It’s Not Just for Steak Houses Any More
By: Rich Turer
the James Beard Foundation.
2008 changed everything for restaurants and their marketing programs. As inflation-adjusted food expenditures fell five percent in 2007 – 2009, the largest decrease in at least 25 years, households cut back on dining out, according to Aylin Kumcu and Phil Kaufman, agricultural economists with the Food Economics Division of the U.S. Department of Agriculture. As a result, the entire segment became an exclusive market-share business.
Stealing guests became necessary – even for the fast-casual guys. Was the glass ceiling lowered? Was it bullet-proof? With stealing share as the only path to growth, discounts and promotions proliferated, driving ever more aggressive price and plate wars:
- An appetizer and an entree for $10
- Half-price wine on Wednesdays
- Unlimited shrimp
- 99-cent breakfast biscuits
- Small plates (the new grazing)
By 2009, 77% of senior marketers worldwide (WSI Trend Report) sought to increase their spend in social media. For some, it was in response to shrinking or flat traditional media budgets with overly aggressive sales plans. For others it was the new unknown being pitched aggressively by savvier agencies and media companies. The next “have to be there” medium was what some called social media. Restaurants marketers adapted to social media enthusiastically while ops teams were facing very public guest reviews for the first time.
Initially, most restaurants entering the new world used social media as transactional tools, with Facebook promotions offering 100,000 free hamburgers, etc. Social media were little more than digital versions of Valpak or a News America FSIs for many.
Now, restaurants are returning the “social” to social media, understanding their true impact and benefits. Social media managers and analytic firms are using current metrics to evaluate audience-building, brand awareness, and customer relations. But we still like the offers.
Customer Relations Marketing
The restaurant industry was late to adopt CRM as a compelling and important component in its marketing and sales efforts. For many in the industry, social media was the “aha moment.” Just how much information about a guest could they gather and what were guests willing to share? Investing in technology to enable restaurant tracking, analysis and rewards for loyalty can be costly and even operationally intrusive, but it can also deliver compelling results. Consequently, independent and multi-unit concepts continue to study and invest in programs of all shapes and sizes. Better utilization of data derived from credit card use, reservations and table management systems (Micros, OpenTable, Freebookings), and social media are necessary paths for managing retention and building frequency in today’s “It’s all about share” marketplace.
Expanded Dayparts & Borrowed Guests
One technique that rarely delivers a healthy return on investment is trying to create demand where it simply does not exist. If you’re a breakfast place, shifting your marketing efforts to promote dinner (especially if surrounded by dinner houses) is probably not a smart plan. If Friday and Saturday nights are “the busiest shifts” of your casual-themer or upscale steak house, should you invest heavily in promoting Tuesday nights (or are there capacity, turnover opportunities or expanded hours on Friday and Saturday that should be your focus?). Pushing more sales when costs are fixed is always a restaurant’s most profitable growth opportunity.
Changing consumer behavior is difficult at best. Most guests eat when they want to eat. Brand Mavens eat where they want eat (more about that later). The more you try to change behavior of your lower frequency guests, be prepared for bigger ad spends and deeper discounts. And watch for brand degradation.
Borrowing customers can be expensive as well. At a minimum, it boosts cash flow. We lower prices, create new (or seemingly new) menu items, purchase a burst of radio and entice a light user or a “switcher” to dine just one more time with us. We employ this technique with the hopes that, perhaps, customers will return to pay full retail. Transforming a switcher into a maven is an admirable plan. It’s important to remember the cost of implementation (at all levels), the possible degradation of service, and the effect on your loyal guests that often comes with product and price promotions.
Importance of Restaurant B2B Marketing
Admittedly, most corporate dining programs (B2B marketing) are cumbersome at best, and ineffective at worst. Nonetheless, large corporations with big Travel & Entertainment (T&E) spends are increasingly looking to save money on dining just as they do on other expenses. Many of us who travel for businessare accustomed to preferred supplier programs. We are told what airline to fly, what rental car to drive, and what hotel chain to stay in. There is not an ad that could make us stray from these preferred travel services when the person who approves our expense reports requires compliance with corporate guidelines.
Having attempted to implement many B2B programs throughout my career (yes, unsuccessfully), I was always intrigued with the prospect of one coming along that worked. Worked operationally. Worked financially. And had metrics to prove it.
To be successful, a marketing program for an expanding, polished casual concept with limited marketing budgets and best-in-class consumer ratings (a blessing) required an innovative management at the forefront of everything new. This management team was not risk adverse, and its default response to innovation was, “yes.” This mindset led to finding a program that worked. One that has since proliferated the company’s portfolio.
The program is offered by Dinova LLC, Atlanta. It is seamless and completely undetectable at unit-level while providing rich, empirical data via your back office systems. It is not intrusive to implement or manage and requires no training roll-outs to staff or management. Restaurants that track customer satisfaction data observe lower ratings during new product launches, POS roll-outs and changes in systems and procedures. This should be an important consideration.
Managing the priorities of the day within the four walls is taxing. Restaurant companies continue to lessen the impact of their oversight in order to afford unit-level management time to guarantee food quality, speed of service and customer service / retention each and every shift.
This program does not distract from quality service initiatives. Participating restaurants launch the program anytime and with no worry that it conflicts with the new store cleanliness initiative, wine flight implementation, new breakfast skillet launch or sexual harassment DVD roll-out.
This program works at chains of company-owned and operated restaurants, franchise chains, and single-location restaurants. With franchises, regrettably, implementation, even testing, is often confronted with a dilemma: The franchisor is either selling something through the community of franchisees, or changing the accounting mechanism to do same. This is solvable because a program that benefits the franchisees also benefits the franchisor. Several of Dinova’s restaurant partners have found creative solutions to get this program up and running and the metrics supporting renewal across the system have been powerful.
Invisible and seamless at point of sale
Carriers of corporate credit cards pay as they normally do. But now they come to your restaurant, not your competitors, when on business, spend more than your average customer (so much, in fact, that it can more than compensate for the discount on the check) and not embarrass themselves by requiring a special card or paper offer during the transaction. All the work is done on the back-end.
Employers direct their employees at every level to dine at a list of approved restaurants. Whether a quick breakfast before the field tech hits his clients, or the SVP of Development entertains a multi-unit franchise prospect for a nice steak dinner, all employees carrying a corporate credit card participate as directed. And if a new user is treated well, maybe they convert their personal use to your establishment as well.
The bottom line is that, in the current, exclusive market-share competitive business in which restaurants find themselves, aggressive B2C marketing no longer suffices. All restaurants – regardless of price point, cuisine, brand recognition, or location — need a strong B2B marketing program to attract the corporate diner to complement their pursuit of consumers.
Rich Turer is former Vice President of Marketing and an officer of OSI/Bonefish Grill and former Senior Vice President – Marketing at Checkers Drive-In Restaurants. At present, he consultants with the hospitality/tourism industry, among others. Rich can be reached at turer1@rocketmail.com.
Contacts:
Hugh Ryan
Ryan Wellnitz & Associates
401-246-2300
hryan@ryanwellnitz.com
Mary K. Talbot
Ryan Wellnitz & Associates
401-245-8819
info@ryanwellnitz.com
