June 2009 Archives

I want to put a stake in the ground today, June 29, and tell you that I think restaurants who source their meats, seafood, vegetables ... locally will win out against those who couldn't tell you where the food they serve at their local restaurant originates.  Yes, I recently saw Food, Inc, a very well-done movie featuring the likes of Michael Pollan (Omnivore's Delight) and Eric Schlosser (Fast Food Nation), along with Gary Hirschberg from Stoneyfield.  I'm not here today to bash the big six or seven who are featured in the movie.  

I recently had my first Nando's experience. Great chicken, great service, great location. But as I awkwardly stumbled through the ordering, seating, and food-delivery process, I began to think: Have fast-casuals tried to make themselves too upscale during the down economy?

Sure they want to grab family-dining consumers who are trading down, but having a hostess seat you then ordering at the counter then having a food runner bring you the food is actually quite confusing. Do I get my drink and utensils? Should I leave a tip? Who do I give my table number to once the food arrives? What if I want dessert after I've finished my meal?

What I'm getting at is there is an art to what industry insiders call "Way Finding." As more upscale fast-casuals flood the market, consumers seem to be running into all sorts of way-finding dilemmas.

I want to know what strategies you think work best. Not just from the operator side, but what have you also experienced as a customer? Remember that's who we're really interested in.

Apparently it does for Carl's Jr.  The company has tapped into Hills star Audrina Patridge to promote its Teriyaki Burger, which Carl's is bringing back as a permanent menu item.

Patridge, who was also recognized by Access Hollywood as one of the best celebrity beach bodies, appears on a southern Cal. beach wearing gold lamé for her close-up.  The burgers look great as well, although they're not in gold lamé bikinis.

This isn't the first time Carl's Jr. has relied on scantily clad celebrities.  Patridge follows in the footsteps of Paris Hilton, who, in 2005, generated a significant amount of media buzz for the now infamous car wash scene.  Since that time, social media has blossomed, so you can expect to see Patridge appearing on YouTube and Facebook for the chain as well.  Not to mention, that female fans of the burger can get in on the fun by visiting HotChicksEatingBurgers.com and telling the world how they enjoy a Carl's Jr. burger. 

The current commercial seems less sensational than the Hilton spot, but not by much. Apparently the point is to emphasize that you can enjoy burgers in moderation and not destroy a bikini figure.  Julia Child would be proud.  But you will have to watch it, the burger comes with teriyaki glaze topped with pineapple, Swiss cheese, lettuce, tomato, red onion and mayo.  It may seem blatantly outrageous, but just think how well it will play with that core target audience of 18-24 year old males!

The marketplace is saturated with talented restaurant general managers, many employed at both successful and struggling restaurants.  And of course, there's a slew of previously employed GMs trying to figure out the next stage of their careers.  Yes, the market is getting better, but many of the pundits will tell you the time to "seize the day" is during a down economy, when times are tough and resources are few vs sitting on the sideline waiting for the recovery.

 

I recall a few popular lines from the classic  story of  William Wallace who fought for freedom.

 

William Wallace:  I *am* William Wallace! And I see a whole army of my countrymen, here in defiance of tyranny. You've come to fight as free men...and free men you are. What will you do with that freedom? Will you fight?

 

Veteran: Fight? Against that? No! We will run. And we will live.

 

William Wallace: Aye, fight and you may die. Run, and you'll live... at least a while. And dying in your beds, many years from now, would you be willin' to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take our lives, but they'll never take... OUR FREEDOM!

 

Ok, so maybe that's a dramatic example ... somewhat off the path, but freedom today is about the ability to choose your destiny.  The franchise model is not dead, but I believe the owner/operator model may be on the rise if GMs are willing to take a chance and become owners and operators.  Until the financing flows again, any quality GM worth his name can walk into an owner/operator model today and take hold of their future.

 

So I ask GMs, will you remain on the sidelines or will you enter the battle for freedom?  Will you fight?   

 

 

 

Perhaps it is because of our current economy, or maybe it's just that some of us don't have the time to sit down to a full-service meal as much as we might like to. Whatever the reason, street vendors are really having their day, reaping the benefits of consumers looking for food's latest trend, curbside prepared food.

 

Our options used to be limited to the taco truck and the hot dog cart, but no more. While those of us whose home base is in the mid-section of the US may not being seeing this trend much yet, it will certainly making its way to the middle, so be on the look out. On the west coast, specifically in San Francisco's Mission District, street food vendors have become the latest and hippest presence in the food industry. With options like the Sexy Soup Lady, the Magic Curry Cart, Moo Moo Cakes, along with options like Crème Brulèe, Indian food & bacon wrapped hot dogs, there are no shortage of options to choose from. Spencer on the Go, owned and operated by Chef Laurent Katgely, features fine French cuisine from the back of his taco truck. Some of his menu items include Ratatouille Cup Almond Crust, Grilled Sweetbread with Sherry, Frog Legs & Curry, and Esgarot Puffs, all under $10.  With options like these the "roach coach" may just become a thing of the past.

At least that's the enticement from Burger King as it launches a new iPhone application designed to stimulate purchase and engender loyalty.

The app, created by GoMobo, includes a store locater using GPS technology, as well as the ability to receive targeted promotions based on the user's mobile ordering history.  Competitor Hardee's already has an app in place that allows customers to devour virtual burgers and receive coupons for the real thing. 

Hardee's also offers couponing via Tag It!, a coupon app from Microsoft.  Special stickers are affixed to packaging by the QSR chain that customers can capture with their phone cam and transmit to receive an e-coupon.  To redeem, customers flash their phone screen with photo to a cashier. 

As mobile media options continue to grow and mature, look for more highly targeted apps that aren't just novelties, but also engage patrons and drive sales. 

 

There is none.  You could be gainfully employed, say as a GM for a restaurant or franchise ... recently out of work ... interested in changing careers ... have been bitten by the entrepreneurial bug ... run with a close knit group of successful friends ... come from a large family ... have parents looking to invest in places other than the stock market.  Any one of these scenarios makes you a perfect candidate for franchising whether you get in it to run the store or sit back and manage it from afar.  Either of those opportunities exist today.  And speaking of opportunities, the streets, strips and mixed use centers that line the towns of America not only have tremendous real estate deals, but existing stores ready, willing and able to serve customers in weeks, if not days.  Of course, you have to go through training and staffing (don't think finding talent will be difficult) and likely a store rebranding.  But you're talking about getting up and running in weeks vs. years, in some cases.  We recently converted a competitive concept to one of our brands over a weekend ... a weekend.  The consumer barely missed a step.

 

And the cost for sliding into either an existing brand you want to take over or an existing restaurant concept you want to take over under another brand, is a fraction, fraction of the cost of starting over.  The consumer is beginning to realize the opportunities in the housing market.  Future or even existing franchisees shouldn't let an excuse like we're in a recession keep them from franchising.  Yes, we are still in a recession.  So act now before the goose stops laying "slightly tarnished, but with some  sweat equity and a good buff ... shiny eggs."

 

 

 

I am imagining the future of the food industry, and I'm trying to decide where I think this jingle will fit in: "The best part of waking up is Folgers coffee infused flavoring in your cup...of water" What do you think? Can you see it? Or rather, can you smell it? 

 

"Infusion Technology", one of the new and upcoming trends that we're really starting to hear about, is the idea that we can infuse products with scent in order to improve, enhance, or even just make seem more fresh, the flavors that we're tasting. We've moved on from adding natural and artificial flavors to our food and beverage; now we're adding the scent of flavors, in order to enhance taste.

 

With Studies showing that the human tongue only detects 4 basic taste sensations: Sweet, Sour, Bitter & Salty , and that everything else that we're tasting comes from our sense of smell, it makes sense that we would want to enhance flavors, in order to be more fulfilled as consumers. Right?

 

Companies like ScentSational Technologies, who are at the forefront of the infusion technology trend, are working with companies like AriZona Tea to develop aroma enhanced packaging. They do this by adding specially engineered FDA approved food grade flavors within the structure of plastic packaging components at the time of manufacturing. The result is packaging that enhances the aroma profile of a product that improves the taste experience and builds a better connection between the consumer and the brand.

 

Another plus, ScentSational Technologies is working with companies to improve the nutritional value of products by adding aromas to replace the sugar, salt and oil content in many products.  And I'm sure NASA is thanking their lucky stars that they've teamed up with ScentSational Technologies to enhance space food products' flavor, aroma, and taste, there just aren't a lot of fresh food options in Space.

 

There are some obvious pros to "smell technology", but, let's bring it back down to earth. At what point do we as consumers call it quits on the constant progression of processed foods. For now, I'll take my Folgers ground from coffee beans.

As any business school graduate will tell you, McDonalds (NYSE: MCD) is a real estate company, not a hamburger company.  However, as a real estate person, I can tell you that the amount of real estate that MCD can control is limited. 

As MCD, its tough to go to a land owner and say, "I know that you own 25 acres of land that is perfect for a shopping center and several QSR concepts, but we only want to buy an acre on the best corner you have for our restaurant."  The land owner would most likely look at them like they were crazy.  The answer to this problem for MCD has been to ask the landowner if they would lease the land to them for an extended period, aptly named a ground lease. 

While many tenants structure this sort of land control for themselves, the landowners particularly like it because they have a very prominent and credit worthy tenant leasing their land for 20+ years.  Then, most likely, the landowner will try and sell that parcel of land, with MCD leasing it from them, to a passive investor who is looking for a sound investment.  I am highlighting MCD because they typically garner the one of the lowest yields for a passive investor because of their credit worthiness, length of their leases and, as the old adage goes, prime location. 

Ground leases, especially for prominent QSR concepts, have become an investment of choice for people in today's economy.  They feel that MCD and others will be around in good times and in bad.

 

Well, Lord knows I certainly love free when I'm the coupon holder.  Actually, I'm not a clipper or redeemer type, but have several friends who are - some are even out in the open about it LOL. 

Restaurants and food companies have given away product for what seems to be eons to generate buzz about new products, drive traffic, stimulate trial and hopefully repeat purchase. As long as your product delivers it's a great strategy. 

It seems like the chaos with KFC initially was planned, but perhaps someone forgot to convey the power and impact of the "Oprah Factor."  I think consumers will give KFC somewhat of a break because they underestimated how much business Oprah would drum up.  And social media options are fairly new, so I find many companies underestimate their power to influence behavior and drive transactions. 

What I like about the Quiznos give-away is that it's tied to a philanthropic/charitable program - again raising awareness of an issue, but ultimately generating buzz and stimulating sales.  Otherwise, it doesn't matter how grand your cause or event or sponsorship is, if it's not driving sales, it's gotta go. 

I don't think we can say either of these promotions didn't drive awareness and buzz.  The key will be tying those efforts back to sales.  In today's economy, companies are looking for metrics and ROI like I've not witnessed before.  And that applies to everything: advertising, promotions, public relations, events, etc.  The proof of whether these were good ideas will be in the results. 

And as for the negative publicity, in today's environment of digital, immediate and more social media options - it's not quite the same being dressed down in the media today.  Where I'd be more concerned and closely monitoring is the digtal/social mediums - where my customers are talking - what did they think, were they upset with how the promotions were handled, and could it influence them not to return? 

Because at day's end, it's their opinions that really count.  

I live in Florida.  As most people know, it's a state that focuses a lot of tourism.  So, when the weather gets overly warm and humid, about 9 months of the year in my opinion, then there are fewer visitors.  But what typically happens is that local residents start to receive coupons in the mail from restaurants offering free this or that.  While I understand that it's a promotion, I typically feel that I have to go across town to try and get a free burrito from someplace that I may not have gone to before.  While there, and as I'm sure the restaurateur wants us to, I'll buy some side items, beverages and maybe take something home.  So, job done.  I bought a burrito and few other things.  However, I may not go back for a while because the only draw was the free burrito, not the burrito itself, which would have definitely made me come back even if it was across town in the hot and humid Florida summer. 

I always questioned whether giving away free product diluted the brand's integrity.  Does Nike give away sneakers?  Does Apple give away laptops? Does Jet Blue give away tickets?  The fact is, at some point every company gives something away for free or with a few strings attached.

 

In a down economy, giving away food is the norm it seems so I can't slam KFC or Quizno's for doing what so many of us do.  However, I always believe that giveaway offers should be positioned in a way that leaves the consumer wanting more or at least, offering them the opportunity to pay a little.  If I go to my franchise system with a promotional giveaway, I have to be able to say, we're giving this much and we believe it will generate x amount of revenue.  In addition, we believe we can generate new trial, traffic during off peak periods.  Don't create promotions that drive free consumption during peak periods.  That's why store owners sometimes say no to honoring promotions.

 

Most important, corporate communications must over communicate promotions with its system to avoid some of the problems KFC, Quizno's and others have experienced.  It should show up on the annual marketing calendar.  There should be webinars about it two months in advance.  There should be internal intranet or at least, email communications to remind them ... A countdown to promotion works too.  I would even encourage an opt-in by stores tied to some type of incentive or penalty ... Whichever you choose.  Most important, remind the system that if a promotion is in play and they choose not to honor it, be smart about fielding the few consumers who ultimately come by.

 

That's just smart business.  Otherwise, if you can't at least do that, you

should be a mom and pop.   

 

 

 

 

I can't say, free offers are not a good thing because I have recommended them to clients in the past.  And in a down economy, boy, free can sell.  It can deliver other benefits as well.  Free can drive traffic.  Free can generate publicity.  Free can build loyalty.  Free can drive new customers.  Free can test products and day parts.  So why wouldn't you launch a Free offer.  

QSR recently ran a story debating the merits of free product giveways. Two recent national campaigns inspired the story: KFC's Grilled Chicken meal and Quiznos' Million Subs. Depending on whom you talk to both campaigns were either widely successful or ill-planned. I say the truth lies somewhere in between.

Sonic routinely offers consumers free beverages and bites. Pretzelmaker, Pretzel Time, and Haagen-Dazs have also managed to pull of successful giveway promotions in recent months. So the strategy clearly works for some brands.

Which leads me to my question for our panel: Is the negative press KFC and Quiznos earned deserved?