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Why Mobile Really Matters to Restaurants…and Why It Doesn’t

March 17, 2014

Momentum behind Mobile Usage Continues to Build

 

Restaurants Mobile

The importance of mobile to restaurants and other retail businesses has been consistently building since 2011 and should not be news to any of us. But to refresh your motivation on the subject:

  • Mobile tablets and smart phones grew twice as fast at the Internet, three times faster than social media, and ten times faster than PCs.
  • Tablet and smartphone shipments exceeded PCs and laptops back in 2011.
  • More tablets and smartphones were “installed” last year than PCs and laptops.
  • Chadwick Martin Bailey research indicated 92% of consumers searched for a restaurant with their smartphone web browser and 81% with an app.
  • A 2014 Econsultancy/Adobe research briefing reported
    • 62% of Smartphone owners expect your company to have a mobile friendly website.
    • 42% expect your company to have an app. 

I have seen indications that smartphone users follow-up a restaurant menu viewing with a visit more than 55% of the time. A 2013 Google/Nielsen study indicated restaurant goers were 50% more likely than the average smartphone user to search while “on the go” and 23% more likely to search from their office. And what drove their searches? It was for more information (primarily menus) almost 80% of the time.

Starting with the Mobile Basics

The basics start with making sure your website is mobile compatible because most smartphone searches focus on and compare menus.

If you can create an app for your restaurant or restaurants, you will gain the additional benefit of not only being mobile friendly but also building a closer relationship with your best customers. If they download and keep your app, you can be confident they are also showing a preference for and potential loyalty to your restaurant, and that’s a relationship to be nourished.

Regardless of how quickly you can go beyond a mobile friendly website to the app phase, the big question will be how well you follow through to deliver a mobile experience customers expect and enjoy. Engagement and relationship building are what should be driving your social media, and a well executed mobile website and app do that and more. Like social media, your mobile program should focus on delivering interesting information, highlighting changing situations, adding elements of surprise, and generally providing value to your customer.

When the advantages of time and location are added to social media through your mobile program, the opportunities to engage your customers with take out, special lunch, dinner, and late night suggestions or happy hour enticements add to the dynamics of the relationship for as long as you make the effort to know what your customers want. Your program must be used to learn more about your customers in terms of when and for what they want to be contacted. But a quick word of caution: meaningful app development requires a good level of customer engagement and frequency and may be a challenge to achieve.

Why Mobile Does not Matter

Like broadcast, direct mail, email and loyalty programs, or social media, mobile is a tool or vehicle to reach and engage your customers. Too often, mobile can become an executional “tech” end in itself, divorced from a smartly integrated marketing program which reinforces the brand and builds relationships. My advice is to make sure those with their hands on the executional mobile steering wheel are fully connected to the brand and company culture because they will become your voice.

While some may argue the reach and frequency “media rules” of the past have shifted to relevance and value, the fact is that relevance and value have always provided important connections to the customer.

Mobile Relevance

Our customers’ needs for relevance and value have always been primary, and the best strategies and communications, whether “outbound” or “inbound,” have always recognized this. First work to understand your customers better and learn how to can make their lives better. Then a mobile platform can to be built on a meaningful and lasting foundation.

About Jim Fisher

Jim Fisher has been successfully developing marketing programs for some of the country’s premier national and regional restaurants, franchises, and packaged goods organizations for more than 30 years. His observations are based on “what works” from that significant experience. He collaborates with investors and CEOs and their teams to profitably expand the customer base and build sustainable sales increases. His integrated marketing programs connect the business strategy to the brand and culture to drive effective execution through an emphasis on building customer relationships, brand loyalty, and the Total  Customer  Experience SM.

If Eighth Graders Could Run Your Company

May 27, 2013

HH Girls on Grounds 2

Although my blog posts are almost always all about the value of the brand and sales growth, a recent personal experience reinforced my sense of how critical a company’s culture and values can be to the bottom line.

Ready for a story?  This one points out how a Nashville girls’ school teaches values which could help run companies more effectively.

Earlier this year my wife and I traveled to Nashville where we lived over ten years ago when I was Cracker Barrel’s head marketer (and leveraging its brand and culture to help fuel growth from $750 million to $1.3 billion in three years).  My wife and I were there for a long weekend and the wedding of one of my daughter’s best friends.

As we had not been back to Nashville since we left for Boston, it was our chance to reconnect with some very good people, check out how the city has changed (and it has), enjoy some very celebratory moments, and enjoy the Sunset Grill, one of our favorite restaurants.

One stop had to be to E.J.’s school (all girls, grades 5—12), which had developed significantly under the aggressive leadership of a Head of School who had arrived three years before my daughter left.  What had not changed was the school’s focus on helping young girls build the discipline, perspective, and poise they would need to succeed in life at whatever they would choose.

The physical change was remarkable and demonstrated growth and progress. But what caught my eye the most were vertical banners attached to the light posts following the paths snaking through the campus’s mildly rolling hills.  The banners repeated the schools mission:  Think Critically.  Lead Confidently.  Live Honorably.

I don’t know what committee or leader or committee and leader thought that combination up, but it’s very powerful.  They are “words to live by.”  And it’s not too late for us—and for me—to remember those words and keep our sights on them.  What company, team, or person would not profit by integrating those thoughts into their culture or values?

Think Critically

Even when I was in elementary school, one of the “check marks” on our report card was a willingness to take criticism and be self-critical.  Rehash a few of those negative business experiences of yours or track some cases you’ve read about recently.  Would the outcome have changed if the CEO, Founder, or management team had been more open to a different reality, more self-critical, and more objective?  Would JCPenney’s Ron Johnson have found a less absolute but better path?  Would Michael Dell have been able to keep his company on a more positive course?

Lead Confidently

Leading confidently is different from leading through power or sheer will.  To lead confidently means not only knowing your team is looking to you for answers and next steps—they’re depending on you—but also being able to lead through persuasion and motivation.  It means making the effort to do your homework and know the answers while fully seeing the options.  It means knowing you have to work as hard to deliver an effective execution as you did to create a meaningful brand or business strategy.  IBM’s Lou Gerstner seemed to have an ability to push toward new ground while understanding the importance of culture and communication to achieve goals and create growth.

Live Honorably

How many times have our politicians hurt their cause and their constituents by looking for shortcuts or taking advantage of a fluid situation for their own gain rather than the political body?  How many times have our business leaders put their personal financial benefit over the growth and stability of the company? Integrity and living honorably seem to be about doing what you know is right even when no one is looking.  As a CEO of mine once said, “If you have the right culture, no one has to refer to big thick operations manuals because they will know what to do.”

As we finished our campus visit, I was a satisfied father who felt good that he had sent his daughter to a school with such fundamental values and could see how they had helped her to her early achievements.  Living honorably can be the powerful cultural catalyst that turns critical thinking and leadership into success.

Why Customer Engagement Requires Management Engagement

March 29, 2013

A  fast casual restaurant chain operator and I were talking, over lunch, about the competitiveness of the retail and restaurant world and the enormous challenge of standing out among the competition.  And in the same conversation, he agreed to the importance of terrific service, service that engaged the customer enough for him or her to come back.  He even talked about the “added value” of great service.

But then he lost me.  He went on to complain about the money he wasted on software programs designed to train his teams to be more customer friendly and better track their resulting “customer friendly” behavior.  It was a case of the right objectives getting lost in the wrong execution.

Before I start sounding too “old school,” you should know that I have a deep respect for how technology has enhanced our life, made it more efficient, and opened up new avenues for education.  I have an even deeper belief in the importance of metrics and eye-opening analysis.

His problem was an inability to see his role as Chief Motivator or Chief Culture motivate for engagementlBuilder or Chief Visionary.  He saw his role as making sure everyone was properly trained—nothing wrong with that—without recognizing that real results are driven by motivation and a desire to achieve, or satisfy customers in this case.  Frankly, even his service system was very well-engineered but without opportunities for the staff to really engage the customers.  There was no sense of personality or what the brand implied, leaving customers with a limited experience when they walked out the door and completely unengaged.

This fast casual chain operator’s approach was in deep contrast to a hard-nosed and successful CEO with whom I worked who said, in a press interview, that “If you have the right culture, you don’t need thick training manuals because your teams will know what to do.  And you’ll be hiring the right people to fit that culture.”

My point is this:  my fast casual operator and lunch companion cared about his customers, wanted to succeed, and worked hard.  He was a good guy, and I always enjoyed our lunches.  But he couldn’t or wouldn’t open his mind to how important motivating his team was to the success of any program or training program.

Why?  He looked at everything through a purely logical, business-like lens, which is important but not enough.  His technological solutions might have worked if they were tied to a customer-centric company culture with emotional connections and rewards for the teams charged with delivering the customer experience.  I do not remember his ever talking about the company’s culture, the brand’s role, or how any of these things connected to the business strategy or profit model.

Thomas Edison said “Genius is 1% inspiration and 99% perspiration.”  But I’m guessing—actually I know—even he went out of his way to inspire others to motivate them and get them to want to perspire.  Inspiration is fueled by emotion and commitment, both important ingredients of the culture and brand.

The Four Steps to Leveraging Social Media for Sustained Growth

November 29, 2012


Image

Social Media has been a hot button marketing tool for at least two years, but whether most retail or restaurant systems really take advantage of it is an open question.  From my direct contact and discussions with CEOs and their investors, it’s more likely a chain or independent — regardless of size — has not fully leveraged the opportunities offered with social media (we’ll get to the mobile aspect of the “new media” in a later blog post).

Why the drift from effective execution?  Why has it been such a challenge to fully leverage a marketing tool that not only supports the brand but also engages customers (70% of consumers are more likely to trust online consumer opinions, 58% are more likely to trust online editorial, and online ad recall is 55% higher than non-social!)?

There are four “do not forget” steps to getting the most from your social media.

First, make sure to integrate the strategic business goals and brand values into the social media execution.

Your Brand is, of course, always the anchor for everything you do, from menu to décor to pricing to location.  But what I see in many cases is a rush to create a Facebook page or Twitter account without a strategy that relates to the Brand and the customer experience.  It’s a rush to completing the preliminary framework and visuals without understanding how the communications will work – or not.  Meaningful executions are tied to the brand through a meaningful strategy.

Second, make sure the social media programs are effectively supported in the future and not simply “handed off” to someone.

Most CEOs I know will closely follow the process of buying broadcast time, using print vehicles, or developing Email campaigns in some detail, doing their best to make sure the communications are strategically aligned and consistent with the company’s overall goals, culture, or brand.  But why, then, are social vehicles like Facebook and Twitter handed over to someone who just happens to be under twenty-five and seems knowledgeable about these social media vehicles without exploring their strategic, brand, and marketing understanding?

To be fair, it’s not always like that.  The more successful companies leverage their brand by figuring out what needs to be said to achieve their goals (strategy) and creating closely monitored executional steps to deliver the brand message at the right time, with the right attitude, and for the right subjects.  Social media communications are as or more important because they directly engage customers on a personal level (note “trust” numbers in second paragraph above).

Third, use social media opportunities to engage your customers about their interests.  

Have you ever gone to a reception and been introduced to someone who only talked about themselves?  It’s certainly not fun.

The full potential of social media is its ability to talk with your customers — not at them — and connect more personally (don’t forget the importance of connecting with your brand’s personality) and memorably.  Fully utilized social media is like direct marketing on steroids.  Conversations with customers create more trust, and trust builds credibility.  And each time someone posts something on social media, about 150 others read it.

So don’t just talk about your products, benefits, and deals but open the door to real communication.  Discuss your recipes, your chefs, how to select a good steak or tomato at the supermarket, or what the latest health information is.  If you demonstrate to your customers how much they matter to you, they will become engaged and might even become advocates.

Fourth, remember customers engaged through social media are most likely the best or most frequent customers because they have willfully signed on to know what your brand concept is doing. 

Your social media channels will create you the opportunity to develop a relationship with them.  Treat them as the special lifetime benefit to your business that they are.  Reward your customer for checking your social media site, find out who the real advocates are, and support their spreading the word about your brand, your service, and your concept.

After all, the “Brain Science of Branding” tells me these emotional connections to your brand are the most memorable, longest lasting, meaningful, and motivating.

Why the Irrefutable Brain Science of Branding Matters to You

September 8, 2012

Caring about the “emotional content” or personality of your Brand should matter to you because it’s the emotional content which makes your dollars work harder, your Brand more memorable, and your customers keep coming back.  It’s the Brand’s personality and its emotional aspect which are the distinctive catalysts to creating an effective, engaging, and sales creating brand strategy.  As my clients and audiences know, the Triumph delivery system defines the first step toward a fully leveraged Brand strategy as a combination of Logic + Emotion (or Attributes + Personality).

The emotional touch is important because it gives life to the Brand and engages your customers, and this truth is upheld by today’s discoveries in brain science.

First, we know that perception is reality, and what our customers believe to be true to their experience is true.  Second, our emotions connect us more directly to our memories because numerous studies have shown the most vivid memories tend to be of emotional events, recalled with more clarity and detail.  For a “hands on” example, think of your own childhood and how most memories are of really positive or high anxiety or negative events.  Or, as Elizabeth Landau, CNN’s health writer commented, “But with human memory, emotional weight gives extra stickiness to experiences…the [evolutionary] ‘fight-or-flight’ response, has a big impact on memory processing connected with feelings.”

We also know that your customers are “Fundamentally intuitive, not rational” (The Righteous Man by Jonathan Heidt), and we are “largely motivated by what makes us feel good” (“What Neuroscience Tells Us about Consumer Desireby Carmen Nobel, HBS Working Knowledge).

Why does this matter to you?  It matters to you because:

  • The best product, menu, pricing, or décor in the world is significantly less meaningful to your customer until they feel connected and engaged emotionally.  They may admire what you are offering, but they won’t want to praise the experience to others or feel motivated to return regardless of the value (price, by itself, may be a strategic benefit but it is not, by itself, a Brand related motivation).
  • A Brand, without an emotional connection, will not engage your customers or cause them to remember the experience.  All those training hours, menu developments, décor enhancements, and pricing research studies will have significantly less impact because the leveraging power of a memorable experience has been wasted or underutilized.  We even know the best advertising is made more memorable through an emotional connection.

Even the B2B sellers like Sandler or Konrath or RainToday recognize the need for an emotional connection to complete the sale.

A simpler way to work with this aspect of Branding is to remember that people buy from people, not systems or chains or companies.

Your Restaurant’s Customer Experience Remains Your Best “Ad Campaign”

February 22, 2012

Here, Triumph’s Fisher elaborates on the restaurant experience being a catalyst for customers connecting emotionally with a restaurant brand.

What are the key elements of a brand?  When it comes to brand building, what does management need to think about once it has two or more restaurants? 

Fisher: Too many restaurateurs see big advertising campaigns or clever social media successes and think it takes media and money and organization to build a brand. I have experience with both big money—even award-winning campaigns—and efforts based on much more limited resources where menu panels are the biggest factor in the marketing budget.

What truly creates and drives a brand is the “interior” effort, the total customer experience.  Why?

  • Human beings are wired to remember emotional experiences.  It’s the way our brains work.  It’s how we survive.  A customer will remember your restaurant if their experience touches them emotionally – for good or bad!
  • A major leader of an upscale but casual chain in Boston will tell you that over a dozen things affect a customer perception even before they see the food!
  • It’s a cliché, but still true: The best advertising is word of mouth (WOM).  Look at the success of BzzAgent and the impact of social media.  Every restaurant can afford WOM, and they are getting it whether they have signed up or not.

Regardless of restaurant sites being managed, leadership needs to think about creating a consistent and visible culture. Whether that culture is built on outstanding value, a distinctively creative menu for the category, exceptional service, personal attention, an exuberant décor, highly respectful treatment of the staff or some – most likely –combination of the above, it needs to be solid and clear, and fully understood.

What are the marketing elements needed to communicate the main message and value proposition of a brand?

Fisher: It was a while ago, but I was working with the man who helped found Century 21, the first national real estate company. When it came to buying houses, he would say: “People search on logic but buy on emotion.”  Similarly, a brand’s foundation includes “Logic + Emotion”…the physical but competitive attributes plus the personality that connects the customer to the experience.

For sustainable sales growth, management must tie together the main message and value proposition–where the experience and pricing meet– and they must do it over and over.  Every communication, from the greeter to the server and from the exterior signage to the physical menu and table tents, must consistently exist within a brand framework.

One client gave me a project of turning around his three worst-performing restaurants in a chain of 15.  We moved those bottom three into the top five in a matter of months through a tactical effort targeted toward bringing in new customers and getting current customers to come back more often. Best of all, we communicated what the brand had always stood for and put more money on the bottom line than was invested in the programs!

Tell us about two or three key aspects of a social media strategy that tie into that example.

Fisher: Social media is an extension of your restaurant, reaching out to your current and future customers with information and personality (“Logic + Emotion”).  Social media reaches your customers in the best way possible: one to one.

The first step to an effective social media strategy is to understand where your brand sits in the Internet world, and what your customers think of you and your competitors. There is inexpensive research which can measure Internet awareness and quality perceptions. And, there are free Internet software programs that will track what your customers are saying about you and the competition.

The second and third steps are closely related as both will engage your customers by leveraging your brand and personality. Listen to what your customers are saying and respond to them directly, and make sure this role is given to someone who understands and can represent your brand. Then, establish your Facebook page along with other social media vehicles which also allow you to talk to your customers. Let them know the great experience your restaurant is offering – and it doesn’t have to be a discount!

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This artcle will also appear in Eatery Pulseour sister publication, for those readers who like touch-and-feel news and best practices they can read on-the-go.

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Fisher began his career developing creative and marketing programs for food service giants like General Mills, Campbell’s, and Del Monte. Today, as managing principal of Triumph, he focuses on what he calls the “total customer experience” to drive sustainable marketing programs. His hands-on expertise includes rebranding, turnarounds, start-ups, targeted unit support programs, and social media programs often built with limited budgets.

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(02-09-12)

Copyright: Kandessa Media. All rights reserved.

Creating Your Brand without a Big Budget

August 11, 2011

To many of us, it takes millions of media dollars and dramatic Super Bowl commercials to create an effective Brand. We think of Chevrolet and
Cadillac, Budweiser and Coors, or Staples and Office Depot, but seldom
consider the brand message created by our experience with the corner
hardware store, the local dry cleaner, or our neighborhood restaurant. By
definition, your company has a Brand. The real question is whether you are
managing it and building on it.

What Makes a Brand?

There is a simple and venerable definition of a brand, and it’s a definition
which we can all use whether we have the media clout to reach our
consumers by pounding the airwaves or are a small manufacturing
company dealing with business customers, face to face. It recognizes all
purchases and customer relationships – B2B and B2C – are based on
product or service attributes and the emotional connection shared by buyer and seller, product and consumer. Jim Collins’ record-selling business book, Good to Great, recognizes the foundation of a brand as a company’s reputation and the emotional connection customers have to it.

A true brand reaches us with its logic + emotion. Even the most basic of business contract requires not only an agreement on the attributes or deliverables to be offered but also an often unspoken emotional element of confidence, credibility, trust, security, dependability, reliability, fairness, or other similar non-tangibles. Even though Nordstroms, for example, has great buyers, merchandisers, and real estate planners, the connection we always talk about is its level of service, the great sales people who engage us and with whom we memorably connect.

Understanding that a true brand is based on logic + emotion is important because it means that any company, no matter how small – even an individual — can create a brand which is something they own, something which is competitive and distinctive.

Understanding that a true brand is based on logic + emotion is important because it means that any company, no matter how small – even an individual — can create a brand which is something they own, something which is competitive and distinctive (Tom Peters, author of In Search of
Excellence, offers a program developing a personal or individual’s brand). A properly developed and positioned brand delivers that final hook to win the sales transaction whether the product is sitting on the shelf, being delivered by a restaurant’s server, or offered up by a committed sales team.

How Do I Develop My Company’s Brand?

How does a small, even a B2B company, create, live with, and build and execute its Brand?
To begin with, the Brand is the key element which ties the consumer or customer to the purchase in a memorable way, and you probably already have the building blocks in place. The first step to create your company’s Brand is to understand what makes your company distinctly competitive or even superior. What aspects of this competitive edge are product focused and
which are more emotional or personality driven? The second step is to work this competitive advantage into your overall strategy or what the company expects to accomplish by creating direct and simple vision and mission statements which all employees can understand and relate to. And the third step, which many of us do unconsciously, is to develop or recognize the
personality of the company. Is it energetic? Thoughtful? Caring? Solid? Analytical? Engineering like? Steady? Reliable?

When these elements are combined, understood, and embraced by the management team, they can be consistently communicated as the vision/mission/personality values to the company, whether it’s made up of five or 2,000 employees. The Brand values exist at this point, but decisions have to be made on what the brand’s “voice” will sound and look like. This voice will impact everything from the logo and the font and layout chosen for the company’s business cards all the way to how we want to “talk” and relate to our own staff and our customers. A real brand is tightly woven into everything the management team communicates to its employees and the
company communicates to its consumers or customers. It represents what a company makes, the services it provides, and its culture and values. A brand is much bigger than a short term advertising slogan.

Does It Really Work?
Because we are accustomed to brands being discussed in terms of Coke and Pepsi, McDonald’s and Pizza Hut, Honda and Toyota, or Boeing and Airbus, we tend to presume brands are not important to our small to medium sized companies.

Case in Point One: But my own experience of working with multi-million dollar communications as well as more minimal budgets has taught me differently. One example is an experience with a medium sized restaurant chain which had been suffering through a malaise created by a lack of clear leadership and a steady 2% to 3% sales decline. Its external media budget was close to zero. However, the management team repositioned the company and brand based on three core values of sales, hospitality, and nutrition. Everything from training to bonus programs to business cards to customer communications were redesigned to communicate a clear message of the company’s new value system. Every operations meeting and every CEO
speech or presentation focused on the three core elements in a way which was consistent with the new “personality.” The result turned a negative sales trend to 50% growth over five years as the chain became known for its great service and tasty, nutritious food.

A real brand is tightly woven into everything the management team communicates to its employees and the company communicates to its consumers or customers. It represents
what a company makes, the services it provides, and its culture and values. A brand is much bigger than a short term advertising slogan.

Case in Point Two: A $10 million B2B service company created a new division and needed to find a different voice from its parent which had been struggling over the three previous years and had made headlines with some legal issues. To start out with its new bundle of products and name, we spent time understanding where we were (Departure Point) and where we wanted to get to (Arrival Point) a few years down the road. The only “media” we had at our disposal was a new web site driven by some good search engine optimization and marketing work (SEO, SEM), booths with brochures distributed at association and other related conferences, email lists, and
our sales approach to potential clients. Although it is too early to note demonstrable results, all communications and products were developed with one clear voice, and the early returns are making the rest of the company take notice.

Your Brand, Your Culture

The foundations for a true brand, long lasting Brand come from within the company and therefore can be expressed by any company of any size, whether it is B2B or B2C – even an individual. These true brand elements can then be expressed to the customers as well as the internal organization in a consistent, sustainable, and business building fashion to give your company competitive leverage for the short and long term.

What I Hear and What I See

August 11, 2011

Following is a summary of the restaurant market based on my own interpretation of the sales trends I can see (thanks to Technomic) and what I hear from restaurateurs like yourself. Let me know if there is a specific area you might have more interest in.

Big Picture

• Consumer Confidence/Sentiment (University of Michigan) may have ticked up a bit from June and July but remained relatively stable over August and September and does not seem to be developing an upward momentum. This is frustrating but consistent with the expected slow improvement in the economy.

• There is a greater unease among families with incomes over $75,000 with a lower percentage expecting improvement.

• However, restaurant sales in general appear to have bottomed as more and more restaurants report sales gains rather than losses in the limited service segments, especially in comparison to a year ago. A discussion with an advisor (a bank chairman/CEO) to the Fed indicated a declining concern over the potential of a “double dip” recession.

The Positives

• As leaders of the Fast Casual segment, Chipotle and Panera are doing extremely well. One has to believe that their success (close to double digit same store sales gains recently) is based not only on their own effectiveness but also declines in the Casual Dining segment. As Casual Dining chains become more of less distinguished convenient alternative to a younger customer base and lose their value as a destination place, it’s easy for customers to drop down to the Fast Casual segment to save a few bucks. Fast Casual provides good fresh food, convenient service, a lower average check, and limited service that does not require tipping. This same customer movement also gives support to the craze for Five Guys and other new and similar hamburger chains.

• There are bright spots in the Casual Dining segment but they are very focused on individual chains and Darden’s Red Lobster and Olive Garden seem to be the most consistent although Red Lobster has had some serious negatives in the last twelve months.

• From the younger customers I talk to, Chipotle is building its business based on fresh ingredients and friendly service, all of which is perceived to be easy to deal with and a very good overall value. Panera continues to surprise as traffic improves in spite of steady price increases. Panera’s loyalty program is in test in 23 units and is scheduled for roll out this fall. From what I have heard, Panera is working hard to leverage the program in a detailed, sophisticated, and analytical fashion and expects to drive an incremental 2 to 4% with the program. To their credit, they constantly work to revise and improve the algorithms to make sure the impact is sustainable and profitable. Without effective diligence, loyalty programs can be costly. Cosi’s new breakfast program was a big positive as its quarterly sales jumped 3.3% — but over a 12.2% drop in previous year. Although the new and more operationally challenging breakfast
program has landed a plus, Cosi’s corporate still seems to be trailing some its better franchisees and remains behind on a two year basis. And Au Bon Pain seems to be struggling to create earnings growth or any momentum in spite of the strength of the Fast Casual category while generating more management changes below the CEO level.

• McDonald’s continues to rule the Quick Service segment. It is focused on strategically building its dayparts, especially afternoon snack and late night, and working hard on its food image. A recent JD Power survey clearly ranked McDonalds at or near the top of important customer categories. The summer smoothie launch and other snack related menu items helped its afternoon business and delivered improved margins, keeping sales and profits positive (29 straight positive quarters). McDonald’s is also one chain which helps its franchisees invest in capital improvements.

Burger King’s recent breakfast campaign also appears to be a success and is something
McDonald’s will follow closely and may have developed a response which could hit in January, a year after McDonald’s previous media supported breakfast effort. I even saw an older McDonald’s breakfast coffee commercial hit the airwaves when Burger King’s breakfast started gaining traction. Burger King’s new ownership has also reported a deep willingness to invest in the system.

• In the pizza category, Domino’s improved pizza campaign continues to build sales at near double digit numbers (Domino’s did not experience significant declines the previous year) while Pizza Hut’s simplified pricing continues to build margins, traffic, and overall same store sales in spite of average check declines. However, Pizza Hut still has double digit same store declines to overcome in ’09 to turn sales positive for the last two years. The simplified pricing has been positively endorsed by the franchisees, some of whom see this as the next “double pizza” pricing scheme. Customers know what they want, and the $8 – $10 – $12 pricing makes ordering easier and obviously helps customer counts. Also, customers’ positive perceptions of Pizza Hut quality adds to the sense of overall value and drives sales further. Pizza Hut continues to work
on supporting its various menu items beyond pizza – the wings and the pasta – to maintain some sales momentum.

Taco Bell has effectively maintained its price/value position in the QSR segment and deserves credit for effectively competing on price points since the 90s. It has its niche, and management knows how to layer their advertising and marketing to maintain support across their product categories. Taco Bell avoided large negative quarters in ’09 and is now rebuilding with smart value focused offers which ring true to its young customer base. Taco Bell’s latest quarter was a surprisingly (to me) strong +3%.

The Negatives

• Generally speaking, Cracker Barrel is the only chain in the Family Dining segment running in positive territory (+3%), and the stability of gasoline pricing and increasing
Sonic’s negative sales trends – at least nine straight quarters that I can count – have led their franchisee community to be not only looking for answers but also another management team. The frustration is high and across the board.

• Feedback on Wendy’s relates to cultural clashes between an entrepreneurial franchise community with a strong belief in its value menu and an Arby’s management team which does not understand Wendy’s strengths. Even though Wendy’s got through ’08 and ’09 with relatively modest declines, bigger negatives hit in the 4th quarter of ’09 and the 2nd quarter of ’10. Arby’s itself is posting double digit or close to double digit declines for the last four quarters – on top of the previous year’s significant declines.

• Other QSR chains are dealing with significant negatives, particularly those with a “center of gravity” in CA with its double digit unemployment. Carl’s, Jr and Jack in the Box fit into this category, and franchisees are looking for indications from management that the future will be brighter – but seem to be discouraged by the prospects. And neither company is in a position to help it franchisees invest.

•YUM’s KFC continues to flounder in the American market even though Church’s, Popeye’s and Polo Tropical have been showing gains.

Generate Your Post Recession Turnaround Now!

August 11, 2011

When the “Great Recession” hit hard in 2008, the wise business leaders looked first to the safety of their cash flows into the future and worked to understand their liquidity options. But history has demonstrated that those who invest in building their brands in these tough times are the ones who gain market share and profit the most when their business segments improve.

As soon as the breadth of the Great Recession was clear in 2008, the well managed company worked hard at projecting and protecting its cash flow. The effort was rightfully targeted toward securing the future.

Coming Out of the Great Recession
And now there are indications – or suggestions might be more accurate – that we are beginning to come out of the worst economic downturn since the Great Depression. A sampling of the good news:

• Unemployment improved from 10.2 % to 10.0%.
• The rate of job loses is improving and could soon turn to job gains.
• Government and other forecasters believe we will be out of the recession in 2010.
• Housing sales are improving even though prices remain below earlier levels.

Is there room for caution? Absolutely. Cash remains king, and the economy is a long way from achieving predictable and real revenue growth, no matter what Wall Street seems to believe in the short term. Many factors will be a drag on the economy:

• The better than expected earnings reports which have buoyed the financial markets this fall are being driven by cutbacks and downsizing, not sales and revenue growth.
• Consumer Confidence (The Conference Board) levels have not improved
significantly since last May and are hovering around 50 (49.5 in November /
100 = 1985 Base). The “Present Situation” Index is at a twenty-six year low.
• Many experts expect the housing market, the source of wealth for most
consumers, to remain slow until roughly 2012 because it was dramatically
overbuilt before the downturn started.

Setting Up Your Success Now
Beyond the steady stream of references to successful 20th Century corporations which were formed during the Great Depression, it is historically true that companies which invest in building their brands before the upturn – whether B2B or B2C – are the companies which grow the most dramatically when their market categories turn around. The businesses which invest and build their customer relationships and culture now are the businesses which will gain market share when their categories rebound because they have positioned themselves in their customers’ competitive framework.

Although the importance of brand building now is historically true across many industries, my own experiences support the case:

• In 1981, a toy company created a stronger marketing focus, and spent more on
media to support its new products leading to their best Holidays sales period ever.
• In the early 90’s, a California based restaurant chain invested in menu and design
improvements to then take a competitive leap forward.
• In 2001, a multi-unit U. S. chain continued to refine its menu, build a customer
centric culture, and redesign its units and created double digit sales growth only
two years later.

Investing in Brand Building
What does invest in brand building mean? Although a full answer depends on a company’s business segment, every company should have a brand development strategy focused on its customers and sales. Companies which are not internally aligned and do not have a strategically focused approach to their customers are letting the market decide how their customers evaluate their brands and products. Investing in the brand means developing and executing a strategically effective competitive direction which can include the company culture, research and development, customer relationships, meaningful research, product development, and the expected marketing and sales functions from public relations and advertising (when right for the business or segment) and sales team hiring and performance expectations (depending on the
business segment).

Now Is the Time to Prepare the Company Culture for the Future
Unfortunately, many CEOs know these business truths but do not act on them out of concern for the unpredictability of a real customer led turnaround, a lack of confidence in their understanding of the marketing or sales functions, or a self-imposed pressure to maintain cash positions even beyond what is reasonable. To deal with these potential longer term revenue blockages, consideration should be given to:

• Resetting and aligning the company’s vision and goals. Each specific market segment can be expected to respond sooner or later than the rest of the economy, and market intelligence and historical trends are critical. Regardless, the company’s vision should be aggressively reset beyond the day to day horizon and set now. Cash is always king, but the company leader who does not have faith in the future will be following, not leading, his competitors when businesses rebounds.
• Ensuring effective marketing and sales alignment consistent with the company’s
financial and sales goals. The CEO and management team must have complete trust in those departments ability to contribute by building the brand and the customer base. Trust, in this case, is used in the sense that every senior manager must trust every other department’s ability to deliver the expected results and explain programs to the entire management team. An outside and more objective perspective can help build the CEOs confidence in his or her vision and strengthen the company’s future profitability.