Who is the next Howard Johnson's?
Remember Howard Johnson's Restaurants? Now a lodging brand owned by Wyndham Worldwide, the name once adorned more than 1,000 owned or franchised locations, the largest chain of restaurants in the country into the 1970s. The iconic Times Square location in New York finally closed in the mid-2000s, effectively ending the association between dining and the brand name for the average American, despite fond memories of road trip stops at the orange and peaked roof restaurants.
It happens all the time in the food and beverage business; the news recently reported in the UK's Drinks Business, in which the Campaign for Real Ale (CAMRA), an organization that has fought for years to keep traditional quality beer and drinking establishments thriving, called on the mayor of London to give greater protection to pubs in London, and revealing that 90 currently close every year. A report by CAMRA highlighting the “shocking” rate of pub closures in London was submitted to Boris Johnson, the mayor of London, in which it urged him to give pubs greater protection through the planning system. Nationwide, UK pubs are closing at a rate of 26 per week with more than half reporting earning less than $17,000 in 2013. Pubs have been dying in Great Britain for many, many reasons, and it may be that the only argument that will save the remainder is that of historic preservation.
It's a lesson for today's large restaurant chains, as economic and demographic changes have put them in a difficult and unfamiliar position. After decades of relying on suburban sprawl, family dining habits, Baby Boomer brand loyalty and the easily met expectations of the average American consumer to provide a steady basis for growth, they are suddenly up against some changes that seem very rapid. In terms of beverages only, there's been plenty of warning that a nationally-crafted menu with tweaks along the edges may not work very well anymore in the face of the total lack of brand and category loyalty from Millennials. Attendees at the recent VIBE Conference heard that in different ways from a number of sessions. Further, the long-time assumption that beverage income will carry the profit burden no matter what is served has been severed by reports that when beverage menus are fairly similar from one chain to another, younger diners will simply not order a second drink rather than have what they consider a boring experience.
Beverage companies are responding to that trend by issuing new line extensions and brands keyed to younger consumers. The increasing number of younger consumers with disposable income moving to urban centers and the explosion of various ethnic groups with different approaches to drinking and dining have opened up many possible routes to market, and that's where those new products are directed. But changing menus to fit local or regional trends isn't in the DNA of chain restaurants, even though appealing to younger guests seems to demand it, if research is to be believed. Depending on pricing deals and social media responses won't be enough, because everybody is in that game. From here, it looks less like a matter of what to do to make chain restaurant beverages more exciting and appealing as it is how to go about it. The only question is, which chains will recognize the need for significant change and which will be remembered as this generation's Howard Johnson.