Transcript of Food & Restaurant Marketing Podcast – Episode: The End is Nigh
[00:00:07] Adam Pierno: Okay. Welcome back to another episode of Food and Restaurant Marketing. With me as always is Mr. Dan Santy.
[00:00:16] Dan Santy: Hello.
[00:00:17] Adam: I’m Adam Pierno, your loyal host. Back and better than ever. We are talking about a subject today that’s a little more somber than usual. More important than I think a little more serious than some topics covered on the episodes we’ve shared so far. But this is a very important one, everybody who is listening and everybody in this business and beyond, probably. We are looking through the data. We’re starting to help a plan for 2017 for a lot of brands. We’re looking at the economic forecast. We’re seeing some statistics that tell us that there’s the headwinds that we’ve been dealing with may be something more than just strong headwinds. The question we’re asking on the top of this episode is, are we going into a restaurant possession?
[00:01:07] Dan: Good question mate. I’m going to share a few facts with you that I gathered here. About a month ago, maybe even a little longer. Six weeks ago, I was talking to more like friends and his financial planner. His prediction was at time, they were thinking that recession is going to hit latter part of seventeen. But just recently, my own personal financial planner who manages my nickel.
[00:01:39] Adam: [laughs] He’s going to get it up to six cents. This is the year.
[00:01:43] Dan: …actually, took me out of the market on several stocks which I thought was very interesting, very proactive thing on this part. This is the market at 18,000, it’s at its peak right now from its low. He was worried about a correction. Then you can’t deny the fact that we have the lowest interest rates in 60 years. That can’t last. Those interest rate, we know the interest rate is going to go up and is going to have an effect with the economy.
[00:22:15] Adam: Yes. And especially for brands like restaurants where there’s a lot of commerce, a lot of trades, a lot of products, and a lot of ingredients to be bought, a lot of staff to be trained and hired. We know that there’s a lot of money changing hands and those small chains of interest rates and small moves, micro moves in the economy make a huge huge difference.
[00:02:34] Dan: Yes. Because we are looking at — obviously the restaurant spend isn’t discretionary spend. The first thing that can be adjusted are for any family.
[00:02:46] Adam: Yes. If you look at some recent reports and recent information that’s come out, or seen that the census has estimated now that monthly sales for food service operations are down month over month again. September from August, and August was from July as well. That trend downward monthly sales just continues there. Black Box and their parent company showing a continued downtrend from most of the restaurant industry in the chain members. We see that just that, on its current pace and that may change. But today, we’re just seeing it dip and it’s looking somewhat similar to 2009 and I think we know what was happening back at that time period.
[00:03:33] Dan: Right. For us today, we wanted to do this podcast today because typically, our clients are talking about, “Oh my gosh. What are we going to do and become very reactive when the recession hits or if we’re in the middle of it?”
[00:03:52] Adam: Well, when they hear there is a recession, which you astutely pointed out, is when we’re already six months to a year into it. It’s usually when the media says, “Hey, we’re in this.”
[00:04:02] Dan: Exactly. Then all of a sudden there’s this reaction and the number one thing that I want to talk about for a minute Adam is, what do you do with your marketing expand at that moment in time? All too often we know the story. It’s you cut, because it’s instant savings. Right? It looks good to the private equity owner or whoever your ownership proof it it’s. But we also know that, statistically year over year, decade over decade for that matter, the brands that stay consistent and spend during recession, through the recession, actually survive it well and come out of it faster and better. That’s my message today. Let’s not wait to make the strategy decision about our stand when we’re in a recession. Let’s make a strategy decision today. I think that brands in need to be smart about this because once again as you know, I preach this all the time. Share up mine, which is awareness, equal shares of stomach. You are going to get my share of stomach if I’m aware of you and I’m hearing hearing about you. Because I can damn make a decision about your LTO, or I can make a decision about your brand, or whatever the product may be.
[00:05:25] Adam: Yes. Let’s talk about a number of factors here. Because you’re right. We see that the brands that cut. The easiest place that it seems to cut, or it’s not going to hurt food or operations is marketing. But we know that again, when awareness goes down, traffic goes down. We see the direct correlation. Consideration is a direct line to traffic, and therefore sales. We know we have to cut. Let’s talk through a little bit of how to do some belt tightening, without just jumping to a giant line item which unfortunately as what we’ve seen and witnessed going in to the last, the great recession where a lot of brands has never recovered the way they have gone in.
[00:06:06] Dan: I love this question Adam. Absolutely [unintelligible]. You know what? I’ve been working with some really really smart analysts here at Food and Restaurant marketing who are looking at the data of many of our clients and say, “What’s working?” And, go back to that test. We test and optimize, that is the approach that we take with spending. We have great intelligence about what is working today. We have intelligence about what’s worked within the side recessions. Let’s go retreat to those tactics, because we know that they work. And, guess what? We can use them when it’s time and we can continue the test and optimize. Does it hold water? Right? Is it performing as well as we’ve seen it perform in the past? At least you could know, but we mean that you’re using a tactic that has been successful in the past. Now you have to pay attention to it and to make sure it continuously successful for you. But use the intelligence you have. That’s my message.
[00:07:16] Adam: Yes. What’s key is having a plan? You can now be looking at your — We’re talking about this now, so you can be looking out six months. This is the time to be auditing your menu performance and your makes and say, “Okay look.” Based on sales today, based on traffic today these are the items that are bringing people in, and this is what cards are and if it’s driving traffic, if it shows up frequently at a good margin for us, we keep it on the menu and these other items that we’ve been holding onto, this might be the time to cut up. Right now going into 2017 we see that cheese is still going to stay low in price. We don’t have to look at cutting cheese, let’s find new ways to use cheese. We know we can get it cheap, you can go into this situation we’re in. As we are looking at commodities and we are looking at ingredient, let’s really be smart about how do we change the menu and start making those moves and do that. If we’re looking at economic trends, let’s also look at consumer trends, right? So we see that consumers right now if you’re talking about millennial specifically and I know everybody is sick hearing about millennials.
[00:08:23] Dan: God knows I am.
[00:08:25] Adam: Yes. But they drive trends north and south. Because they’re the primary group and because they are right now on the sweet spot of maturity and discretionary income, they drive trends for gen-X and bloomers because they are willing to try things and then tell people. The trends tell us they want bold flavors and they want diversified flavors. Okay. How can I look on my menu and take the existing items I have and add items without adding any new commodities, besides sauces maybe? Or just changing up sauces that I already have so, I already sell this sandwich that’s a killer. Okay well, let’s add Sriracha to it or even a non-licensed version of a bold pepper sauce. How can I do that and bring that flavor? Something just to combat, having it in my back pocket as an LTO that I can come back when prices start getting really serious, and competition gets really rough when this recession hits. If it hits like it looks like it will, I can pull this out of my pocket so this is going to be on trend. It cost me no more money than what I’m doing now and it’s going to drive few traffic.
[00:09:30] Dan: You hit on a note there that I’m a huge fan of and that’s the LTO, Limited Time Offer because — Especially when it comes to a menu item like that and it’s new, it’s unique, it’s different, it’s a point of differentiation without having to ship to all brand strategy. It’s a menu item that people will hear about, discover and say, “Wow, I want to try that” and becomes a reason to come in, or come in again. Or in recession environment, it’s the reason that I’m going to your brand which is another brand. That’s just the same old thing, and I’m not doing anything because I’m resting on the rules that I’m going to come in for what I typically come in for in the past. The LTO is a really smart strategy and by the way, real quick side bar note that Adam taught me this years ago, the LTO doesn’t necessarily need to be a discount. The limited time offer could be a bundle that is the same price as if you bought all three of those items separately, but the perception that it’s a good value, how you present it, consumer’s not going to care. They’re going to say, “Hey, that’s sounds like a good value to me,” and it helps you steal share from other brands.
[00:10:48] Adam: Yes, really in a recession environment, you’re just trying to keep traffic flat and start stealing one occasion here and there from competitors and figuring out ways to do that. Any news you can generate, will help you do that, it’s going to help you stay top of mind because we know from the last recession that people will start changing their habits. We refer to that one — I refer to it as the L-shaped change in dining. The Millennials never came back from that last recession, dining out as much as they did before and every year that we’ve asked them, since that we do research here, primary research, into Millennials and other cohorts, almost every single study we’ve done and every study we’ve seen the respondents for that say, “I plan on dining out as much or less next year as I do this year.” There is no group in this country that says, “No, no, next year’s the year I’m going hog-wild. I’ve got all this money to spend.” We’ve been all trained by the recession, the great recession, to just be a little bit more mindful about our money. Value is very involved. Being smart about our money, in style, and that’s a dangerous thing for restaurant brands where I just need you to come in and have a meal and just be open-minded about buying an add-on item or having an extra drink or doing — having dessert and not just come in with a coupon and try to get your $1.50’s worth.
[00:12:09] Dan: I am so glad you brought up a research variable because one thing that does not change, regardless of the economic environment is that people have cravings, and by the way, I’m convinced that cravings — so making your product craveable, may actually be the most powerful during a recession because I’ve actually cut back on some things. I’ve given up some things — a lot of things that I was doing before and splurging on and treating myself. I’m still going to be working by butt off, I’m not — as a consumer and I’m still going to want to reward myself. Those things don’t go away, you got to thing about that emotional reward of getting themselves very craveable and introducing the valued proposition for it, and again, steal share man, it’s your opportunity. Get aggressive, steal share, and you’re going to come out the opposite end, because we all now recessions end, and who comes out the winner and who comes out the loser has a lot to do with how you behave during the recession.
[00:13:22] Adam: Yes, right. You can earn a lot of credit, and I do think you’re right about craveability. Because you’re going to be making those cuts as a consumer, and you want to feel that you’re keeping some indulgences in your life and even the thing that today, pre-recession, I eat twice a week or three times a week. When it gets time, when I cut down to once a week, I want to make — I want to feel like, “Oh, this is something extra I”m doing. I’m getting this little extra thing off, taking my family to this place, and having this extra nice meal and this thing that my wife’s been craving.” You got to build that up and you can actually start that today that really when we speak to craving, it’s just — all it is is paying a little extra attention to your food photography, food video, the presentation of your food, plating, small details that you can do.
We know that food video can be exorbitant in price and we know that there are guys that are table-top shooters that are very expensive. You don’t have to do that, especially today in the digital environment. There’s ways to do it just by adding a little bit of lighting and a little attention to make the food seem extra craveable, and really figure out what is it. Talk to your customers, ask them, “Why do you love this item? What is the detail about it?” Then really hone in on that.
[00:14:36] Dan: Right. Speaking of messaging, the message you were talking about, in this case you’re talking about visual messaging, and you know me, I’m a huge advocate of television, I’ll probably go to the grave that way.
[00:14:48] Adam: On television.
[00:14:49] Dan: On television, yes.
[00:14:50] Adam: Yes, and have a funeral, a royalty or something.
[00:14:53] Dan: I hope so, but you can use the written word to create cravings. If it is a visual tool that you’re using, a video or something like that, and enhance the craveability, not only the visual but the words you use. But if you’re doing audio, so maybe you’re doing Spotify or even linear radio, make sure that you are describing that food in a way that people are just like, can visualize and go home and, “I need that,” whatever that may be.
[00:15:29] Adam: Yes. I think another thing to consider right now with costs, is going to be staffing. We know that nationally, there’s going to be pressure, tremendous pressure on staffing, on hours management, full-time employees and a different set of circumstances, State by State. We know that that pressure’s going to change, and now in light of the pressure you’re going to have in sales and traffic, how are you going to manage that? I suspect we’ll see some organizations cutting staff in front of house and server staff, how is that going to affect customers? You have to be very mindful about your operation and what the output is for the customer. Just cutting one shift of a server at a rush hour time, does that ruin their experience? Or does it just make it a little longer? What can you do to fill that time at the table and be mindful of that now knowing you may have to make those cuts?
[00:16:21] Dave: That’s a great point which leads you right to training. Take the recession variable, so everybody’s being affected, who, more than that casual dining server, right? Because so, occasions are down, sales might be down because we were still going out and spending less, so that means my tip – my tip wages are down. That’s when training, which is not terribly expensive, and training them how to up-sell, training them how to create a great experience, so actually there’s a repeat visit. And to your point about — if you are trimming staff and you’re cleaning out, make sure you’re filling that void with something. Whatever it is, surprised and delight moment of, “I know you’ve been waiting, I’m sorry. Here’s a-”
[00:17:14] Adam: Train those in.
[00:17:14] Dave: Train that right in. Absolutely, and you can use this environment as an opportunity actually and not just go, “Oh,” I’ll throw up my hands. You know what? You cut my staff and therefore, service standards suffered.”
[00:17:31] Adam: Yes. Unite with your other operators and figure out how to get that training built in and do it now, proactively. The next thing you might want to start thinking about is, if you don’t have a loyalty program, we’re not — it’s very funny, Dave and I are on the fence about loyalty. It goes concept by concept, whether it makes sense or not, how it’s executed makes all the difference, and it’s really part of the bones of the brand, whether it works or not. But this would be a good time to examine. If you don’t have a loyalty program, should you start one? Do it now and start testing now to figure out when money is tighter for consumers, how are you getting them to be loyal? Or if you have one, how are you testing it now? How is it performing? You want that thing to be absolutely humming at a Starbucks level to make sure that when the rubber meets the road and times get very tough, this thing is another tool that you can pull out to start adding in perks and adding in benefits to start driving some traffic. And again, we are not proponents, one way or the other of loyalty, it goes concept by concept.
[00:18:38] Dave: As a matter of fact, that sounds like a great podcast.
[00:18:41] Adam: Yes. That’s a future episode, I have a feeling. I have a feeling we’ll be doing that one.
[00:18:45] Dave: Absolutely. One other item I want to bring up today Adam, is targeting. You mentioned Millennials earlier –
[00:18:54] Adam: You talking about Media, Media Targeting?
[00:18:56] Dave: Yes, audience. What audience are you after? You really want to, again remember we’re talking about a recession environment. Who is less volatile in a recession environment? More than likely it’s going to be the Boomers. They’re at their highest earning or they’ve burned out or they’re living off a healthy package in their early retirement, whatever the case may be. I think the Boomers are — they’re just being ignored and I think it’s an audience that you should seriously look at. Ask yourself, are your media plans touching them? If they are, is it enough? What can you do to invest more dollars there without undermining your core audience? If it’s not Boomers, I’m not telling you to abandon your core or go to a Boomer, but you need to think about these things because these are the kind of details you dial in five, six, or seven of these items that we brought up today, you’re surviving. You are — you’re not surviving, in my opinion, you’ll be thriving.
[00:20:10] Adam: Right. If you just do a little bit of planning now. I think you’re dead on about the Boomers and if you get that upper-middle Boomer that has — whether the storm from the last Great Recession and maybe is now in retirement age and they’re off and running. They’re not going to feel the pinch of a couple of bucks at your restaurant. They’ll be okay and they’ll come in. Earlier, we spoke about shifting trends that make sure you’re hitting that Millennial. But again, the trends that are set by Millennials, the Boomers are on top of those things. They lag a little bit, but when they see it being consumed and done by their kids, they get on board and they want to try it, too. I think you can–
[00:20:50] Dan: Oh, my gosh. All day long, and it cuts across so many categories. I hear a good friend of mine, he’s 70 plus years old. I’m not that old, by the way.
[00:21:00] Dan: I just happen to have an old friend. He talks about bands today, which crack me up. I know darn well it’s because his daughter or son were saying they love this band.
[00:21:13] Adam: This is somewhat off-topic, but look at the Superbowl. The Superbowl has to get an act in there that appeals to, essentially, 250 out of 350 million Americans, and so they’ll bring in an act that is Millennial focused and then the Boomers catch on to it. They love, Bruno Mars, now. Before they probably were waiting for, The Red Hot Chili Peppers, they’re more aware of them and, now, they’ve caught on, “Oh, this guy’s in town. Okay, now we’re off and running with him”. Just as an example, you can take something that’s got broad appeal to Millennials, which is harder and harder to do as it’s getting more and more fragmented to reach any huge group, and you can take it and port it out to another demo.
[00:21:57] Dan: Yes. Agree. Agree.
[00:21:59] Adam: I think we’ve pretty much covered this topic. There’s so much more to dig into, but without getting into some really boring economic theory. That’s our sister podcast, Food and Economics Reality, which has almost no listeners except my mom.
[00:22:15] Dan: [laughs]
[00:22:16] Adam: If you have more thoughts on this, questions, if this made you spark any kind of ideas that you want to talk through or maybe another episode you’d love to hear, please, reach out to us: adam@foodandrestaurantmarketing or dan@foodandrestaurantmarketing and, please, hit us on Twitter: FandRM or get to the bottom, leave us a comment. We appreciate you listening.
[00:22:38] Dan: Eat well.
Listen to the episode here.