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The Honolulu Advertiser
Posted on: Sunday, November 16, 2008

Eateries spurred to new efforts

By BRUCE HOROVITZ
USA Today

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 has begun mailing out $25 — yes, $25 — gift certificates. McCormick & Schmick's this week launches a Web site that sells many of its menu items uncooked and ships them overnight anywhere in the U.S. And Cold Stone 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," said consultant Ron Paul, president of Technomic.

But they must keep trying. For the third quarter, Ruth's Chris same-store sales dropped about 7 percent, and McCormick & Schmick's were down 5.3 percent. Bad as it is now, 50 percent of restaurant owners say the economy will worsen over the next six months, according to 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, said CEO Mike O'Donnell.

  • Unlikely partnerships. Cold Stone Creamery is testing a partnership with Rocky Mountain Chocolate Factory that will devote up 40 percent of its space to chocolate. "As a mature brand in a struggling economy, we need to come up with strategies for incremental sales," said 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, said 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," said 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, said Bob Kraut, marketing chief.

  • Surprising promos. Starbucks 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.