Transcript of Food & Restaurant Podcast – A Funeral For Retail

Transcript of episode A Funeral For Retail or read the companion article by Adam Pierno.

[00:00:03] Adam Pierno: All right. Welcome back to another episode of Food and Restaurant Marketing. I am Adam Pierno. With me again is the effervescent and extremely happy, Daniel Thaddeus Santy.
[00:00:19] Daniel Santy: Hello, everybody. Good to be here again today.
[00:00:22] Adam: Dan is in a great mood because we have been attending a funeral for the past year, that just seems to never end. Last time, we talked about the funeral that has been going on for 10 years for television.
Today, we’re talking about the funeral. We’re both wearing black for retail and specifically shopping centers, malls if you remember those. It’s just that it’s sad there’s a dirge playing, there’s a black limousine out front, a hearse. What do you think sir?
[00:00:53] Daniel: We just put a outlet mall in the hearse, there’s a processional that will happen. [laughs]
[00:01:00] Adam: You know what? I wonder– I’ll bet you outlet malls are okay.
[00:01:04] Daniel: Yes, you’re probably right. Well, I have a theory if you want to kick this off really-
[00:01:08] Adam: Let’s go, yes.
[00:01:11] Daniel: -with speed, is I have a theory about malls in terms of their revolution because I think you’re right about they’re not dying, they’re evolving. We talked about that. There are going to be two successful mall types going forward and I think outlets will be one.
[00:01:29] Adam: Extreme discount, extreme value.
[00:01:30] Daniel: Exactly, because everybody likes cheap blank.
[00:01:36] Adam: Right, you could say the word. [Editor’s note: we swear a lot]
[00:01:38] Daniel: Almost as much as they like free shit.
[00:01:41] Adam: I think they like cheap better than free.
[00:01:43] Daniel: Sometimes, I think you might be right. Then on the other end of the spectrum is luxury goods. I think the worlds of Louis Vuitton and I’m talking really pretty much the high-end stuff, because I think people really want– if I’m going to go in and buy a $1,600 bag, either as a gift for my wife or my girlfriend, which I don’t have currently or if a woman is going to splurge, she’s a professional and she just got a bonus and she wants to go gift herself a beautiful new purse or some luxury item, I think they want to see, feel, and touch it. Ordering it online is not the same.
[00:02:30] Adam: No, and you don’t know what the real heft of it is or what the real shape of it is until you’re holding it in your hands. If it’s a bag, leather. I think for tech goods, even for assembling this. Last time, we talked about the all-new Food and Restaurant Marketing studios, I bought almost everything on Amazon and read reviews and clicked links and then when it all got here, this very microphone that I’m speaking into now didn’t come with a cord.
[00:02:57] Daniel: Fascinating.
[00:02:58] Adam: So, then I started thinking, I went online, and I thought, “Oh, I could just order this cord.” and I was like, “You know what? I just want it today and I don’t want to mess around.” I had already had to return some things, I just wanted to go get it. So, I went and found there’s a– I was like, “I don’t even know where to go to buy this.”
[00:03:13] Daniel: Right.
[00:03:14] Adam: There’s a guitar center over there and I went in and I found a person and talked to them and asked them questions.
[00:03:19] Daniel: There you go.
[00:03:20] Adam: And got all the answers and bought the thing and it was like 13 bucks.
[00:03:23] Daniel: Yes, amazing.
[00:03:25] Adam: So, I think that part is not going away. That was a major, major, major digression.
[00:03:30] Daniel: Yes, interesting. Interesting. Again, I think all these stories are validating your theory about evolution.
[00:03:39] Adam: Yes, I don’t think what looks like today is right and I don’t think that the CNN slideshow of 12 photos of dead malls is where it’s going. The real estate’s too valuable. Somebody, either an entrepreneur or somebody that’s already existing in the retail space, will figure out how to reuse those spaces, either knocking them down or just filling those big box spaces.
[00:04:03] Daniel: More than likely [sic]– more than likely. [sic] More than likely, a few of them, and I mean this seriously, will become evangelical churches. You see that a lot where they reuse of a old movie theater.
[00:04:20] Adam: Right, and it’s a good, big, empty box.
[00:04:23] Daniel: Good, empty box that’s inexpensive to–
[00:04:25] Adam: I’ve actually thought of maybe putting a school in.
[00:04:28] Daniel: Yes, there’s another fundamental use. There’s so much going on in the charter school space.
[00:04:33] Adam: Right, they’re expanding and they’re looking for real estate in markets like ours, too. It’s hard to find.
[00:04:39] Daniel: If you think about it, retail malls typically are placed based on the residential density. That makes it viable. So, that’s actually interesting.
[00:04:50] Adam: Yes, that applies to both malls and churches.
[00:04:52] Daniel: Yes, Simon and company, if you’re listening, there’s a couple ideas for you.
[00:04:57] Adam: Yes, send the royalty checks our way. This is important because for you guys that are listening, because shopping, malls, and retail is really the major source of a lot of spontaneous restaurant traffic that pops up every day. So, as we’re watching, I don’t think it’s a coincidence that we’ve been seeing these headwinds in the restaurant space while we’re watching these big box major brands close and go bankrupt. They’re facing challenges and people are shopping less and then therefore, there’s pressure on any other cottage industry around that activity.
[00:05:33] Daniel: Okay, imagine if you did the math, just take the last 90 days. Every week, sometimes two or three times a week, you read the article about restaurant chain X is closing 30 stores.
[00:05:51] Adam: Wow.
[00:05:52] Daniel: Think of the implication if those 30 stores tend to be pads at these malls that we’re talking about.
[00:05:59] Adam: Right, it’s a death spiral; one feeds the other.
[00:06:01] Daniel: Exactly.
[00:06:02] Adam: Because you know what it is with retail in general is always clustered. So, when we say mall, that might be a strip mall, it might be a huge shopping center, a traditional indoor shopping mall. But the restaurant that I might stop at next to the store I might go to buy shoes and next to the bookstore that I used to go to get books or whatever else, those are all related activities and so when Fridays closes or Ruby Tuesdays closes at the mall, like at PV Mall.
[00:06:31] Daniel: Right.
[00:06:32] Adam: Well, there’s one less corner of the place I’m going to walk into and each time that mall gets less useful, and until now, if you walk into that mall, it’s deserted.
[00:06:42] Daniel: Yes, it’s kind of like what the West Valley Mall was like but now it’s complete reuse.
[00:06:51] Adam: Scary stuff. So, why is this happening? What is happening and what are the experts saying? Why is retail dying?
[00:07:00] Daniel: I will tell you right now.
[00:07:01] Adam: You have some answers for me?
[00:07:02] Daniel: Well, and you know what? Anecdotal as this may be and literally happened this morning, my lovely bride reminded me that I’ve been wanting to get a new pair of running shoes. So, I said, “All right.” I’m going online right now and we’re having a cup of coffee, I go to the place where I have a loyalty program.
[00:07:25] Adam: Right.
[00:07:26] Daniel: It’s a retail store so I could literally go in, I hate going in and here’s why because they’re vultures. I want a pair of shoes I do not want insoles. I do not want socks. I do not want a cap.
[00:07:40] Adam: Where do you go?
[00:07:42] Daniel: What’s it called, Runners? Not runners.
[00:07:44] Adam: Road Runner?
[00:07:45] Daniel: Road Runner, yes. They’re ridiculous.
[00:07:48] Adam: Sorry, Road Runner,
[00:07:49] Daniel: Yes, sorry Road Runner
[00:07:49] Adam: Maybe we’ll bleep this.
[00:07:50] Daniel: So, I’m all the way– I’ve got the cart. I’m going to checkout. Liza goes, “Why don’t I check my Amazon Prime account and see if I can get that same pair of shoes?” Because I buy the same pair of Asics every time. I love them.
[00:08:07] Adam: I’m the same way, same pair of Adidas.
[00:08:09] Daniel: She goes and they were $35 less.
[00:08:14] Adam: Holy moly.
[00:08:15] Daniel: Thirty-five dollars, same exact shoe. Now, I would venture to guess that the guy or the gal at– what’s it called, Road Runner?
[00:08:23] Adam: Yes.
[00:08:23] Daniel: Road Runner would tell me that the ones on Amazon are the 2016 model or something like that.
[00:08:27] Adam: Who gives a rats?
[00:08:28] Daniel: Right, because what did-
[00:08:29] Adam: I don’t care.
[00:08:29] Daniel: -they do between 16 and 17 to make that thing different?
[00:08:32] Adam: No, the body of the shoe, it’s with the fashion. The colors change. Who cares?
[00:08:36] Daniel: Right. Right, and so boom, abandon cart and head straight boom, and used–
[00:08:42] Adam: Wow, that’s it. Free shipping.
[00:08:45] Daniel: Free shipping and they were offering me shipping because I’m a VIP member
[00:08:48] Adam: Okay.
[00:08:49] Daniel: But still, I mean that wasn’t even enough.
[00:08:52] Adam: So, you’re saying you weren’t going to go into Road Runner, anyway?
[00:08:57] Daniel: No.
[00:08:58] Daniel: But you’re saying there was a reason now that something that made it very convenient for you and very affordable for you to buy those shoes. What was that thing? What was the name of that store?
[00:09:07] Daniel: Interweb? Amazon.
[00:09:10] Adam: Yes, exactly.
[00:09:11] Daniel: Amazon, absolutely.
[00:09:12] Adam: So, Amazon is eating everything and if it’s not Amazon, it’s a store that’s exactly like Amazon that’s in a very tight vertical that is stealing your reason to go to the store. That’s number one and we saw this going back to when we think of it, it was Christmas of ’15. I wrote an article about this. Showrooming had been a big thing, but at that time, what we found was, people would go to a store like Best Buy or they would go to a place like Road Runner, they pull out their mobile phone, they would take a picture of the thing that they wanted, they would Google the thing that they wanted, they would not buy it on their mobile device, they would go home and they would convert on their laptop.
[00:09:54] Daniel: Interesting.
[00:09:55] Adam: So, what they saw was a spike in mobile traffic going to these retail stores, but not a spike in sales and a spike from desktop-
[00:10:04] Daniel: Interesting.
[00:10:05] Adam: -in that same seasonal period. Retail was down that year. Now, we’re seeing that people have finally figured out, “Oh, I can just buy it.” I’ve been trained to either buy it on my phone, which is getting easier and easier and easier, and Amazon has [crosstalk]
[00:10:19] Daniel: Amazon has made it very easy.
[00:10:21] Adam: Yes, and Zappos and a bunch of people have figured out how to make it one click, basically. They don’t– going to the store, just like you said with Road Runner, I don’t really want to deal with– I don’t want to get sold. The experience is very rarely fun or helpful, but there’s some key times when you need to and most of the time you just say, “I just need this thing in my mail box. I think I’ll be fine. If it’s free returns, I could send it back. I don’t need to lose a half a day to go to the mall.”
[00:10:51] Daniel: Yes. I really think that these– many of these retailers like Road Runner need to do a true audit on the customer experience in store. I get that sales is the holy grail, but there’s this fine line between what feels like fake and forced and I think they’re being incented to sell socks this week to–
[00:11:20] Adam: [laughs] That’s the worst.
[00:11:22] Daniel: Right. To genuinely helping me make a good purchase decision based on my needs. It doesn’t feel like that way. It feels like the corporation’s shaping how to sell versus how to understand my needs and then find the right product for me.
[00:11:40] Adam: Right, and you don’t leave there feeling a value.
[00:11:43] Daniel: No.
[00:11:43] Adam: You leave there feeling either A; “I just got sold socks and I don’t need socks,” or B; “Why did that guy keep bringing up insoles? I told them no. All I wanted to do was try on shoes.”
[00:11:54] Daniel: Especially when I have orthotics [laughs].
[00:11:56] Adam: Right, exactly. That’s a totally different thing. They don’t know who they’re messing with. I do think that applies to the restaurant industry, doesn’t it? When I go to a restaurant, I have a lot of choice, a lot of options.
[00:12:10] Daniel: Absolutely.
[00:12:11] Adam: Tolerating service that’s– look, bad service happens. People have bad days. That’s one thing and I think people are willing to deal with that or forgive that.
[00:12:22] Daniel: Right.
[00:12:22] Adam: But mean service, or service with someone who just does not want to be there, or someone who really doesn’t care or a restaurant where you just get the idea like, “They don’t care if I’m here or not.” That’s what is putting the headwinds on the restaurant industry.
[00:12:37] Daniel: Absolutely. Maria told a great story. One of our co-workers told a great story to me this morning about– she was at this local burger brand that had opened a new location up here by our office. Their original location, which is extremely popular, is pretty far away, it’s not some place you’re going to drive to on a workday for lunch.
[00:13:03] Adam: Right, too far.
[00:13:05] Daniel: So, she gets there. You could shoot a cannon through the place; number one. Number two; the server, she said she felt that maybe he was high. She said that it was just– the service was ridiculous. Listen to this story, the ending of the story, she writes– she goes online to their customer service function on their website, she tells them what happens, and she actually says, “Listen, you can use–” I think it was Facebook. I forgot what she recommended, “To recruit more qualified staff.”
[00:13:37] Adam: Yes, hire better people.
[00:13:38] Daniel: Yes, and she goes–
[00:13:39] Adam: I’m not complaining. I’m trying to help you.
[00:13:41] Daniel: Yes, yes exactly. The manager wrote back [laughs] and said, “Thank you for your information. I saw what you experienced. I was in the restaurant when that happened.” Now, can you imagine?
[00:13:53] Adam: Now, is that better or worse?
[00:13:55] Daniel: That made it like a debacle, in my opinion because like– so you– it’s like you just watched me get choked out on the street and you didn’t do anything.
[00:14:03] Adam: Isn’t that– yes, that’s how I hear it.
[00:14:04] Daniel: Yes.
[00:14:05] Adam: It’s like, “Thank you for your sympathy now.” Where was your sympathy then?
[00:14:09] Daniel: Yes. Can you imagine it getting me back in the store while I’m still in the store is much easier than saying, “Here’s a $25 gift card. I hope you come back.” Well, I don’t know, maybe. I’ll probably give it– She said, “I probably won’t go back. I’ll probably give it to one of the young’uns who 25 bucks to them is meaningful. Not that it isn’t to her but–
[00:14:30] Adam: Right. No, no, I get it. I get it.
[00:14:32] Daniel: Again, customer experience, I think it really comes down to that. I was talking about the high-end environment. I want that experience. The outlet mall is the experiences is I’m getting the deal. You feel lie ‘I’m an insider getting the deal.’
[00:14:49] Adam: You know when you walk into that outlet mall that the experience what you’re giving up in exchange for that 35% off, and that’s a trade-off you’re willing to make. I know when I go to QSR that there’s no white tablecloth. I’m good with that because I only want to spend $18 for me and my son to have a meal. He will always choose Burger King because he just loves Burger King.
But I think it’s funny you brought up the high-end brands because, in retail, we saw Radio Shack, we talked about this on our last episode, too, about cord cutting and cable. But the Radio Shack brand, for example, has gone bankrupt probably 10 times since the downturn started and they’re done for good now.
That was a dead brand for a long time, but high-end brands like Michael Kors, is a pretty high-end brand, a consumer brand. They are having problems.
[00:15:39] Daniel: They’re closing a hundred plus stores, I just read.
[00:15:41] Adam: Yes. Yes, Ralph Lauren is a brand we talked about before. Same deal. So, something is changing out there in the world that people are actually starting to think differently about shopping and what used to be the event of going to that store. Even just walking around and then, “Well, now we’re here, let’s buy something.” Nobody’s going around– going there to hang out, so then there’s less of those casual purchases that are off the cuff.
[00:16:10] Daniel: Right, yes. So much of retail for so long was that impromptu purchase. You just happened to go to the mall as a way to hang out and socialize and the buying. Now, shopping really is destination-driven. You went to the store to get that cord.
[00:16:32] Adam: It’s task-oriented much more. Yes, I think you’re right.
[00:16:37] Daniel: Yes. Got to get a birthday present for my wife. That’s very task-oriented.
[00:16:41] Adam: Yes, and you can’t leave without getting something because you probably waited until the last minute.
[00:16:47] Daniel: Pretty close.
[laughter]
[00:16:49] Adam: Exactly, but I’m sure it was a lovely gift.
[00:16:53] Daniel: I like going back to this what you– again, I credit you with this because genuinely, your strategic thought and that retail is not dying. Again, there’s so many funerals being– or so many deaths being predicted out in the media today including retail, but it is truly in its evolution and you talked about delivery. Now, tell me a little bit more about your theory, about how delivery is changing the retail environment as well.
[00:17:24] Adam: Yes. No, I’m glad and there’s an article that is going live. By the time this is up, it should be live, that talks about there’s a little bit more, but we think a lot about delivery here. We just see the size of the trend and we see all the players, the entrepreneurs that are trying to get into the delivery business.
What we’ve noticed anecdotally and also through some research is that if you’re let’s say– I can’t say Pizza Hut, but let’s say you’re like a Wingstop or something, that’s standalone, you don’t have delivery or Buffalo Wild Wings is a better example and you use UberEATS or you use any delivery service. Well, when that thing gets to you, yes, it might be in your box but the experience at the door is UberEATS branded, it is not Buffalo Wild Wings branded.
[00:18:15] Daniel: Yes, that’s a great point.
[00:18:17] Adam: That person is dressed in that brand, that person, that experience is their brand. So, if it’s a good experience, you really don’t get any credit. You know when you get the blame is when I open it and the order’s wrong which– that could happen anyway.
[00:18:29] Daniel: Absolutely.
[00:18:30] Adam: So, what we talk about is, “Hey, if delivery’s a trend and you want to make money in delivery and you want to continue thriving as a brand and growing, what can you put in that box or that order? How can you treat that thing differently to make it feel like I’m having a special experience, even if I’m just ordering because I’m working late and I’m ordering wings for my office and there’s six of us that are pissed off, we’re here late? Make something special happen for us that we say, “Oh, this is interesting.” Sometimes small things like Taco Bell and their sauce labels, the little stupid quips they put on their sauce packets. Dumb but–
[00:19:13] Daniel: On brand.
[00:19:14] Adam: On brand and every now and then I get a little snicker when I see one and I haven’t seen that one before and it says, “Oh, I’m going to make you sweat,” or something. All right, that’s pretty– that’s just the right-
[00:19:24] Daniel: To smile.
[00:19:24] Adam: -amount of chuckle that I expect from Taco Bell. It didn’t have to be this big surprise in the light like they gave me a free chalupa, just a little joke. I think about kid’s meals, you think about Happy Meals that come in that special designed box that’s designed to delight those kids, to make those kids have a good memory.
[00:19:42] Daniel: The food is just the function.
[00:19:45] Adam: Right, at that point, yes, it’s a side item. I think they should– for delivery, if I was a brand like that, that had that business, I would probably be thinking about how could I make this the real star of the show? How could I make the delivery package interesting, engaging, and fun? I mean pizza boxes are a pretty big opportunity.
[00:20:04] Daniel: Well, it’s interesting you brought that up. I think you know this. One of the clients we’re consulting with right now which is entertainment. I challenged the teams to think about how to bring the entertainment component into the carryout.
[00:20:21] Adam: Yes, how do we get it home?
[00:20:22] Daniel: How do you do that? It doesn’t have to– to your point, don’t overthink that, don’t make it, “Oh, we’ve got to deliver some crazy expensive game that they will play.” Make it very, very simple but it’s a reminder, that thank you for getting our product via carryout, but remember the next time you want to dine in, we’re the place that has great food with fun entertainment.
[00:20:49] Adam: Yes. So much of the retail brands that we’re talking about; Michael Kors, Ralph Lauren, believe that– I’m theorizing right now, so this is all happening in real time, tell me if you disagree. They think that the brand– in a conference room, somewhere they know it’s not true, but when it gets down to the tactical level, the brand is the product on the shelves and hanging on the clothes, on the racks, and everything else is like, “Eh, it’s okay.”
I think a lot of restaurant brands think the brand can be dumbed down to just “Well, it’s the menu. It’s the food and the server better not be a jerk.” But that’s not true.
[00:21:29] Daniel: I agree with you 100%. My wife’s a big fan of Louis Vuitton and staying on the Kors example. When I’ve gone into a Louis Vuitton store with her and I see the way they deliver the sales process in that environment. I mean they put gloves on and open these drawers to get the item that she’s “Oh, I’d like to see that purse” and they go, they pull it out of this felt bag and–
[00:22:03] Adam: Right, it feels special.
[00:22:05] Daniel: It feels very special and it sure is heck better because the price tag reflects that, but you’re right. You go to a Michael Kors and it’s not anywhere near that level of experience and I do think, to a certain degree, resting on their laurels that the Michael Kors logo will carry the day.
[00:22:27] Adam: Walk out through that office. I mean everybody out there has some Michael Kors product. My son has Michael Kors sunglasses or something. I mean– [Editors note: My son just broke his glasses and replaced with Ray Bans]
[00:22:35] Daniel: Oh my gosh.
[00:22:35] Adam: Yes, it’s ridiculous. It’s everywhere. So, it’s funny if [crosstalk]
[00:22:38] Daniel: Styling.
[00:22:39] Adam: He’s a very stylish boy, but I think about the restaurant brands, it’s almost the bigger you get in scale, the further you get away from the center of your guest experience, and Jesus, we hate jargon and we’re not talking about making it just– what’s it? A customer journey map, I mean those things–
[00:22:57] Daniel: You don’t want to talk omnichannel right now?
[00:23:00] Adam: Omnichannel marketing, for sure all day. We don’t like the jargon. I think there’s value to the journey map, but honestly, we don’t have to overthink the customer journey when it comes to a restaurant.
In 70% of cases, they’re driving by, they’re hungry, and they pull in. I mean there’s not much more than that. They see an ad. They don’t even remember it and subconsciously, they see the sign and they go, “Oh, right. I’m hungry.” For whatever reason, that neuron fires and they go in. That’s the journey. If you let them down after that, they’re not coming back.
[00:23:28] Daniel: Well, and I think that– I’m very cynical about the whole customer journey because first of all, there’s millions of customers. How can you ever– if you’re going to dumb down the customer journey to, “Oh, it should be this,” that means you are missing so many opportunities because if I come in and I’m not following the journey the way you’ve been trained to deliver it.
[00:23:56] Adam: Then what?
[00:23:57] Daniel: What do you do? Especially in a environment where the sales individual or the server isn’t paid that much. They’re not going to know how to evolve and move with what I’m doing. So, I think the customer journey, quite frankly, is fraught with risk to commoditizing it all mostly like, “Okay. Well, 60% of our customers do this so therefore this will be the journey,” leaving 40% which is a boat load of people
[00:24:30] Adam: I wish– I want it to be that easy. I mean I wish it was. I would love to go sell journeys all day. I agree with you. I think they’re more– for most brands, there are some brands that can parkour their way around a journey and figure out how to shuck and jive and build on it versus being constrained. But I think for most brands, they barely have the bandwidth to build the operation they’re trying to build and it becomes a trap, it becomes a tunnel they’re stuck in.
[00:24:59] Daniel: Yes, exactly.
[00:25:02] Adam: Talking about brands, we talked about– we touched on the digital experience. We talked about Amazon who’s eating everything. Ultimately, I don’t think Amazon will be the only company in the world. I’m pretty confident. There’ll be other companies that also exist.
But another side of the digital experience is that people are spending much more time doing things that they think they’ll be able to share online, that’ll be share-worthy, that can be Instagrammed. Most stores at a mall are not that.
[00:25:35] Daniel: There’s no Instagram options in Dillard’s. Sorry, Dillard’s.
[00:25:40] Adam: No, it’s rather hideous, right?
[00:25:42] Daniel: Yes
[00:25:43] Adam: So, when we think about restaurants– who was it? There’s a few brands that do table tents that are shaped like picture frames. So, you can put your face in there and then do a selfie or take a picture of the person you’re with. It’s a dumb thing, but again, going back to that Taco Bell example, it’s something little, like just the right amount of interesting for I’m at this casual Mexican chain. That’s okay. That’s good. It doesn’t have to be much more intelligent or dynamic than that. If it is, that’s cool, but man, if you have a standee of the most interesting man of the world from Dos Equis and people can take a picture of it, they will. They will do it.
[00:26:26] Daniel: Yes, classic don’t overthink it, make it simple. Furthermore, as you know, all our stats our showing this, that user generated content is shared and consumed and liked so much more than the brand generated content because it’s not curated. It’s more organic. It’s natural. It’s more interesting because like-minded people are sharing these things and I think this example that you give, gives the user the opportunity to generate content-
[00:27:02] Adam: And control it.
[00:27:03] Daniel: -and control it and can potentially be shared because they’re friends are going to see it and then they’re going to want to say “Oh, you should see what’s going on here.:
[00:27:10] Adam: Right. Yes, that’s right. It’s more authentic in a way that the word is really intended to be used not in a way that a ’70s slide deck on authenticity for your brand-
[laughter]
-it brings to life the authentic side of it.
[00:27:26] Daniel: Be sure to be authentic.
[00:27:28] Adam: Oh, jeez. These millennials they love the authenticity.
[00:27:31] Daniel: That’s right.
[00:27:33] Adam: Any last parting shots you want to take on retail? Do you think that we’re in the midst of a funeral and almost will be close in the next 30 days?
[00:27:42] Daniel: I do not. I think it’s more like 45 to 60. No. [laughs]
[00:27:46] Adam: You think that’s good?
[00:27:47] Daniel: I subscribe to your theory. This is a major evolution going on, 25% of the malls are predicted to be closed in the next five years. I don’t doubt that. I think there’s probably a great deal of reality that I think like anything in these downturns, if you will, these evolutions, the strong will survive. The ones that are smart and in the right place and with the right mix of stores and offering new experiences within their malls instead of just resting on their laurels as to what’s been driving mall traffic for the last 20 years is not what’s going to drive mall traffic going forward.
[00:28:31] Adam: Yes, I agree. It will be new things. We won’t miss 25% of the mall’s closing. I don’t miss– I haven’t been to a mall. I can’t remember how long. You can close a quarter and nobody will miss them. I think they probably just had overbuilt.
[00:28:47] Daniel: Yes, major overbuilt. Absolutely.
[00:28:49] Adam: Yes, and so I think we’ll see what– as those really do close and are closed or knocked down and rebuilt into something else, the part of the evolution will be, “Okay. Well, which one of these restaurant brands is left standing when a major source of traffic closes?”
[00:29:05] Daniel: Yes, and it becomes the next big question for our restaurant brands as these malls close for those brands that have the luxury of expanding right now and there are many, where are they going to go? I think the real estate model and this is probably something we could do in our future-
[00:29:26] Adam: I think we should, yes.
[00:29:27] Daniel: -podcast is I think the real estate departments of all these chains are going to have to start really thinking about the model they’ve been using to select locations, I think in itself, probably it needs to evolve in the light of this evolution going on in retail.
[00:29:45] Adam: Yes, that’s a great point. I think we’re going to close on that and that’s a great place for us to pick up with our next episode. So, I think we can make a promise to do that.
[00:29:53] Daniel: Perfect.
[00:29:54] Adam: So, thank you very much for listening. If you have any questions, you can email us dan@foodandrestaurantmarketing.com or adam@foodandrestuarantmarketing.com or bug us on Twitter @FandRm. You can read the article I mentioned at foodandrestaurantmarketing.com and please comment, tell us what you like, tell us what you hate. We love to hear it all. We really appreciate it.
[00:30:18] Daniel: Take care, eat well.

Listen to the episode here.

retail, sales, traffic, restaurants
Things aren’t too busy in retail locations.

Transcript of Food & Restaurant Podcast – Living Brand Authenticity with Zac Painter of Fatz Cafe

Transcript of Food & Restaurant Marketing Podcast – Episode: Living Brand Authenticity with Zac Painter of Fatz Cafe

[00:00:09] Adam Pierno: Welcome back to another episode of Food and Restaurant Marketing. I am excited to get this one on the books because our guest and I have been working for a long time to make this conversation that you’re hearing now happen. Today, we have a really, really interesting guest with an interesting story. Joining us today is Mr. Zac Painter of Cafe Enterprises and Fatz Cafe. Welcome, Zac.

[00:00:56] Zac Painter: Hello, Adam. Thank you for having me.

[00:00:58] Adam: Of course, it’s been a long time coming. I would love to just let you tell the audience who you are and where you’ve been, and just give them the highlights so we can get a little context for who we’re hearing from today.

[00:01:11] Zac: Sure. Well, I’ve been with Cafe Enterprises for a little over a year. Cafe Enterprises operates- we have 46 casual dining restaurants in the southeast, 45 under the Fatz Cafe brand and one under the Tavern 24 brand.

Prior to joining Fatz, I spent the last nine years or so on the agency side. I was working with Erwin Penland Advertising which was part of the inter-public group. Most recently, we were- I served as the Group Account Director, Senior VP of Account Management for account. We’re agency record for Denny’s. We handled everything from their social media brand strategy broadcast. Really, everything except for the media buying and planning and the scope.

So, a lot of experience with Denny’s. Prior to that, I worked on brands like Dunkin Donuts, Firehouse Subs and a few regional players. So, really, restaurant is in my blood. I grew up– my father was a restauranteur. My mother was a Director of Human Resources with a restaurant chain based in the Carolinas. Worked my way through high school and college, serving and tending bar and then I got into the restaurant marketing world. This is the perfect spot for me here.

[00:02:33] Adam: Totally. So, two things I want to touch on in what you just went through. Number one, if you’re listening to this and you compare our bios, you’ll notice that Zac and I both worked on Dunkin’ Donuts but at totally different times and places.

We’ve crossed paths a few times but we actually did not know each other until just really recently. But you’ve worked on a lot of really killer brands that the topic for today is all about Living Brand Authenticity. You’ve got the experience on the one hand with the brands that you’ve worked on. Danny’s Duncan which I know personally is just– they really do try to live their culture. Then Firehouse Subs which is another great brand that even as they extend and get bigger and bigger, they don’t lose touch with who they are. do they?

[00:03:17] Zac: That’s right. There’s a reason for that authenticity, I mean, especially with Firehouse Subs. The brand story behind that is really not exaggerated with the heritage in the– I think of a hundred years of the firefighting experience in the family, that was all very true and that’s a great story.

[00:03:36] Adam: You can’t fake that. That’s amazing. Also, something else you can’t fake, your background growing up in the restaurant business and seeing it from the side of operating, running a restaurant, being on the floor, and be in front of house and really see how it works. You’re not an empty suit that’s saying, “Well, I think we can do A, B, and C.” You’ve seen it firsthand and seen the effects of these decisions have on people.

[00:04:01] Zac: Yes, that’s something that I think has really helped me win credibility and build relationships with numerous franchisees, identities, or the general managers and operating partners at Fatz Cafe. The CEO of Cafe Enterprises has a culinary background. I worked in restaurants. Our CFO was a General Manager while he was getting his Master’s in finance.

So, the cool thing about our leadership team is really all of us have spent time working in the restaurant and understanding what it’s like on the frontline.

[00:04:36] Adam: It helps so much and I’ve done the same thing. I did a lot of jobs inside the restaurant industry. So, I have a little bit more of a sense of it. I don’t know if credibility is something I ever have but I think you have it for sure.

So, the topic we’re going to talk about today is Living Brand Authenticity. I wanted to give Zac a chance to talk about Fatz and the project, Zac, that you inherited there as you’ve explained it to me. What was the task and what did you walk into there?

You may need to talk a little bit about what Fatz is as a concept to make that more relevant for people. But just give us an overview of that of what you were trying to do and then I think we could dive into how brand authenticity has been playing out.

[00:05:20] Zac: Sure. So, Fatz was founded in 1988 in Spartanburg, South Carolina. We say it was founded with humble beginnings because the first location was literally a converted peach shed. So, that was kind of a farmer stand on an exit off of Interstate 26 in Spartanburg that you would never put a casual dining restaurant.

Really, it was just the founder, he was about southern food, big portions buying that [inaudible 00:06:01] and really that was one of the reasons it’s named Fatz is there’s this retro logo that we’re actually using on our uniforms now because after I think a few years of trying to keep it in hiding which we want to embrace how we probably started of– it’s just a fun place with you can get fantastic, [unintelligible 00:06:21] and cold draught beer in a very casual setting. So, that’s how we started.

In the ’90s the restaurant brand became very successful, started growing pretty rapidly. We have 45 Fatz in five states right now and we call it– it’s a southern kitchen. We’re best known for calabash chicken which is a seafood method of frying chicken, our baby back ribs, fantastic steaks.

So, the brand was really about southern food, southern hospitality, and this community engagement and the attitude and relationship among the employees, so just being a really fun place to work and a fun place for our guest to be.

[00:07:15] Adam: All right. Now, I want to stop you there. This is where I want to interject. So, it starts at a peach shed, it’s all– for crying out loud, it’s called Fatz. It’s all about southern hospitality, big portions, good times, great food, and let’s not be shy about either which is awesome; great brand promise.

When you got there, were they still living that peach shed dream or what did you walk into when you came back or at least when the management team came back and started putting it on the trajectory we are on today?

[00:07:50] Zac: Sure. So, I think after the recession 2008, 2009, what happened with a lot of casual dining brands, the segment and the industry started to decline. You look for answers in various places, whether it be low price points or looking at what some of the other brands are doing, throwing things on the wall to see what sticks.

Over that five or six-year period, I think some things were put on the menu and the menu went into a place that really just didn’t fit the core brand of what Fatz was founded to be in 1988. As a leadership team, we’ve committed to our– it’s really making Fatz in 2017 being what the founder would have wanted Fatz to be in 2017.

[00:08:47] Adam: Yes, you want to go back in time?

[00:08:48] Zac: So, not another– well, not go back in time. It’s sort of funny. We don’t want to go back to our roots, it’s really more of a Renaissance. It’s where we would have been in 2017 if we had not maybe gotten off track or the recession hadn’t cost some things to go off track. So, you talk about all these things of what Fatz was founded to be and it’s a pretty cool thing. Not a lot of folks are doing that.

[00:09:23] Adam: Yes, and that’s a really great distinction. It’s not going back in time, it’s going back to the roots of, “Hey, what was it created to be and how would that have been translated if nothing had interrupted it? Which parts of those would still make sense?”

I think as we define authenticity, you were able to help pick and choose. I think we should jump in and talk a little bit about the menu and what happened during the recession. You said everybody was scrambling to keep their share and keep traffic up and we were all doing things to try to wrestle that extra visit that we could. There was some funny things that happened with the menu from where we started in a peach shed.

[00:10:11] Zac: Yes. When we just introduced our new menu, it’s only been out for maybe 12, 14 weeks now. We changed or enhanced most of the items on this menu. We delete a lot of items off the menu. One of the [inaudible 00:10:31] talked about, we took this brand DNA filter of southern kitchen, fast as a southern kitchen like that, the portion should reflect that, the presentation should reflect that.

So, there are some recipes we didn’t touch but we changed the vessel to better deliver us. We got a lot of white plates. Now, some things goes on trays or cast iron skillets or in that sort of way.

Then some of the items we deleted, when you supply a filter, my favorite example is we had an Asian chicken salad on the menu. It’s a good salad, sold fairly well, but there were some items that we had on that salad that we only used for that salad and we couldn’t find other applications in the menu and any person that’s worked in a kitchen will tell you that’s probably a sign that you should cut that out on the menu.

[00:11:25] Adam: That’s is a killer.

[00:11:28] Zac: Right, we deleted that from the menu. We had a Mediterranean Tilapia. We had some of these other things that were fine, but they were added to the menu because at some point or another someone said, “Oh, we don’t have most of our competitors do.”

[00:11:45] Adam: It’s invented or added into the menu as a veto breaker and until somebody has the willingness or the stomach to say, “Well, if we’re a southern kitchen, is there a Chinese chicken salad?” [laughs] Anywhere in Spartanburg, it was somebody expecting a Chinese chicken salad. That example really cracked me up and is a great way to crystallize the project that you guys are doing there.

[00:12:10] Zac: Right.

[00:12:13] Adam: Let’s talk overall about what else happens inside the four walls. You described the macro scenario of what we’re talking about when we think about authenticity, it has a menu for sure, we can come back to menu. What about decor and even things like I think you mentioned music. What are some other areas that where you looked for ways to add to the authenticity and what did you do to impact it?

[00:12:45] Zac: So, for any brand that’s been around for 30 years, we’ve got buildings of various ages. We can’t go out and update the decor in 45 restaurants to be universal and brand new to reflect this new menu. But there are things like I mentioned the plate ware, the glassware, we’re serving some items on quarter sheet trays and butcher paper because that’s an appropriate delivery for our southern sampler, for example. It’s fried pickles, it’s pimento cheese dip in a cast-iron skillet and calabash fried chicken. That doesn’t belong on a white round plate. There are some better vegetables that better deliver on the experience.

Our staff uniforms, I think they’re a little formal for what we were. It didn’t reflect what we were intended to be going back to the peach shed. They were wearing shorts and t-shirts. We got to a point where it was black, white pants and colored shirts.

So, we’ve gone back on t-shirts with southern sayings and our most popular one because we’re actually selling them at retail now because they’ve become something that our guest are requesting. It’s great and this originally was intended for bartenders to wear, it says, “Talk southern to me.” We’ve got things and say they are around, here you all as a proper noun.

So, things that deliver on that– the southern kitchen aspect of it. I think when you– what the team members are wearing in the restaurants reflect– make them more comfortable and we want them to be more personal. We don’t want them to be scripted.

I think it creates a more casual environment and the music. The music was a big one. For me, I love music and I love music that has southern roots. I think we’ve been here. I have been here a few weeks and we were having lunch in one of the restaurants and an Imagine Dragon song was playing. [inaudible 00:15:04] was fine but–

[00:15:06] Adam: As southern as it gets, Zac. It’s as a southern as it gets.

[00:15:10] Zac: [laughs] Imagine Dragon should not play in the Fatz. We worked with a company and actually built a custom playlist that consists of blues and R&B and southern rock and Americana music. No offense to Imagine Dragons, I said, it’s not something that I think should ever be played in a Fatz, it doesn’t really fit the experience.

So, we worked with a company to develop a custom playlist specifically for Fatz that consists of blues, southern rock, Americana, R&B [inaudible 00:15:50] as far as regions of the country go, you would be hard-pressed to find an area that didn’t have the same roots and music that has influenced so much music as the south.

So, we really needed to deliver on that. Between the upgraded plate ware and glassware, the uniforms, the menu, the music, and most importantly the food, I think we’re delivering much better on that brand promise that we have in Fatz.

[00:16:25] Adam: As it relates to music, it’s really smart to say, “Well, let’s go back a little bit towards when we were founded and start thinking about what the roots were.” Including blues and including some more soulful expressions of music. It would be an easy thing to say, “Well, let’s just call Muzak or whoever the vendor is and have them put together a country hits list.” Jesus, that stuff would be missing by a mile for you guys, a lot of the commercial country that’s on the radio today that I just feel like misses the soulful part of what you guys are assembling for the brand.

[00:17:01] Zac: Yes, that’s exactly right. We actually put together really a creative brief for what the music is and we specifically said this is not pop country. We can have some country music. I think you would hear Jason Isbell more than you would hear Tim McGraw in a restaurant, right?

[00:17:19] Adam: More soul.

[00:17:21] Zac: Right, it’s that Americana– the type of country that I think you would be more likely to hear on Sirius XM radio rather than your standard pop country radio station. I hear a lot of Blues.

You can sit down in an hour, you hear the Allman Brothers, Aretha Franklin, Sturgill Simpson, and the Grateful Dead and that is not an uncommon bachelor music to hear. I think there’s– one of the things that I thought was interesting right after we made the change, I visit the restaurants pretty frequently and I’ve had dozens of employees saying that it’s made working there a little more fun because they’re not just hearing the same top 40 over and over and over. They’re really hearing some diverse, fun music.

[00:18:10] Adam: Yes, and not only that from a guest experience perspective. They can’t go into Chili’s and hear the same songs. It’s a unique take on it and for their– I don’t know what your average duration of a visit is, but let’s call it 60 minutes. They are hearing things that they normally don’t hear but I’m sure they respond to and it makes the experience have that authentic feel. It’s unique and it’s hard to track down that combination of songs you just laid out. Even on Sirius XM, there’s not really a station that plays the playlist you just described which I think is really powerful.

[00:18:45] Zac: We actually play the same music in the office here and been funny because it’s like I actually enjoy. It sounds like it’s my iPhone on the office speakers. That’s been fine. I mean, really, it’s interesting and it’s fun to talk about and it’s really what we’re trying to do with everything because you think about that music and you think about some of the food we’re talking about.

You just think about what’s happening with casual dining. If you can find those things that appeal to both boomers that have the disposable income and are still using casual dining often, and we’re all fighting to win Millennials, right?

There are certain things that really hit both but they hit both for different reasons. That type of music we’ve gotten compliments from boomers because it’s what they– it sounds like what they used to listen to. In a lot of cases when we’re playing some of the older blues or R&B and southern rock, it is what they used to listen to.

But that type of sound, I mean, you can tell by looking at the recent Grammy winners is back, especially the Americana feel which 10 or 15 years ago just didn’t have the popularity that it has now.

So, I think you can make that same parallel with some of the foods we’re talking about, some of the comfort food. One of the top items on– we call the Big Fatz Chopped Steak. It’s a 14-ounce smothered chopped steak. We’re seeing younger and older, I mean that’s something that a chopped steak is an item that boomers, that type of [unintelligible 00:20:28] appeals to them. But we’re seeing younger people get it because we’ve made this item at as a certain connotation in the new premium way. We’re using certified Angus beef and the presentation is really impressive and we found that common thread between the two.

[00:20:47] Adam: You just said something that really struck me which I think a lot of brands and marketers and side brands really miss. The notion you were talking– you started by talking about music, but you just brought it back to culinary. It hits boomers and Millennials but it hits them for different reasons.

I think so often brands feel like, “Well, I have to– either I have to choose or I have to get Millennials so that means I’m going to have a smartphone app at the table and that’s the only way you can talk to a waiter who stays behind glass.” It goes so extreme to try to get on trend but I think your formula is working, is smart because you’re creating– you’re making it work on two levels so that if I bring my father who’s a boomer and I’m actually a Gen X’er technically. So, let’s just say I was a little younger, Zac. Let’s just pretend.

[00:21:39] Zac: I’m the oldest Millennial for the record by the way.

[laughter]

[00:21:44] Adam: We can both agree to go and we’ll take slightly different things away but it’s a pleasant enjoyable experience from both of us because we’re both finding things to pick out of it that we can enjoy. As we talk about Millennials and boomers and essentially personas which is something I love, spend a lot of time thinking about and creating and I’m sure you do too, Zac.

What do you need to know about your customer to help avoid pitfalls that break up authenticity for guest? It sounds like you’re making the decisions in a very strategic and thoughtful way about making sure you’re touching– creating an emotional connection to your guests. What is it that you look for and that you want to know?

[00:22:25] Zac: Understanding your guests, knowing your guests, how they’re using you, and how they’re using you on different dayparts and occasions and how we can be relevant and as many of those as we possibly can.

We talk about the layers of sales here where we’ve got a– we’ve recently introduced a brunch on Saturday and Sunday mornings starting at 9:00 AM. Sunday is a huge day for us and I think partly because the type of food we serve. The nearest what’s out there is a wait at a Fatz on a Sunday a few moments later and I think it’s because of those southern comfort foods.

Through our eClub, through data that we’ve been able to gather from various partners and looking at our eClub and where else, what hobbies those people have, what interest they are, where they fall on. Our demographics are pretty well representative of the areas that we’re in.

We have a little bit of everyone, 50% of our guests have children in the home, but 30% of our guests are 55 or older. When you start looking at some of these things and how they’re using us, we really– here’s a good example.

Previously, there was a program we did on Tuesday nights called Classic Tuesday’s which was originally intended to be for those 50 or over, it was a menu that had smaller portions and smaller prices. As we’re doing similar things, this is something that we went away from but we didn’t take away without giving.

What we felt like after we talked to the users of that program, what we found is they wanted more than one night a week and Tuesdays weren’t always the best night for them. Really, all we did was take existing menu items and knock a few dollars off and serve a smaller portion.

So, we created this program called the Classic Club which is only available to those in that age range. They can come Monday through Thursday. They get 20% off their entrée. They can wear anything they want, not only the select items we had on that menu.

On Friday and Saturday, we offer them guaranteed call ahead seating and on Sunday, they get a free beverage with any entrée. So, what we tried to say is, “How do you use us and how can we be relevant?” The first thought is, well, you can’t take away classic Tuesday’s because then we’re going to alienate all of our boomers and matures that we’ve created this relationship with.

Well, we don’t want to do that but we want to make Tuesday night relevant for everyone and we want to do something that’s going to make those people even more loyal and be able to come to us more often and use us for different reasons.

[00:25:21] Adam: Well, no. I mean what’s really smart about what you’re saying again, you wanted to upgrade the program but you wanted to make it so it was more valuable to them based on what they’re really looking for. It’s not just the day part or the program. They weren’t in love with Tuesdays, it’s really more about figuring out what they value and how to expand that and make it– you made it more accessible even though you may have pulled some items off the menu, you actually gave them more ways in and more ways to engage based on their habits. That’s awesome.

[00:25:54] Zac: Right, and with families with kids are the other side. Let’s go to the Millennial and Gen X crowd. I think after we did some extensive research in the last year on who our guest is and how they’re using us, I think most people were surprised by how young and how many young families we have that are coming to us on a fairly regular basis.

It’s not a surprise to me but I guess for those in the system there have been older guests can tend to be the most vocal. That’s maybe who you’re listening to when you’re making changes. The kid’s menu had historically been something that was much of an afterthought.

[00:26:38] Adam: It almost always is totally just like, “Well, we’ll have a hamburger and chicken nuggets.”

[00:26:43] Zac: But you look at some of the brands that are really thriving, I mean, some of the casual dining brands that are doing really well right now. They put a lot of effort into their kid’s menus. I have two young children and– knowledge of food and not just because of what I do but their awareness and knowledge of food is so much more than when I was five years old just because of what’s happening in America right now with all the options.

Right after we enhanced our core menu, we immediately tackled the kid’s menu. We put more options on there, bigger options not just for kids that are in that four, five, six age range, but giving those seven, eight, nine-year-olds something to look at, some healthier options but not grilled chicken and broccoli. Like everyone checks off the box with that item.

So, we’re looking at all of those segments and the weekday lunch and the brunch and what people are wanting from us on various nights. So, we’re trying to give that very diverse group of guests we have multiple ways and reasons to use us.

[00:27:54] Adam: And ways that tie into the brand and are authentic to that vision you have for the menu and for the experience that still makes sense. Well, that’s awesome. I think I have used up enough of your time. Thank you very much for making time for us. This was an awesome conversation, Zac. I really appreciate it.

[00:28:14] Zac: Thank you.

[00:28:16] Adam: Yes, cool. Anybody listening, please if you have questions for Zac or for I, you can reach out on Twitter @FandRM or through the email Adam@foodandrestaurantmarketing. Please subscribe and feel free to share this. Zac, anything you want that you have going on with Fatz or personally that causes or anything that you support that you want to–?

[00:28:39] Zac: Yes, we just completed– this was the first time we worked with Autism Speaks. So, it’s part of autism awareness month. The last week of April, we did an in-restaurant fundraising program where in-guests could give a dollar or a $5 donation and get something in return on their next visit.

The first time we’ve done something like this in Fatz. Since I’ve been here and from what I understand in recent memory, we raised over $30,000 in five days of fundraising for 45 restaurants.

[00:29:14] Adam: That’s fantastic.

[00:29:14] Zac: We were thrilled with that. So, we’ll be doing a formal announcement to check presentation and we’ll continue to announce how we’re going to work more with Autism Speaks in the future.

It was really encouraging to see– that’s another part of the brand promise, that community engagement, the way that our team members really got behind that and really broke every goal that we had, even our ambitious goal that we didn’t publicize. So, that was really encouraging. That’s some good news.

[00:29:48] Adam: I love that. Do you think you’ll be doing more of those types of events even beyond Autism Speaks or is that a project or a cause that you really believe in as a brand?

[00:29:59] Zac: [unintelligible 00:29:59] that we believe as a brand and both our CEO and CFO are actively involved in that and have been personally touched by autism. So, it’s something that’s very important to us, but what we also found for our associates is just the calls that everyone can rally around. Unfortunately, so many people now know someone who has been affected, [unintelligible 00:30:24] families that have been affected on this.

[00:30:26] Adam: Absolutely.

[00:30:28] Zac: It’s just something that’s been so much more in the conversation in the recent years. So, we’re excited about that. We also encourage each of our restaurants to do– we do this thing on Saturday morning called Pancake Breakfast where we work with local nonprofits. The nonprofit’s come in and actually volunteer to be servers and they get to keep a portion of the sales for that day. So, we’ve been doing those for a decade. This was just the first time that five days all restaurants–

[00:31:01] Adam: Yes, a concentrated effort.

[00:31:03] Zac: Everybody has a laser focus on this and it had great success. So, we’ll definitely do thinking’s like that in the future.

[00:31:09] Adam: Excellent, that’s awesome. The next one you do, let us know. We will help you promote it for sure.

[00:31:14] Zac: Awesome. Other than, I’m about to head to NRA. So, I’ll be in Chicago the next few days looking at-

[00:31:29] Adam: Beautiful.

[00:31:21] Zac: -what’s coming up on [crosstalk].

[00:31:24] Adam: We’re sitting that one out but I’ll check in with you after for a good recap of what you found.

[00:31:29] Zac: Awesome. Well, thank you, Adam. I appreciate it.

[00:31:32] Adam: Yes. Thanks a lot, Zac. I really appreciate it. We appreciate you making time for us. Thanks again. It was a little bit tricky, but [laughs] I’m glad we’re finally able to get it on the books.

[00:31:42] Zac: We figured it out. [laughs]

[00:31:43] Adam: There we go.

Listen to the episode here.

Transcriptions by Go Transcript.

Earning traffic during the retail decline

Retail business is being crushed – no surprise to anyone studying their local markets, watching the news or even driving in their neighborhood. Stores are closing and brands are going bankrupt. Strong brands like Macy’s, Lululemon and Ralph Lauren are suffering. Weaker brands like Sports Authority and Payless are suffering even worse.

There are some theories about why. Amazon. Experiences. Did we mention Amazon? But the fact is that people are spending less time going to stores. The build out of restaurants across the US was aligned with the buildout of retail. Creating destinations that would attract people (shoppers) called for restaurants that allowed them to refuel and extend their shopping trip. Now, traditional anchor tenants are shutting down making malls empty husks. Developers are scrambling to rethink the space they’ve got so much invested in.

What will be the memorable touch that your staff provides that will earn five stars on Yelp and a repeat visit?

Multi-unit restaurant brands have lost the natural traffic from their retail neighbors. Considering the extreme die-off in retail, restaurant sales are remaining fairly strong.

Experiences built for sharing.

One theory for the drop in retail is that people are spending more on experiences. Specifically the kind of experiences that make them look good on social media. Experience has become a buzzword, generating cottage industries of specialists and consultants. It doesn’t have to be that complicated. What in your restaurant is worth posting to Instagram? What’s on the menu that will break through the Facebook feed and go viral. What will be the memorable touch that your staff provides that will earn five stars on Yelp and a repeat visit?

We are seeing strong, established retail players really ask themselves if they are offering something worth visiting. Is the experience worth the trip? Would you invite someone to come along? Would you share it to social media in a non-snarky way? Brands need to look in the mirror and accept what they provide and its value. The brands that do will have a chance to create experiences that people will travel for.

Delivery as an extension not a replacement.

If people won’t be coming to you, you can go to them. But one flaw with the current trend of delivery services is the lifeless exchange with the brand itself. Hospitality provided by the restaurant is gone. The experience is provided by a proxy. Staff and servers are critical to earning repeat customers, so what happens when they’re eliminated from the transaction? And a transaction is all it becomes.

Another reason that retail has fallen off is that online retailers have found ways to mimic the service and personal touch of live staff. They’ve eliminated barriers. Restaurant brands must find ways to extend the experience in a delivery environment. What touches can be added to make delivery from your brand memorable and differentiated? While people are keen to share images of their meal at the table in your restaurant, they’re very rarely interested in sharing an image of food that’s been delivered, unless something’s gone terribly wrong. Give them a reason to get excited about the brand from their own home.

One interesting thing about people is that we always think we’re watching the third act. What is happening to malls today isn’t necessarily the final state of American retail. Building malls as a center for commerce was one phase. The web was a second. Mobile is still impacting things today. Technology like self-driving vehicles will change shopping in ways we haven’t yet considered.

The brands that are positioned for growth aren’t the ones going all in on what we know today. They are the ones who are creating plans that will be adaptable going forward.