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Putting a ribbon on the recession

January 9, 2012 by Don Fox — CEO, Firehouse of America

Conventional wisdom (or at least the wisdom of the National Bureau of Economic Research) says that the Great Recession began in December of 2007 and ended in June of 2009. It was the longest lasting and most penetrating negative domestic economic event since the Great Depression. It influenced the course of events in the restaurant industry for the better part of two years. But with the passing of 2011, the Great Recession recedes further into the past. Two and a half years have passed since it ended, and the recession is now a matter of history.

There is value in reflecting on the recession. It was a time when rising unemployment and depressed consumer confidence conspired to impact the habits of consumers, and many restaurant brands and independents felt the pressure of too many kitchens chasing too few dollars. Even brands that were considered to be fundamentally sound found that they possessed weaknesses they had to address when viewed in the light of the “new normal.” But the best managed brands adjusted (or in some cases, rode through the recession unscathed) and by the time 2010 arrived, they were back to growing their business. Restaurants that failed to adjust suffered significant losses during the recession, and when 2010 arrived, they found themselves being lapped by more insightful brands that kept – or made – themselves relevant to the consumer.

While we should always learn from the past, we can’t become stifled by it. I find that some within the industry still utilize the Great Recession as a crutch of sorts. When discussing results for the recovery years of 2010 and 2011, it is all too common to hear brand leaders caveat their remarks with references to how the recession continued to impact their performance.

I believe this point of view rings hallow. While we always could have hoped for things to be better than they were, in hindsight, 2010 and 2011 provided a stable environment for conducting business. Throughout this period, consumer spending in restaurants remained reliable and steady. In retrospect, it may be as good a set of circumstances as any of us could have hoped for. Many brands took advantage of this, growing both comparable sales and new units. The Fast Casual segment as a whole was the star performer during this time. Consumers were hungry for better food and a better service experience, provided in a great environment and at a better price than what they would spend at a casual dining restaurant. It was, and is, a formula for success. Brands on both ends of the restaurant spectrum are taking cues from the Fast Casual players. It is a great compliment to those in the industry striving to improve the value of the guest experience each and every day.

As we move into 2012, if a brand is still trying to figure out how to stop the bleeding that started in 2008, they certainly have their work cut out for them. In essence, they are four years behind in the hunt. Those that succeeded through the past two years figured out the recipe for providing the right combination of quality, flavor, and experience, at a price that serves the interests of the business model while leaving the customer with a sense of satisfaction that they got their money’s worth.

So, what does this mean for the future? Simply that brands would best be served by pushing aside references to the recession, to the extent that they try to make it a relevant factor in today’s business. We have our challenges in this country, economically and politically. But the past two years have provided a stable platform for us to recover our strength. We can and should push forward into 2012 with optimism. Let’s put a ribbon on the Great Recession as a thing of the past, consider it to be a formative part of our mutual history, and build upon the resilient industry that emerged in 2010/11. 2012 can be the best year our industry has seen since…well, you know when.