Leading through a recession: Houlihan’s small plates
Situation
Sales in casual dining restaurants were tanking in late 2007 as the financial crisis led 1 in 5 Americans to lose their jobs and trade down to value-oriented purchases.
Action
Address converging trends as older consumers sought value and eating healthier while emerging Millennial diners sought communal dining and grazing meals. Retooled Houlihan’s entire menu with 65 small plates of the same quality and interest the brand promised, but with lower pricing, smaller portions and higher profit margins.
Result
While most casual dining brands closed stores and eroded brand equity with heavy discounting – many eventually filing bankruptcy – Houlihan’s emerged from the recession more profitable than it was pre-recession and continued unit expansion in 2011.
Small Plates
The small-plates menu accounted for over 30% of item sales for the system, at a much higher-than-average profit margin. Profitability improved 12% at a time when the $83.5 billion casual-dining industry saw many brands file Ch. 11 and most saw negative year-over-year sales.
Media response.
“Houlihan’s is a Hot Dish in a Chilly Industry”
“Small Plates + Bold Flavors = Big Business”
“A Restaurant Chain Shrinks Plate Size to Appeal to the Social Networking Crowd. Is This the Way of the Future?”
— Salon