John Myers Jr., Business Reporter
The Island Grill Session pack
The rising global prices for commodities, which has been fuelling inflation in Jamaica, is biting into the sales of fast-food restaurants, their operators and managers report.
In some cases, operators say, year-on-year sales for the first five months have dipped by as much as 10 per cent, forcing some restaurateurs to adjust menus and shave margins in a bid to retain customers.
They are also attempting to position themselves to catch customers who, in the tight environment, may no longer be able to afford more expensive restaurants.
"What we are hoping is that some of the people who might go to casual-type dinning (restaurants) would come to a quick service instead," said Thalia Lyn, the principal of the Jamaican quick-service chain, Island Grill.
drop in sales
"We are trying to position ourselves so that they can come to us," added Lyn.
Island Grill's sales dropped by between five and 10 per cent over the past month or so, depending on the store. Island Grill has 14 outlets.
Quick-service operations have been part of
the Jamaican restaurant scene for over three decades, but mushroomed in the 1990s with the liberalisation of the island's economy. However, some of the foreign-food franchises that took the trek to Jamaica have retreated in the face of the market shake-out.
However, fast-food restaurants still represent the largest segment of the island's restaurant sector, accounting, according to estimates by the United States Department of Agriculture, for 48 per cent of meals away from home.
But with rising utilities and commodity prices helping to drive inflation in Jamaica last year to nearly 20 per cent, and prices projected to rise another 14 per cent in 2008, consumers are increasingly opting to eat at home.
Fast-food restaurants that rely heavily on middle-to low-income clientele are feeling the pinch.
Restaurant Associates of Jamaica, owners of the local Burger King and Popeye's franchises, says that its sales have dropped approximately five per cent. Marketing manager Diana Blake-Bennett attributes the shrinkage to the erosion of people's disposable incomes.
And she does not expect the outlook to grow brighter in the immediate future.
"I don't anticipate an improved position because we all know that salaries haven't changed and we in the fast-food industry rely on disposable income," said Blake-Bennett.
The tight environment is forcing the restaurants to adapt and innovate - which, according to Island Grill's Lyn, is in sync with the philosophy of her company.
"In the last month, we have seen a drop-off in sales," she said. "But with us constantly innovating and trying to be as creative as possible to meet the customer's need, we will manage to hold our own," she said.
For instance, Lyn, whose stores serve Jamaican foods, says menu shifts, mirroring traditional Sunday meals, have helped to shore up weekend business.
sunday sales improved
"Sunday sales have improved because we have comfort food," she said. "Rice and peas is something new on our menu. So, Sunday dinner, which is rice and peas and ripe plantain, is exactly what we have."
Contributed
Jamaica's largest and most popular fast-food chain is KFC. It, too, has been grappling with the bite from higher prices and reduced disposable income, according to Mark Myers, the CEO of Restaurants of Jamaica, which controls the KFC franchise.
Sales, says Myers, are down five per cent.
"It is a challenge from week to week, but I would say we are indexing at around 95 per cent," he said. "That would be about a five per cent reduction in terms of transactions."
Like his competitors, Myers has had to innovate. So-called 'value meals' are popping up on menu boards at KFC - and elsewhere.
"We have had a series of price increases that have forced us to adjust prices over the last couple of months," explained Myers. "... In that light, what we have done is try to come out with what we call the 'real deal' menu, which is a value-oriented option (that) allows the consumer to enjoy the flavour and the ambience of a KFC at a lower cost."
One KFC real-deal option costs less than J$300 and Myers says he is examining the possibility of expanding the range.
Lyn's Island Grill is also fashioning combinations at a price they hope will keep customers in the stores.
Two are to be launched today:
Stew peas 'dutchie' - Stewed peas with chicken and a choice of rice and peas, callaloo rice or pumpkin rice.
Island Roni - A Pasta dish topped with jerk-chicken slices and vegetables.
These will be delivered for J$200.
Burger King and Popeyes, too, have developed value meals, which Blake-Bennett says will be delivered for $250 and $200, respectively.
"As a marketer, we also have to be creative in trying to ensure that we attract the same level of customer traffic that we have always had," said Blake-Bennett. "That's how the business grows."
john.myers@gleanerjm.com
