Denise Pedini Leads a Loyalty Renaissance at Newk’s

Denise Pedini was leading a tech-stack roundtable at this May’s MEG, the marketing event that annually precedes the National Restaurant Association Show. It was a paragon of how much has changed since the 1990s, when Pedini worked at commerce agency Tracy-Locke. How did you market food those days? You jazzed it up or found the best way to spin a discount.

Back then, Pedini read an AdAge article about the horizon of loyalty. It was headed to airlines, hotels, and other sectors where frequency could be rewarded with engagement, instead of constant trial programs. She went to work at Dallas-based Brierley+Partners, a solutions and consulting group considered one of the pioneers of loyalty. “It hadn’t entered the restaurant space,” Pedini says, “but, I just had this feeling that if I wanted to continue in the restaurant business and I wanted to be in the corporate side one days, I needed to learn [about loyalty].”

It's a decision that returns Pedini to her 2023 MEG talk. Today’s marketers need a base in technology, says Pedini, the CMO of Newk’s Eatery. So much restaurant advertising is digital. Understanding pieces and how they talk to each other, from POS and online ordering to loyalty, is the universe marketing execs are asked to navigate.

Pedini’s loyalty career ramped up during her agency work with Pizza Hut. She was one of the early leaders who launched Wing Street, which was positioned as a separate entity of sorts—the 12-person team was housed on their own floor. Creating a “little brand within mega Pizza Hut” forced Pedini to dip into multiple buckets, such as culinary, technology, and finance. “That’s where I learned most of my knowledge of the business,” says Pedini, then 26 years old.

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She had to understand POS, learn how to put wings in the system. How to price them. Years later, Pedini would serve as CMO at Pizza Inn, a smaller brand (sub 150 locations), and that nuanced skillset came in handy. She worked with IT, on online ordering, and then launched the buffet chain’s loyalty program. “I’ve been very fortunate at every single aspect of my career to touch technology,” she says. “And I’m still learning. I think I am a very curious person. I like to know what if we did this? And how can we make this faster? And what if we were able to use our points to buy merchandise from our restaurants, or donate points to charities, how can we do that?”

Naturally, it led Pedini to a similar inflection in Newk’s history. The 2004-founded fast casual, which began as "Newk's Express Café," a creation of Don Newcomb, Debra Bryson, and Chris Newcomb, the team that founded McAlister's Deli, brought Pedini in as SVP of guest experience about two and half years ago. She helped IT implement tech systems like a new ordering website through Olo, app with Punchh, and dine-in table ordering. But rolling a loyalty program—a first for Newk’s—was always the golden target. Pedini, the company’s CMO since January, unveiled and integrated the platform in under five months, hitting a first-year download goal of 300,000 and 15 percent participation in the opening eight months.

Walking through how it unfolded, Pedini says Newk’s started with the partnership. Punchh was a provider she worked with previously, which made the decision quick and comparatively seamless. And fortunately, she adds, Newk’s had loyal guests who already wanted the program.

The first year was dedicated to acquisition. Newk’s focused on CRM and strategy and “how to make them come more often and spend more money,” Pedini says.

One starting point was Coca-Cola. Newk’s connected with the beverage giant on contests where it would give away food, Coke memorabilia, tumblers, and coolers, and other activations designed to incentivize sign-ups.

Previously, Pedini tried a similar contest-centered approach at Pizza Inn. To celebrate 60 years, the brand dangled a 1958 Ford Fairlane Skyliner hard top convertible. It was open only to rewards members, with the winner picked by an independent third party out of a random draw of the loyalty pool. Pizza Inn took the car on a tour of locations from Durham, North Carolina, to Hobbs, New Mexico, hitting 28 cities in total. At every stop, Pizza Inn courted signups

Pedini chose the nostalgic route because it fit the brand’s DNA of generational dining. One of its franchisees sold classic cars as a side hustle and offered to assist.

With Newk’s, Pedini took stock of the landscape again. She attached a prize of $10,000 to the January 2022 launch, understanding the program arrived after the holidays and during a COVID-saddled era when people often could use the help. “I think membership is one goal to have,” she says. “But the second is are they using the app and are they participating?”

A typical participation rate for a loyalty program is roughly 10 percent. Newk’s today is at 22 percent, Pedini says. “Which means our members love the program and are using it frequently,” she says.

Newk's Eatery

Next up for Newk's? A major rebrand.

Pedini believes Newk’s got here through focusing less on discounts and more on the aforementioned contests and similar themes. For instance, Newk’s often pulses challenges where the brand asks users to come in three times a month. If the guest does so, they’ll earn 1,500 points (a free pizza). It’s a loyalty push that rewards frequency over straight spend. And it’s proven more lasting to those who sign up, in terms of sticking after their day one offer.

“Pizza is the lowest food cost item that we have,” Pedini says. “It’s like $1 food cost. So it’s a great thing for us to come in because they had to come in and spend a certain amount, three times during that month.”

In just March, 14,000 people that had never come in three times in one month did so.

Newk’s more recently teamed with Norwegian for a summer cruise promotion where a guest signed up for rewards and then made a minimum purchase of an entrée and fountain drink to enter (existing members skipped the first step). The carrot was a seven-day cruise for two and airfare.

Newk’s expanded its tech arsenal over recent months as well. It struck a partnership with AI-generated answering system kea to take orders and payments over the phone. Even with all the digital options live today, about one in every 10 Newk’s orders are still called into the restaurant.

Pedini says Newk’s tested a different AI program last year, but it didn’t land. Customers got frustrated and the brand reversed course. Yet it still hoped to ease the call-in painpoint considering steady labor challenges. CTO Adam Karveller found kea, a California-based company that also works with Hopdoddy. Newk’s is now seeing an average of 500 orders per day and sales on that side of its business have climbed 30 percent. Simply, kea is answering calls employees weren’t before. It’s not putting them on hold, either. The technology sounds like a human and has personality, Pedini says. “She doesn’t just say, ‘hi, what’s your order,” she says. “… the franchisees love it.”

The challenge at Newk’s, unlike some other chains that tapped the AI well, is its menu is known for breadth and customization. Tech needs to be able to understand modifiers.

But speaking of Newk’s menu, this is another arena Pedini tackled from the outset. She had been with the brand a couple of months when CEO Frank Paci, the former chief executive of Corner Bakery, McAlister’s, and Einstein Noah Restaurant Group, was hired.

Paci asked Pedini where she wanted to start. They stayed in the conference room for a week, she says, “every day, all day long,” going through each menu item and category and looking at mix. “OK, we have this salad on here, but less than 1 percent of people order that so why should it be on the menu,” Pedini recalls. “And, by the way, this menu item is calling for a special ingredients that is only on this item. It was these kinds of conversations.”

When Chris Newcomb founded the brand, he went full-on with flavor and ingredient-conscious sourcing. There are no fryers or microwaves in locations. But over time, favorites emerged and others became outliers. Newk’s new leadership shed 30 SKUs in the first eight months and improved its cost of goods—it appreciated a 25 percent food cost reduction on remaining menu items. Pedini says the approach was straightforward: don’t change anything popular but reexamine everything on the fringes to see if it could either be stripped or reformulated to use ingredients already in the kitchen. In one LTO example, Newk’s summer launch included a Watermelon Feta Salad (with chicken), Green Goddess Salad, Chicken Avo Club Sandwich, and Lemon Cake. No new proteins were added or anything that would clog the line.

Newk's Eatery

Newk's exited 2022 with 100 locations.

Newk’s also re-emphasized its pairings menu in 2021 by adding a new “Pick a Pair” option that enabled guests to pair a full sandwich, salad or pizza with a cup of soup, half classic salad or a half mac and cheese. As a result, pairings increased from 30 percent of Newk’s menu mix to nearly 38 percent.

For the full year, Newk’s saw its average unit volume increase from $1.5 million in 2020 to over $2 million in 2021. That number last year was $2.065 million for franchised units and $2.386 million for corporate venues.

At the end of 2022, the brand had 100 stores (27 company and 73 franchised), down five year-over-year. Newk’s had 122 stores at the start of 2020 and shed 12 during the first pandemic calendar.

Going forward from a menu standpoint, Newk’s will focus on LTOs and tweaks, likely every six months.

Returning to Pedini’s earlier point around tech integration, when Newk’s launched its loyalty program, Punchh had the capability of offering table ordering in the app. Basically, a customer sits down and orders without approaching the counter. In order to distinguish cashier ordering from the app, Newk’s created red cards with a different series of numbers. This way, when a customer orders on the app, it asks what is your red table number? A customer puts in “305” and employees know anything with 300 is a red card where they need to look for that table.

Newk’s is currently testing a new iteration through Olo. It’ll help with engagement but also labor efficiency. “Because if we don’t have cashiers who show up; we usually aim to have two during lunch,” Pedini says. “But sometimes we only have one and there’s a long line. So that helps us get people in faster and helps with labor.”

On deck is full-on rebrand. Pedini and her team create and produce all creative, TV commercials, and photoshoots in-house, saving $1.5 million a year.

One thing about Newk’s, though, Pedini says, is the brand doesn’t always get wide credit for its differentiators. Loyalists understand it, but the message isn’t always clear outside of the core bubble. Newk’s has premium proteins, like steak, shrimp, and salmon, served at affordable tiers. The chain will soon launch a whole rebranding that will affect every part of its marketing, website, app, and communication. There will be a commercial as well. “To really communicate who the brand is for guest, and for new guests,” Pedini says.

Before she first interviewed, she recalls, Pedini drove by and thought Newk’s was a deli. She didn’t realize the array of flavors and Newcomb’s commitment to separating from the quick-service pack, from chili oils to fresh herbs and more. Every location is an open kitchen layout where guests see employees make the food; cut the vegetables, avocadoes, and everything else fresh. “It’s all made to order,” Pedini says. “I don’t think we get enough credit for that. So we’re “going to go in a big way and talk about the brand this year.”