Comparison shopping. Brands are tested against a wide array of experiences.

If you kept a dining journal you might be surprised at the varied names that appeared. People don’t have a loyalty to most restaurant brands. Never mind a single dining format. Know anyone that goes exclusively to fast casuals and never sits down at a casual dining establishment? Know anyone that truly avoids every type of QSR?
People have a wide array of options and a larger pool of comparison.

No, if you looked back at the location data stored in your phone, you would find something surprising. People choose restaurants of all shapes and sizes depending on a variety of factors. F & RM has examined this in our study. Beyond restaurants, people eat or purchase meals at convenience stores, gas stations, food courts, kiosks, family entertainment centers and theaters. How does your brand stand up to the comparison?

If you launch a restaurant brand today and hope to identify a tight group of competitors, think again. A concept like Studio Movie Grill is offering something no other casual dining place can; first run films. C-stores have upgraded their food offering. It’s on par with many QSRs and some even survive comparison to Fast Casual. Brands like Pizza Hut have softened the entry point on the pizza category through their entry in to QSR and drive-thru formats. Brands like Hunt Brothers and Quick Trip have a solid quick serve pizza offering. The middle ground is shrinking.

Each restaurant brand is used for a different range of purpose. It solves a different problem for the customer. We add more potential solutions for each situation or day part. The comparison between the solutions for each day part is natural. How does my quick morning pick up will go? Starbucks, Quick Trip, Dunkin’ Donuts, Panera Bread, the local deli. Which best meets the need?

But it doesn’t stop there. Food is sensory. Service is emotional. Both of these elements create lasting memories for customers. Those memories aren’t constrained by rationality. People do compare the pizza they got from a drive-thru to the great pizza they got at a family restaurant. They absolutely do. How do you suppose that comparison ends for Pizza Hut?

How about customers of places like Jimmy John’s or Capriotti’s? They like the brand, they understand the experience. They know how the prices of each align and how long each takes. Then they go to a convenience store and pick up a surprisingly good ready-to-eat sub on a road trip. That experience is marked in their mind the next time they go into one of those sub shops. The value and food quality are now subject to a new comparison. Is it better than the c-store sub? Is it two dollars better?

In this context, think about casual dining customers. Even a loyalist of Applebee’s will run a similar comparison to food quality when they have a good prepared meal from their grocery store. Again, they do the math on the cost and ask, “Is the service and a soda worth that?”

When we price in service on top of COGS we price against similar concepts. We look at the other brands that look just like us. So often, brands limit their competitive set to only ‘like’ concepts. It’s time to expand on that. Because that’s what customers are doing.

Changing beverage habits and sales erosion

Some long gestating changes to American behavior have taken root in 2016. The beverage category looks much different today than it did 15 years ago. Sales of giants Coca-Cola and Pepsi (and their endless list of owned brands) have been flagging. Though they have found innovative ways to gain bumps in sales, it appears that new habits may be leaving those brands behind. The CPG space has already reflected these new behaviors which are now impacting the dining space.

According to NPD Group, soft drinks are still the number one consumed beverage on-premise. Coffee ranked number two. It appears that tap water is cutting into the purchases of both of these. But bottled water is the fastest growing segment of beverages purchased with meals. Orders of tap water indicate cost sensitivity, but increased sales of bottled demonstrates people making a choice. They are choosing fewer soft drinks.

Government programs raising costs won’t help. Sugared beverage taxes increase costs for both customers and restaurant operators. Tax programs have expanded to five more cities this month. State programs like these take aim at cost sensitivity to change habits towards sugary soft drinks, but may have further reaching consequences.

Sugar isn’t the only problem. This summer, it was reported that alcohol sales have dropped for the third straight year. The Beverage Information Group reported that sales had dipped again in volume though revenue remained mostly flat. This reflects a move to more premium or craft alcoholic beverages.

The introduction of the Coca-Cola Freestyle machine differentiated restaurants and spurred drink sales for a while. But this has faded.

Assuming this trend continues, a move away from premium beverages would be another hit to same store sales. That becomes even more important when you layer on research from Upserve. They analyzed thousands of checks from their POS system. Guests who ordered alcoholic beverages are more likely to order dessert. About 75% of tickets with alcoholic beverages also included dessert. Red wine had the highest correlation to a dessert item. This tells us that as average check drops from lower alcoholic beverage sales, desserts and other items will drop as well.

Obviously, fewer drinks ordered immediately reduces average check. People choosing tap water take revenue away from restaurants. So understanding why is important. Guests have never had more options for beverages. It will be difficult for restaurants to both stand out and to predict the favorite of every guest.

The introduction of the Coca-Cola Freestyle machine differentiated restaurants and spurred drink sales for a while. But this has faded. New approaches are needed. For most brands, beverages are an afterthought. The time is right for innovation with beverages.

Go small.

This might be the time to test offering craft beverage makers exclusively. We sell what guests want. They are buying less of big brands. Test programs bringing small producers to your guests. The drawback is finding partners to match your brand footprint, and meet your demand. Obviously, Pepsi and Coke have distribution covered no matter where your restaurants are. This might be an opportunity to work with new distributors to uncover brands on a regional basis. Using small or local partners also aligns with the trend of anti-global consumerism.

Explore drink LTOs.

If your concept allows for it, consider rotating your beverage options. Dedicate one of your pours to a revolving drink on a limited basis. This will create some interest in the drink menu and vary experiences for returning guests. This is an important part of the experience curve. Pricing these attractively will also spur interest and get guests back in the habit of ordering that beverage.

BYO Beverage.

One way to counter the swing-and-a-miss of choosing the wrong small beverage brands is to create your own brand. Guests are already there, they will be receptive to trial if you can make your drinks compelling. Try flavor combinations that really compliment your food menu, even specific items. Make drink options that are fixed or recommended parts of combinations. This is another way to extend your brand and differentiate from competitors.

Finally, train your staff to offer a drink with each transaction. Whether it’s a server at the table or someone at the register. Just asking if guests would like a drink is often enough to remind them that they actually do.

Growing an emerging brand: three key factors for success

watering can, new product, CPG

Growing an emerging brand in the CPG space takes a special focus and attention.

A growing consumer package goods company can efficiently and effectively create demand and generate trial with limited distribution and a limited budget. The way it’s done is by doing a few things well and with great precision.

It’s important to remember when setting a precise strategy, you must sacrifice some things you think you want to do. Staying focused on what’s working will prevent you from straying to random tactics and getting off message. There are three critical components to an effective marketing strategy for most emerging brands. They’re designed to focus your limited budget on the optimal tactics and messages through a test and optimize approach. More on that later. The three critical components are: geo-targeting, target audience, and optimal messaging.

1. Geo-targeting

Geo-target your promotional investment in your best markets. Examine your ACV in each market to ensure people will be able to find your product once you create an interest.

You need to understand who your best and most likely customer is.

Start by identifying your top five designated market areas (DMAs) based on where you have the best distribution. Your primary objective is to generate awareness so you can generate trial. Several great ways to generate that awareness include: paid search, paid social, and online video. All tactics can be implemented relatively inexpensively.

2. Target audience

Have a precise target audience for your product. Do not try to reach broad demographics like “Adults 25-54.” It’s not efficient. You want to understand who your best and most likely customer is. You’ll base this not only on gender and age, but also with a clear psychographic profile. Understanding who your raving fans are is important so you can use all the digital targeting tools available today to go find more people with the same profile. When setting your target there are several tools available, like social listening, Facebook Insights and Google Analytics.

3. Optimal messaging

Create optimal messaging that will resonate, engage and motivate your audience. Because you are implementing the test and optimize model, there is no need to limit your message options. Since you’re early in your marketing efforts you want to test a variety of approaches to determine which ones resonate with your audience and creates the best click through rates and conversions.

As you learn what advertising messages and types are generating click through and conversion, you optimize your advertising spend on the most effective ads.

Consumers are looking for new products all the time. They’re interested in new flavors, new options to replace old favorites or they’re just trying new products out of curiosity, and they use a variety of channels to seek them out. Whether it’s search, social channels or websites; emerging brands need to get their message out there so we can discover your great new product.