Industry News | May 21, 2011

LIVE: Social Media Deal Sites Boom for Operators

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As social media continues to explode as a marketing tool, limited-service restaurants will likely face even more decisions about how to spend their time and dollars in an effort to use special online deals to grab the attention and loyalty of customers.

Whether it's the use of Facebook, Twitter, or other tools to drive fans to the restaurant or daily deal couponing via Groupon and LivingSocial, operators are continuing to see their social media options grow.

Social media "is an ever-changing world," said Hilary Allard, a vice president of Boston-based marketing communications company The Castle Group, Boston. "Who knows where it will be a year from now? You have to dive in and see where it takes you."

Allard was one of several presenters during this afternoon's highly attended panel discussion on social media at the annual National Restaurant Association Show in Chicago.

Although restaurant operators are embracing social media – particularly the Big 3 of Facebook, Twitter, and YouTube – doing it well is "a lot of work," said another panelist, Geoff Alexander, a vice president at Chicago's Lettuce Entertain You Enterprises Inc.

"It takes time, it takes commitment," said Alexander, who leads the restaurant company's fast-casual Asian startup, Wow Bao. "You don't flip a switch and have 10,000 followers tomorrow."

He suggested employing Facebook as a billboard to build relationships with customers, while Twitter is for holding a conversation with them.

Restaurants can use social media as a form of promotion, through coupons or specials once in a while, but should not do so constantly.

"If you use billboard after billboard after billboard (to promote deals) people will stop reading you," Alexander said.

Separately, however, the idea of daily deals will continue to be popular. A report by BIA/Kelsey, a consulting firm based in Chantilly, Virginia, estimated the industry will grow to more than $3.9 billion in 2015 from $873 million last year.

Although Groupon and LivingSocial are the leaders, BIA/Kelsey says the industry includes 200-plus players that reach an estimated 102 million Americans.

That's one reason why Facebook also entered that market earlier this year, testing a service called Deals. The popular site is the 800-pound gorilla of social networking with more than 600 million users.

It's not easy for a limited-service restaurant operator to decide how much to coupon through its own Web site, social media or a daily-deal service.

"The decision has a lot to do with the size and activity level of the restaurant's existing network of followers and fans," said Erik Thoresen, director of research and consulting for restaurant industry research and consulting firm Technomic Inc.

Quick serves are becoming more effective at building networks of followers and fans on Facebook and Twitter, he said. At the same time, they are doing a better job of leveraging that base of consumers in a way that translates into traffic.

But deal sites provide the benefit of critical mass and an ability to attract new customers.

"It's important to note that one of the value-added features of a site like Groupon is the ability for an operator to extend its reach beyond its existing base," Thoresen said.

Facebook Deals is looking to bridge the two, and it's likely to lead to other combinations.

One that launched yesterday at the NRA Show is a partnership between e-mail marketing provider Constant Contact Inc. and mobile advertiser WHERE Inc. They announced earlier they would work together to help restaurants and other merchants drive business.

The collaboration allows Constant Contact's 450,000 business customers to use the Where system to offer deals to existing email patrons. It also gives those businesses the potential to reach Where's 50 million mobile customers.

"We've created seamless a integration of the two," said Alec Stern, vice president, strategic market development for Constant Contact, based in Waltham, Massachusetts. 

One of Constant Contact's tools can link a customer's e-mail lists with the client's Facebook page and other social media tools. Where extends that to local mobile advertising, with ads or coupons that can target a particular area.

"You can decide to have a promotion that features a food item," said Sarah Hodkinson, Where senior manager-partner marketing, "and walk up to the counter and show (the order taker) the coupon or offer appearing on your mobile phone."

Even without a coupon, providing information about a restaurant on a mobile "app" has its benefits. Consider that 37 percent of Americans get information about businesses on their mobile devices, according to a recent Pew Research Center report.

 

The National Restaurant Association Restaurant, Hotel-Motel Show is the restaurant industry's largest trade show. It takes place in Chicago's McCormick Place until Tuesday, May 24.

For more information, visit QSR at booth #4861.

By Barney Wolf

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.