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.

Is your brand experience easy to understand?

I visit a lot of restaurant concepts to find new trends and innovations. I always note is how easy it is for a new customer to understand what they are supposed to do to enjoy their visit. Especially their first visit. Blow that one, and there may not be a second. In our research into Millennial dining habits, 58% told us they base dining decisions on past experience. It is important to get it right early and often.

Menu

This is an issue on two levels. First, choosing the menu items and names that let people understand what they are choosing from and what it will taste like. Some concepts go all in on naming conventions that don’t always set expectations. Krystal calls its regular burgers Krystals. Probably fine given the presentation of the menu and focus on that primary items. But also on the menu are variations of hotdogs called Pups and Corn Pups.

Does everything on the menu make sense together? If you’re an Asian wok-based concept like Pei Wei, adding sushi is not a far leap for the customer. Less so at a southern chicken concept. That’s pretty simple. What about new items Buffalo Wild Wings has added? The brand has done great with a straightforward menu and formula of wings, sports and beer. Do burgers make sense there, or is the brand grasping for innovation. They’ve also added a pulled pork sandwich to their menu, even further afield. Raising Cane’s has been disciplined in keeping the menu extremely tight. Time will tell if they feel the need to expand the menu when location growth slows.

Don’t underestimate the importance of menu design. QSR and fast casual brands have the burden of communicating the flavor and experience at distance and often without much conversation. At Culver’s, the menu is much more expansive than a new guest might expect, making the first visit potentially overwhelming. Is the menu organized as simply as it can be? Are there flavor cues where needed? Is the menu divided intelligently, so it can be scanned.

Footprint

This is sometimes out of your control, but a restaurant layout needs to welcome people. In casual dining, it’s important to have an area near a host’s stand for guests to gather and wait. But also to hear the music and see the sights inside the restaurant. No one likes to wait, but at least give them a chance to absorb the atmosphere and get excited to get to their seats. Texas Roadhouse does a great job with this.

In fast casual and especially QSR, give them an entry that allows them to comfortably view the menu. Even if a restaurant is as simple as Five Guys or Firehouse Subs, the first visit takes some orientation. Give people space to stand back and observe; don’t force them directly into the queue. Watch people’s first visit to a Qdoba and witness the awkward pauses, the questions, the confusion. Don’t position the menu at awkward angles that make it hard for people to read. A common mistake is posting the menu boards on the wall along the queue at chest height; the spacing makes it impossible to read.

When designing a standard footprint we maximize seating, kitchen equipment, safety. Make sure customer experience is included. Especially for new guests. How much does the layout give the guest a chance to understand the brand? Guests need to look at some of the food on other guests tables, see how they’re eating it, and what they’re combining.

Training

Does your staff know their stuff? Do they help people understand? Are they trained to explain the concept and guide people towards favorite menu items? In a perfect world, the answers to all of these are yes. But reality is far from perfection. Even with the best menus and a flawless layout, some guests just won’t read or get it. Some will want to talk to staff and test them.

Find out what the most common questions are from guests. Set up training programs to give staff the help they need to perform at this level. Secret shop to ensure a high standard is being upheld. Reward staff living up to that standard with spot bonuses or other perks.

Staff trained in explaining the experience are trained in hospitality. Executing that well turns a confusing experience into a great one.

Transcript of Food & Restaurant Marketing Podcast – Episode: The Ups and Downs of Restaurant Loyalty Programs

Transcript of Food & Restaurant Marketing Podcast – Episode: The Ups and Downs of Restaurant Loyalty Programs

[00:00:03] Adam Pierno: All right, welcome back to another episode of Food and Restaurant Marketing. I never get tired of saying that.

[00:00:11] Dan Santy: Right.

[00:00:13] Adam: So again I am Adam Pierno and I’m here again with Mr Dan Santy.
[00:00:18] Dan: Good afternoon.
[00:00:20] Adam: Today we are going to talk about something near and dear to our hearts, loyalty programs for restaurant brands.
[00:00:27] Dan: Well may be near, but not dear. We’ll see what I have to say about that later.
[00:00:34] Adam: Yeah well we’re, I think, unique educates, because we’re neither advocates or enemies of loyalty programs, we definitely are pragmatic about it.
[00:00:44] Dan: Absolutely.
[00:00:46] Adam: The key is: really when does it make sense for the brand, what stage of life the brand is in, how are sales, how are your customers, what does loyalty look like?
[00:00:53] Dan: What’s the strategic initiative that loyalty programs are designed around, but we’ll get into all that here now in a minute.
[00:01:00] Adam: Yes, we can we can jump in, so let’s talk about some of the reasons that we’ve seen brands launch loyalty programs. You know essentially what are you trying to do when you’re when you’re launching a program like that.
[00:01:13] Dan: That’s the number one problem with loyalty programs, I’m glad we’re kind of getting at that thing that irritates me the most about watching brands that jump into this field because I think a lot of times it’s a strategy that people will employ due to a short-term problem, and because it’s a short term problem they think they’re solving, they jump into it and they go and, forgive me Fishbowl but I’m gonna pick on you here. They call a service like Fishbowl and they pay them the fee and thirty days later, whatever the case may be, they’ve got a lot to program up and running, but they’ve not really thought through any of the mechanics of the program, do they really think it’s going to work, if so how and what’s the phase one, phase two, phase three of a loyalty program.
[00:02:04] Adam: Right, what’s the end game besides the short term problem.
[00:02:08] Dan: Exactly.
[00:02:09] Adam: So for everybody listening we know that you are keeping track on a daily or hourly basis of stats like traffic, sales and counts, looking at average ticket, looking at repeat traffic, so how often are people coming back and how are people kind of peeling off and losing interest in the brand. Those are the metrics that usually, that we’ve seen trigger panic from operators where they say well we better do something to create some loyalty here.
[00:02:41] Dan: Right and free — listen, I’m a big fan, I’ve got a friend of mine back east, he’s in the finance game and he says that people — number one, they like free sh*t, forgive me for saying it. And number two, they like cheap S-H-*-T, so it makes sense, right? Like OK well we’re going to reward them for coming back, but are are we really rewarding them for coming back or are we just getting the least amount out of them and then rewarding them based on whatever formula we’ve created.
[00:03:15] Adam: Yes, and that’s something that we always debate, we’re going to talk about that when we get a little further into this, but you know at the top if your goal is to solve a traffic problem, if traffic is down then what we always say when we’re — when we look at these programs, make sure you’re engineering a program that has traffic as a defining metric. I get loyalty from making multiple visits, if it’s sales then reward me for paying more or buying more things.
[00:03:43] Dan: Exactly.
[00:03:43] Adam: A lot of times Dan referenced Fishbowl, there’s a lot of “out of the box” programs-which I like turnkey-but turnkey often means one size fits all and we know that, no it doesn’t.
[00:03:56] Dan: Absolutely not.
[00:03:57] Adam: It fits awkwardly.
[00:03:59] Dan: At best. That’s right and having discipline to be strategic is hard in today’s world, I get it. You’ve got pressure from either the C-suite, depending on who you’re reporting to, if you are the C suite you’ve got pressure from private equity or the markets, whatever the case may be, so I get that. However, when you implement a program like this you’ve got to look across the entire spectrum of your marketing effort and say “Where is this going to fit in, how does it fit in and the why?”.
You referenced earlier, Adam, all the data that’s available to our clients, they have so much information as a matter of fact, a lot of the articles that (I’m going to digress here from), a lot of the articles you’re seeing lately is big data, great almost like it’s too much data now, now we’re overwhelmed by it and in some respects when we’re overwhelmed we don’t pay attention to any of it and we resort to anecdotal commentary.
So you’ve got to look at the data and say “Where are my real core problems, what’s really happened to the brand” look over a longer period of time, don’t look at the quarter, heck don’t even look at the last year, look at over a two-three year period, because you have that kind of data and say “When were things good and why, when did things start to suffer and why and how do we get that back?” That requires discipline to look at the data and be very analytical about that data and number two is, then make conclusions you’ve got to draw conclusions and make recommendations, which is risk oriented and I know everybody’s a little risk averse and they’re just looking for a solution orientation or tactical and we implement things that ultimately fail.
[00:05:52] Adam: If you just jump to a conclusion, it’s not good. There are some brands that are doing it very well so we want to talk about those and look at what we can learn from those brands so one brand that does it exceedingly well is Starbucks, they’re not exactly a restaurant, definitely atypical in everything that they do, but their loyalty program is really great-
[00:06:16] Dan: And you discovered, this was your revelation or your insight, really, about a year ago, maybe a year and a half now, when we did a study of what’s happening in the restaurant industry and we came up with this idea about — Adam came up with this idea about friction and when you create friction in any program, any marketing program and specifically, specially in loyalty, you’re reducing its opportunity to be successful. When something becomes frictionless, which is what you talk about a great deal to our consulting clients is exactly what Starbucks has done, they’ve eliminated any of the friction, it’s just really peerless in how they execute this. Now they have an enormous brand loyalty about them they have a high frequency level-
[00:07:08] Adam: and they have an advantage in their product mixes, it’s just a lot different, they have a lot more flexibility, so if they’ve got me down I figured it out this morning in preparation for this I get about one cup free for every five I buy.
[00:07:22] Dan: Interesting.
[00:07:23] Adam: And that’s the metric. I sort of watch the points they offer me and they’re very opportunistic, the way they offer me programs, I compared notes with other people here and I say “Hey, I got this thing so you get two hundred points, did you get it?” “No I didn’t get that one.” “But I was in there last week.” “Oh, I hadn’t been there in a month.” A lot of times we talk about customization of these programs, we talk about digging into the metrics and everybody talks about all the data. I can tell that Starbucks is actually using the data to provide better experience and unique offers to people based on behavior, they’re triggered by actions or they’re triggered by absence of actions and they’re unique to each person. Standing ovation for that and it actually is effective on me and I’m pretty cynical about these types of programs.
[00:08:09] Dan: Here’s the important thing to understand about — what Adam’s talking about, the number one thing they’re doing is leveraging technology, leveraging data and algorithm to understand his behavior in order to then optimize how they’re going to reward him. That’s a whole another level, you know. I’ll go — again, forgive me Fishbowl, you guys are perfectly fine people, I’m sure, but like Adam said, that’s just this basic “out of the box” solution-
[00:08:40] Adam: One size fits all.
[00:08:41] Dan: One size fits all and it’s not going to do — it’s not going to get anywhere near doing what what he’s talking about, now we’re also saying that some mid-sized brands, even smaller brands, don’t have the resources to use that technology or employ that technology. But again, back to my “phase one, phase two, phase three” comment I made earlier, think this through. Say “phase one, let’s get something launched, let’s launch it on this level with the plan”, test and optimize, that’s what we always say. Test it out, optimize it and continue to make it better, which I believe is another thing that Starbucks has done over the years is continuously improve on their program.
[00:09:26] Adam: We did a survey here to get to some brands that people really like their loyalty program, Red Robin showed up a lot and that’s a brand we just talked about in our last podcast on brand extensions. I guess the thing people like about it — and this is something Dan and I talked — we debate this endlessly, is that the biggest comment, the most common comment that came back about Red Robin was “I feel like I’m always getting a reward. Every time I go I’m getting a reward.” And the follow up questions are “Were you already loyal to the brand?” “Well, yes.”
[00:10:00] Adam: So you’re already loyal, you already like it, you’re already a regular and now we’re giving you something for free every single time you come in. Dan, do you think that’s smart?
[00:10:07] Dan: That falls under one of my favorite things. What Red Robin is doing whether it’s deliberate or not, in my opinion, is — they’re surprising and delighting you every time. If that frequency of which I’m getting rewarded is high, I’m going to not be as critical of what the reward is. If it’s an order of fries, a fat-free soda or whatever the case may be, I’m just like “Wow, great, thank you. You just gave me a reward last time” versus “I got five more visits before I get a nickel.” Surprise and delight is another — quite frankly, it could be its own loyalty program if implemented correctly. That’s a whole another subject really falls under the restaurant experience.
[00:10:55] Adam: No, and it’s interesting because they are — it’s very dissimilar to the Starbucks program. There’s no app, you just use your phone number, and it is a kind of a surprise and delight. The offers are different every time. There is a wide variety of things, sometimes it’s a free sandwich or a free soda or free dessert. It’s varied and it is surprising whereas the Starbucks one is always these points that you are going to redeem and choose. They work for different reasons and obviously two different types of customer. So I love that they’re different.
I’d be surprised if those two operators have the same program, both really good programs. The last one that came up was Chili’s. People just really like that program. They just felt like one of the most common things about it was, it was referred to as “under the radar”, pretty common, or no pressure to join which came up a lot that it’s almost got that speakeasy effect. They’re not pushing it on you and saying “Download this app today” every ten seconds, just pretty easy to get rewards and there’s not a lot of pressure around it. I think we know a thing or two about people and how much they like being sold.
[00:12:00] Dan: Oh my gosh, that example about Chili’s is the number one thing that drive me crazy about a lot of casual dining places. You can tell — now again, I’m in the consulting industry but I hate when I get my check at the end and there’s this postcard, and then the waiter puts the pitch in or the waitress, and says-
[00:12:25] Adam: “You guys are members of the app yet?”
[00:12:27] Dan: “Sign up here.”
[Crosstalk] [laughter]
[00:12:25] Dan: And you know damn well that these-
[00:12:28] Adam: Well, I like that they — when they employ training, but I don’t like when they get there.
[00:12:32] Dan: I do to, yes. I have to give him credit because I’m sure there’s some level of advocacy to it but it’s so blatant and so obvious. Then three months later I come in and they’re no longer doing it. You know it was a promotional period and they were spiffing kids to — the guy who got the most sign ups in the day got a free ice-cream cone or something like that, I don’t know. But I guess, to your point, people don’t like to be sold. As you pointed out, we’ve learned that a long time ago.
[00:13:03] Adam: Yes, we know that for sure. When we compare and contrast these three brands that they do it really well, and there will be a blog to follow up on this with a little more detail. One of the common elements of all three is there’s no pressure to join. All three of them are very hands off, their signage was POP. You go to their websites, you can see it. Especially on mobile for Starbucks, where there’s a downloadable — download button. They don’t really hit you over the head with it at any of those locations. The Red Robin one is almost hard to find.
[00:13:33] Dan: Yes, interesting. Adam, correct me if I’m wrong. McDonald’s have a loyalty program?
[00:13:40] Adam: No, sir. Even during their darkest time they did not roll out a loyalty program. {Editor’s note: Reports in the link above to Forbes suggest they are investigating a loyalty program or app}
[00:13:47] Dan: I think there’s a lot to be said about that.
[00:13:49] Adam: Why do you think that is?
[00:13:50] Dan: It’s a it’s a great question. I think they understand that they have a frequency level from their customer, and they have a price point, a value play that they’ve got going, that I don’t think they’ve got a lot of room to buy ten burgers and get a 11th one free.
[00:14:07] Adam: You think it would impact margin.
[00:14:10] Dan: I think so. When I look at Starbucks and Red Robin and Chili’s and I don’t know all their margins but you have a general idea based on our experience what the ranges are, their margins are reasonable. Starbucks is ridiculous, giving away a cup of coffee to me for buying five cups.
[00:14:27] Adam: That are marked up 500%.
[00:14:34] Dan: Yes exactly. That’s one theory I have about McDonald’s.
[00:14:38] Adam: No, that actually makes a lot of sense.
[00:14:40] Dan: The other is that it’s a frequency play, that QSR. They’re getting the most visits.
[00:14:50] Adam: McDonald’s is a good — you brought up McDonald’s but now that I’m thinking about it, there’s not a lot of QSRs is in general, true QSRs, fast food hamburgers that have a — none of them have a loyalty program.
[00:15:03] Dan: Burger King I don’t believe has one. I don’t know if Subway does or not, I probably could have done that homework. Anyway I just find it interesting that the- {Editor’s note: BK and Subway do in fact have underpublicized programs (linked above)}
[00:15:09] Adam: They have promotional periods but they do not have ongoing sub program.
[00:15:13] Dan: Which we’re going to be talking about that discounting on another podcast later.
[00:15:19] Adam: But yeah, we just brought up the punch card. I think people hate the punch card. It seems like although Dutch Brothers came up and they are the only one that does have a punch card that people really like. People don’t want to carry it around, they don’t want to remember it, they want to kind of put the onus on the brand. And I think brands would be wise to heed that advice. The more you make me work and the more friction that you add, as Dan referenced earlier, the less of a response you’re going to get. You jump through the hoops, not me.
[00:15:48] Dan: Exactly I was at CVS the other night, completely different category. My wife had already signed up for whatever their program is, and I don’t have to do anything I just give them her telephone number.
[00:15:57] Adam: Right.
[00:15:59] Dan: And her name comes up. And they’re not rigid, they don’t go “Well, who are you? You’re obviously not Liza.” [laughter] “No, I’m not. Not yet.” But man, talk about easy. Then I get this printout that says “You just earned ten bucks.” And I’m like “Oh, what the heck, ten bucks.” There’s that frictionless thing again that we are talking about-
[00:16:29] Adam: They just basically hand it to you as a coupon. That’s the way to do it. What people forget and we laugh about this, we talk a lot about hospitality on the food side and we sort of leave hospitality off at almost everything else we do in a restaurant. This is a hospitality play, even the loyalty club or the loyalty program, you have to make it easy and be a good host and say “Okay I’m going to roll this program out to build loyalty, I’m going to make it really easy for you to use it, as a good host. I’m not going to build it and put up all these gates around it and put an alarm on it, make you climb a ladder and ring a bell. I am going to make a very low barrier to entry, because I want you to do it. I want you to really feel like you’re getting something for nothing.” It’s not easy to do but it’s worth it.
[00:17:17] Dan: I couldn’t agree more. Take a page from your local bartender. You go and you take care of them night after night. Every so often, a couple of those cocktails aren’t going to be charged to you. Talk about frictionless loyalty program.
[00:17:34] Adam: Yes, and I think the other thing all three of these do in dovetailing right off that, is they make it pretty easy to rack up a reward. It can be something really small, an app or a free drink or something, but Starbucks, Red Robin and Chili’s all make it pretty easy. Although from the research we’ve done, Dunkin‘ brands — people are saying they get almost a free coffee a week from that program. I have not used that program but they say it’s very easy to get free cups.
[00:18:04] Dan: They’re finally getting some — they’re getting enough locations out here in the West. Actually, we can start becoming Dunkin’ customers again, Adam being from — both of us actually being from back East there’s a there’s a Dunkin’ on every corner.
[00:18:19] Adam: We were just down and count here a little bit but hopefully they’ll start adding more. What are some of the typical flaws with these loyalty programs? Not the three we were just talking about, but in general.
[00:18:33] Dan: Well I go back to what I was saying earlier and that is not thinking through the strategy. They get fundamentally flawed because you haven’t spent the time to say “What do I want to reward? What behavior am I trying to change or effect?” It’s the strategic side of it, it’s so easy to become tactical around loyalty that, you just go “Well, let’s do this, for every five you get one”, or whatever the formula is. That’s just some random formula that somebody came up with versus saying “Hey, here’s the behavior we need, what is going to change that behavior? What loyalty effort should we put in to get that behavior to shift?”
[00:19:18] Adam: That’s right and you’re speaking of strategy, we always relate strategy to finding the ideal customer and understanding how we want to move that customer and how to make them have a great experience. If in that “buy five, get one” model — really what you’re doing is you’re bringing in a coupon customer that’s looking for 20% off. They’re looking for one-fifth free. If you have a traffic problem, is that the solution long term to a traffic problem to bring in a thousand new guests that are all discount hunters and only come in when there’s a coupon or a program in play to give them something free?
[00:19:43] Dan: Right.
[00:19:44] Adam: Your sales are not going to increase even though your traffic is going to.
[00:19:59] Dan: The thing that you don’t know is, would I have come in five times anyway, without the sixth incentive. All you’ve done is giving it away and I would argue that I have not necessarily walked out feeling great, going “Woohoo, look at me” because what I’m thinking about is what I had to do in order to get the free.
[00:20:07] Adam: Right.
[00:20:00] Dan: You didn’t have to do anything and I was coming here anyway. Again, that’s that piece of saying is it really — are you creating loyalty, is it a true reward? When I look back on it, my experience with it is that if I had to do all the work to get the reward, I’m not giving you very much credit for it as a consumer.
[00:20:30] Adam: Right, absolutely. One thing we’ve always looked at, are we conditioning people to come in and just expect the reward. Is that smart? What we try to do in our consulting business is really understand the best customers and know these people. Are they going to come no matter what, they’re loyalist. You have this core, or you have a broken audience. Let’s do something to spiff some people and get them in the door to try it, and we think once they try it, they like it.
[00:20:59] Dan: Exactly.
[00:21:00] Adam: It’s where is your concept from an evolution standpoint. How much help do you need, what kind of guests you have, and how much can you rally those people.
[00:21:09] Dan: I would say that the question is, what’s flawed about some of these programs, “Have you looked at your competition?” People are probably getting really annoyed with me right now, because they’re like, “Jesus Christ, how much work do I have to do to put this loyalty program back,” but-
[00:21:24] Adam: Jeez, a lot.
[00:21:26] Dan: You should do a lot, because you’re giving up profit, you’re giving away a product. Make sure it’s intelligent. You got to look at your competitor and say, “What are they doing? Can we do it better? Do even need to do it at all?”
[00:21:43] Adam: Right, yes. “Are we sure this is the right answer?” The other thing about when you create a loyalty program, you’re building discounting in, you’re building in cut margins overall, over the whole product category of everything you got. Profit at that point relies heavily on upselling, training your staff to really provide a great experience so that, for someone like me that goes in, and I’m ordering just the basic thing to get the reward, I’m upsold, also adding an appetizer or a side, or extra large, or a combo. That’s got to be trained in too. When you’re rolling out the loyalty program, making sure your staff knows. The way we’re going to make money on this is by blank.
[00:22:29] Dan: Right.
[00:22:30] Adam: Right?
[00:22:30] Dan: Yes.
[00:22:30] Adam: Making sure that operations is rolling that out at the same time.
[00:22:33] Dan: It’s so, so critical. The better programs do exactly that, gets in it for that pizza, I’m just making that up, “Won’t you upgrade that pizza for a dollar more, I can give it to you”, this way or the side, as you pointed out, the drink or whatever case may be. I think they managed that customer that’s going to be, as you pointed out earlier, that coupon customer who is very rigid, and really like “No, this is what I’m getting-”
[00:23:01] Adam: “I’m spending 3.99 for my six inch sub and not a penny more.”
[00:23:04] Dan: Yes. And that’s fine. We know that that consumer’s out there, and we love them too, but if you don’t have the training in place to at least be asking, you’re not going to get the weakling like me, who goes, “Oh, I’m not spending as much money this time. Why don’t I get that side”, or whatever the case may be.
[00:23:28] Adam: Yes, and you feel like you’re getting a deal, so you don’t mind that little splurge. I think the key is to not punish people for participating. The key is to make it easy for them, to give them something so they feel like they’re getting a deal, even if they do uptake the upsell, and then really make it feel like a reward, and not feel like a punishment.
[00:23:48] Dan: I love this next topic, it’s part of this whole discussion around loyalty and you asking what have been some troubled programs. I got to tell you, I couldn’t agree more with your commentary earlier to me, before we started the podcast, about Chipotle. They roll this thing out, they make a big deal out of it, and then all of sudden, you never hear another word about it. It was a short lived thing.
[00:24:14] Adam: It was a weird LTO loyalty program, that was-
[00:24:17] Dan: Yes, it was-
[00:24:18] Adam: Confusing.
[00:24:19] Dan: Yes, it was confusing, it was weird, it felt desperate to me. I just find it so interesting that this brand that had such a shine on it for so many years is just struggling to really get back. They really are.
[00:24:38] Adam: Let’s talk about that. Obviously, the loyalty program was conceived to fight that. Traffic is down, sales are down, stock is down. The founders getting chased out of there by activists-
[00:24:50] Dan: [laughs]
[00:24:49] Adam: It’s all, nothing good’s happening. Obviously, this was a promotion they created to try to get people back in, try to reset. It was designed very deliberately with frequency in mind. You could see how they plotted it out if you have spent any time researching it. We will have a link in the show notes of the program. Obviously, it didn’t take. I think the people who used it were people that were already one foot back in, and they used it like a coupon.
[00:25:18] Dan: Exactly.
[00:25:19] Adam: Now, they’re not back.
[00:25:21] Fan: Right. Again, there’s probably strict strategy error that may have been made. We’re not inside the Chipotle, so we don’t know. We wish someone would call us and yell at us from Chipotle, we would love that.
[00:25:32] Adam: Yes, we will help, yes.
[00:25:35] Dan: I do believe if trial or retrial, in other words lapsed customer was the true strategy, is that really the answer? I just read that they’re testing television. You know me and television.
[00:25:53] Adam: You love television.
[00:25:53] Dan: Television and I are going to our grave together.
[00:25:56] Adam: [laughs]
[00:25:56] Dan: It might actually be a potential savior for them, depending on how they do the commercial. I’ll be commenting on that in another podcast, I’m sure. But again, I think your point is well taken. Why did you do that loyalty program? What you really thought that — I’m a lapsed guy from them. Now I’m a low frequency Chipotle guy. You’re probably above average to me-
[00:26:27] Adam: Even now, I’ve started going back.
[00:26:29] Dan: You went back.
[00:26:30] Adam: I ate there today.
[00:26:31] Dan: You did?
[00:26:32] Adam: There was zero- [crosstalk]
[00:26:32] Dan: You don’t look green or- [crosstalk]
[00:26:34] Adam: There was no wait. There was no line. It’s part of my favorite thing.
[00:26:37] Dan: No.
[00:26:37] Adam: The food is back to normal, and the lines are not. When there’s a wait, I probably- [crosstalk]
[00:26:42] Dan: See, that could be a reason I might go in, because there’s no lines. [laughs]
[00:26:46] Adam: Yes. You know I have seven minutes for lunch. I just go out running and get it- [crosstalk]
[00:26:50] Dan: Who allowed that much time for lunch around here?
[00:26:52] Adam: [laughs]
[00:26:53] Dan: That’s what I want to know. I feel like they did some research, and they asked the customer, “If we did this, would you come back,” and they said, “Yes, probably.” [laughs]
[00:27:06] Adam: Well, it’s that researcher, it’s that top two box at 60% in 10. It’s like “that doesn’t mean anything, you idiots.”
[00:27:13] Dan: [laughs] Yes, exactly.
[00:27:14] Adam: Of course, it’s easy for me to say, I’m fine.
[00:27:16] Dan: Okay. They’ve been a good punching bag, maybe we should-
[00:27:20] Adam: Yes, they don’t need to- [crosstalk]
[00:27:21] Dan: -move on to Dutch Brothers and their punch card.
[00:27:23] Adam: Yes, we’ve talked a little bit about the punch card, but people in our little poll that we did, which was far from scientific, people just bashed it. The comment we got was, “Love the brand, love that they have a program, but hate-

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