economy nudged the chain to roll out the program sooner, says CEO Doug Schmick. "It's an opportunity to get our products out without having to build restaurants."
T.G.I. Friday's and Heinz will sell frozen $6.99 T.G.I Friday's Complete Skillet Meals in markets.
Burger King is rolling out a line of branded T-shirts this month and men's sleepwear in 2009 "so consumers can interact and connect with the brand," says Russ Klein, marketing chief.
• Techie sales drivers. Pizza Hut is launching an eGift card so folks can buy and send gift cards online. Sales of eGift cards will surpass regular gift card sales, says Bob Kraut, marketing chief.
• Surprising promos. Starbucks sbux regionally has rolled out a promo that gives college students $5 Starbucks cards attached to pre-written postcards that not-so-subtly urge parents to go online to add cash to their kid's card.