Two weeks ago, I attended the Restaurant Finance & Development Conference put on by the Restaurant Finance Monitor and Franchise Times. I heard good things about several of the speakers and panels, but can’t comment, as I spent all my time in one-on-one and small group meetings. I can, however, relate the following observations:
I don’t think I’ve heard the word value so many times, in so many contexts, in such a brief period of time since being forced to sit through 36 hours of time-share presentations (kidding -- I’d have chewed through the restraints to escape that fate). I heard high-end operators tell me of their new “value” menu, intended to forestall customers which might otherwise trade down to a less expensive eatery. I heard QSR operators tell me that 99 cents connoted value; quick-casual operators told me that the avoidance of the hidden 20% toll (the tip) associated with full service gave them a value edge. I heard senior lenders tell me that the low rates (due to Fed policies as much as anything) provided value for their borrowers; meanwhile non-bank and especially the now-popular “unitranche” lenders described the value of their offerings, which carry a lower rate than equity capital; and equity investors told me of the value their funds provide in giving the operating partner a higher return by enabling growth which wouldn’t otherwise be feasible.
All these uses of the word “value” effectively mean “costs less” (than the alternative). Very few times did I encounter someone who used the word in a context which suggested “adding to or enhancing with a goal of making better” -- i.e., building value rather than cutting price, quantity, or quality.
Let’s be fair -- the world (and certainly the U.S. consumer and small business operator) are looking for value in the “costs less” sense these days. With no near-term indications of a significant uptick in hiring, which would be the only factor capable of boosting both demand and discretionary income, consumers and operators will take what they can get in terms of value.
Still, I did find it refreshing to have conversations with one operator and a couple of investors whose “value” focus was more about the second definition above -- in the one case, surprising and delighting the guest by bringing more and better (quality as well as quantity) than what was expected or suggested; in the other, bringing real, seasoned operators and advisors as part of the “investing package”, in order to provide a board which could simultaneously mentor and and coach the operator as he/she tried to develop and expand on a budding concept.
It’s clear from some of the economic and industry forecasts which have already begun to appear, and which will clog our inboxes for the next six weeks, that value in terms of price and savings is key to holding back the tide for the coming year, as we’re apparently in line to replace Italy as the country which proved for decades that a functioning government was not a prerequisite for a stable (albeit not growing) economy. [Oops -- did I say that or just think it?] However, for those with a longer and wider vision, I believe it’s still the idea of value as something to be built, something lasting, which will ultimately prevail and stand as the example and goal for those who follow.