A Question of True Value

John Lawn Editor-in-Chief

I read an article in The New York Times a few days ago that described how Andrew Cuomo, New York's attorney general, had reached an agreement with AIG (American International Group) that would let his office review the insurance giant's spending habits. Executive severance and bonus payment agreements were of special interest, as were travel and special event plans.

The agreement was reached after AIG was forced to make embarrassing acknowledgements before Congress about an expensive, weeklong retreat it held for sales agents right after the government was forced to bail out the company with loans and other subsidies to the tune of over $100 billion. The retreat in question cost almost half a million and reportedly included $150,000 for food and beverages charges.

Later, the article revealed that under pressure from Mr. Cuomo, AIG agreed to cancel “a $750,000 ‘best operator’ event in Las Vegas … a $500,000 risk management conference scheduled for the Ritz Carlton in Half Moon Bay … a $350,000 sales conference in November at Sea Island, GA … and a $190,000 meeting scheduled for Scottsdale, AZ in January.”

Given the scale of taxpayer support that's been required to keep AIG and other entities like it afloat, such curtailments would seem more than appropriate. But whatever you think about the excesses (if we may call them that) of Wall Street, anyone in the foodservice business has to appreciate the fact that these folks were spending plenty of money on F&B and that such cutbacks are going to put a pretty big dent in someone's catering business.

It is not much of stretch to predict that similar cutbacks on a smaller scale will be happening in the special event and catering expenditures of many client and host institutions throughout the onsite market in coming months. “Conspicuous consumption” just does not fly very well with the public or employees when unemployment rates are creeping upward, retirement security appears threatened and household spending power is stagnant or declining.

The same forces can tend to put a damper on ordinary cafeteria and other onsite sales. So how can readers of this magazine best strategize now for what is likely to be a challenging year ahead?

In our annual Forecast issue last February, I wrote that there would be a major push on the commercial side to promote so-called “value meals” and that onsite operators would do well to offer their own, price competitive, in-house alternatives. That remains a good tactic.

However, a more strategic approach for what seems now will be a more prolonged softening of the economy should involve a tight focus on re-positioning onsite foodservice in the minds of customers. In that regard, I'd suggest an emphasis on how and why onsite offerings offer “True Value” to your customers.

Direct comparisons to the actual costs of meals from nearby restaurants can dispel some of the smokescreen that “$2.99” meal promotions (not counting choice, beverage or side dishes) offer. So can reminders that the cost of “brown-bagging” lunches is usually higher than customers believe it is. (If you want government statistics showing how grocery store prices are increasing faster than those of your meals, go to www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/Data/cpiforecasts.htm.)

The idea of True Value positioning should go beyond simple price comparisons. In contrast to the “Super Size Me” approach of fast food restaurants, a “True Value Me” promotion could be a great way to re-position the daily special. A “True Healthwise Value” could emphasize the added value nutritious offerings bring to consumers beyond an attractive price value.

The point is not to tell readers how to name their menu offerings or manage their operations. Rather, it's to suggest that, from a positioning standpoint, it's important to re-emphasize why a choice to dine onsite is a better one for many consumers than the various alternatives they have. This is pure “blocking and tackling” from Onsite 101, but is a good strategy to revisit in light of what will likely be an extended period of economic uncertainty.

Onsite foodservice by its nature can offer a comfort level, meal value and workplace convenience that can't be matched. That is True Value that makes a good story to tell customers in a difficult time.