Monday, August 29, 2011


I read an interesting story about the restaurant business that mirrors what is happening in the housing industry, especially the modular side of it.  Mid-priced chain restaurants like Applebee's, Ruby Tuesday, Chili's, Red Lobster, TGIF and others are seeing their sales drop over the past several years.

Other chains like Five Guys, Green Turtle and Panara Bread are seeing their sales climbing rather quickly.  So what's the difference?  It appears that two factors are occurring that have brought about this shift.

Panara Bread

First is that most of the mid-priced guys are starting to look stale.  Same old decor, same old menu and same old attitude.  This has caused the younger crowd to move to the newer guys for what they view as faster service in a more intimate surrounding.  They want fresher tasting food, quicker service, Wi-Fi and that touch of comradeship that is missing in the mid-priced restaurants.  They are eating there more often and spending a lot of money.  They really don't want to cook at home.

Secondly, the crowd that still thinks that the mid-priced places are at the top of their list for affordable food is seeing the prices rising and have decided to stay home and cook, not shopping at either their old haunts or trying the new places.  

Ruby Tuesday

So how is this predicting the new American home buyer?  Let's take a look at who's buying homes today.  There will always be a market for the people that buy from Ruby Tuesday and we have plenty of modular factories that punch out homes like they are baking cookies with the same old recipe that they've used for decades.  The house plans look dated and their idea of offering something new is to change to a different window supplier.

There are the "affordable" home buyers looking for the basic home in a good neighborhood.  This market is drying up faster than Boston Market's business.  This is another place where the traditional modular home factory shines.  The plans and management's attitude are in sync with this dwindling crowd.  So far, the traditional modular home factory has tied itself to two of the most dull markets out there.  Unfortunately, they are also two declining markets.

So who should the modular factories being trying to attract to their homes?  It funny you ask!  As everyone that reads this blog knows, I am not a fan of the modern modular home but I also like Ruby Tuesday.  No, the future is gong to go the companies that understand Panara Bread and the people that love it.

Look for Blu Homes, Zeta Communities and other similar companies to start grabbing market share from not only the traditional modular home factories but also from the site builders.  The 25-35 year old home buyers are shopping for homes that offer them open floor plans, gathering areas for friends and easy to maintain exteriors.   

If your factory doesn't offer anything other than the houses your grandparents lived in, then be prepared to start getting ready to shut down this winter and maybe not reopen in the spring.

It's not to late to start making the changes needed to go after this crowd. Just don't expect them to wait too long for you to catch up.


Anonymous said...

Coach, those are some pretty hard assessments of the modular home industry. Equating Ruby Tuesday with Ritz Craft Homes however is not too much of a stretch. As you said. Same old floorplans, same old decor and same old attitude.
Substitute Fleetwood Homes or Signature Homes or New Era Homes for Ritz Craft and you can start to see the problem with modular home companies today.

William said...

Coach, I like your comparison but you lost me when you made the prediction that Blu Homes, Zeta and other similar companies would start grabbing larger market shares. In my mind that is a big stretch and I cannot see where you came up with the information/data to make such a bold claim.
True Zeta has sold a couple of nice "projects" and are in a great location (California) to make significant enroads but a tough market to crack. As for Blu what have they done sales wise to generate such unabashed enthusiasm from you.
I think I read similar remarks about some other companies on this blog and a few of those operations are no longer in business.
My hope for the industry is your predictions come true as we certainly need something to "crow about."

Mannymanbo said...

You are pointing out (in a left handed way) that the new gneration of homebuyers will be using new processes in deciding what type of housing to buy.
Marketing to this new breed of buyer will be the key to success, or the failure to change our approach will result in our demise.