Thoughts on doing the right thing.

Named as one of the Top 25 Most Extraordinary Minds in Sales and Marketing by the Hospitality Sales & Marketing Association International, Andrew Freeman pegged this year as one with more heart than years prior. While Cruffins and Cronuts can draw traffic, can they sustain in this day and age?

The hospitality Industry, like many industries is beginning to address a number of global issues - ready or not. Brands are responding to state and local sustainability initiatives such as the straw ban.

Brands are responding to consumer nutrition and ingredient concerns: Menu calorie laws are now available at multi unit chains (by law).

Minimum wage in many SF Bay Area Counties are up (sometimes twice that of National minimum wage) to address cost of living concerns.

The purpose? As Andrew Freemen said, “We’re doing the right thing to make this world more livable.”

Get his full report:

https://www.afandco.com/whats-trending/trend-report/

The duopoly of Facebook and Google in the digital ad space

In the age of digital marketing, Ad agencies now need to work harder for slimmer commissions:   

1st: Digital advertising has been fragmented, however it’s now consolidated between Google and Facebook, giving ad buyer less clout. 

2nd: Clients (really big ones) can bring digital ad-buying in house.  Digital media vehicles offer data to the client – they got access to the same tools the agency has, unlike traditional media (TV, radio, print).

Agencies still offer neutral, independent advice.  They just have to work much hard to earn a buck.

That said, companies like Proctor & Gamble have held the Duopoly (Facebook and Google) accountable by cutting $200 million in advertising spending until they can demonstrate efficacy. 

Grim outlook for US chain restaurants

“Following a 2018 marked by torpid sales and sluggish customer traffic, U.S. chain restaurants will confront surging food and wage overheads in 2019, Bloomberg reports. Some of the biggest names stagnated in 2018 with Starbucks closing U.S. locations and McDonald's continuing to wrestle with its best menu options. Delivery was also a significant challenge in terms of logistics and profitability. With consumers now expecting delivery from fast food chains, many must make expensive investments in technology to make that possible.”

- LinkedIn’s F&B team.

Change is inevitable. Time to innovate. But can they do it in time?

McDonald’s Restaurant

McDonald’s Restaurant

Value’s not a new concept. 

As an Agency Account Manager, I had the opportunity to working closely with Adman, Madman, Mike Moser of Goldberg Moser O’Neill, and author of United We Brand, Harvard Business Press.  We worked together agency side and client side.  Together we wrote a brand trail map, a brand plan for Black Angus restaurants.  Mike talked about this importance of brands keeping promises, and of staying cognizant of the value equation.

Quality/price = value

These days, with flat restaurant counts, consumers more educated, demanding, time crunched, and trends changing quickly, we find American consumers willing to look well beyond a sit-down, full-service restaurant for dining value.   People find quality faster these days, and Zagat helped make that happen by democratizing restaurants food.  Following are excerpted parts about the value the value equation. 

Following Fast Company article is about the wonderful bootstrap history of the Zagat guide. Then the Google purchase, the termination of what we knew of Zagat, terminating the staff, ending the ending founder’s participation, last print guide in 2017, and the recent sale to a startup called The Infatuation. 

Fast Company

The Way We Eat Now, Zagat: A Survival Guide by Ben Paynter

By democratizing food, Zagat altered the culinary landscape forever. Here’s how it felt from the inside. 

Allan Ripp, former Zagat PR director:  At one point we compared foot traffic and foot ratings between some of the high-end and lower-end places.  The restaurant run by the [chef who inspired] the Seinfeld Soup Nazi, its food ratings were higher than Le Cirque…{Zagat wasn’t merely] riding the wave of culinary change in the country but helping to advance it.

Kevin Sutro CEO, Zachary’s Chicago Pizza:  In 2003 we were the top 10…in the Bay Area and that ruffled some feathers.

Danny Meyer, restaurateur; CEO, Union Square Hospitality Group:  I was a junkie with all the [Zagat] statistics.  I created what I call the value equation…for the top 50 restaurants-their food décor, service scores and dividing that by that number by the cost of buying a mean there: quality per dollar.  [The guide] was an annual report.  I started to pay bonuses based on those [analyzed] scores…I’ll never forget when Shake Shack made top 50.  Who would have ever though a burger place would do that?

illustration from Fast company Article - by Wren McDonald

illustration from Fast company Article - by Wren McDonald

Q1 same store sales numbers up for three casual dining brands

Outback Steakhouse notched a 4.3% pop in same-store sales for the first quarter, the upswing from a 2.2% traffic gain. BJ’s Restaurants posted a 4.2% increase in comps, as well as a rise in visits, and The Cheesecake Factory generated a 2.1% uptick for established stores. For a segment some dismiss as a graveyard, casual dining is looking remarkably robust as the first public players air their Q1 results.  Many are citing off-premise for the incremental sales.  Excerpt from Restaurant Business 5-2-18

Outback parent Bloomin’ Brands attributes drivers:  drivers as exterior updates and the relocation of some stores, along with the addition of delivery at more units and increased membership in Bloomin’s cross-brand loyalty program. It’s a matter of turning the momentum, she suggested, rather than some silver bullet. She noted that $40 million has been invested over an extended time frame in customer-facing initiatives.

Similar comments were heard during the conference calls between analysts and the leaderships of Cheesecake and BJ’s.  

The strategies now paying off were different from chain to chain. BJ’s, for instance, cited the impact of a new slow-roasted meats menu, a differentiator that required a yearlong program of retrofitting kitchens and retraining staff.

Bloomin’s Smith noted that Outback’s seafood sister, Bonefish Grill, posted essentially flat comps, a marked improvement for that brand, in part because of a return to allowing individual units to choose what fresh fish to offer as daily specials.

But all of the casual operators reporting this week noted the considerable sales lift they’re getting from off-premise consumption. Cheesecake CEO David Overton, who once commented that he couldn’t see his brand doing delivery, noted that 95% of the company’s restaurants now offer the service through third parties, and all feature online ordering. President David Gordon said that 60% to 70% of that business is incremental.

Bloomin’s Smith cited research that shows nearly a third of millennials have food delivered from a restaurant at least once a week, while half of baby boomers order it less than once a month. “The potential for off-premise and delivery provides a large and incremental tailwind for casual dining,” she said in the scripted portion of Bloomin’s conference call with analysts.

BJ’s off-premise business rose 30% year over year during Q1, and now accounts for 7.5% of sales overall, said CEO Greg Trojan.

BJ’s and Bloomin’ also cited the beneficial effects of their loyalty programs. Bloomin’ offers one program across all of its casual brands, and membership now tops 6 million, Smith said. “This program is performing well and driving strong engagement across the portfolio,” she said.

Trojan said that participation in his charge’s new loyalty program is growing at a rate in double digits. The program was introduced just a few weeks ago.

Two other sizable casual-dining operators, Chili’s parent Brinker International and Applebee’s brand owner Dine Brands, are scheduled to post their Q1 results next week.