Transcript of Food & Restaurant Podcast – Cord Cutting, Television and the Restaurant Industry

Transcript of Food & Restaurant Podcast – Cord Cutting, Television and the Restaurant Industry

[00:00:03] Adam Pierno: All right, welcome back to another episode of Food and Restaurant Marketing. I am here again with Dan Santy in our all new Food and Restaurant Marketing studio.
[00:00:12] Dan Santy: Nice digs too, I’ve got to admit. The equipment is state of the art and the acoustics are the best they’ve ever been.
[00:00:21] Adam: Yes, what do you think of this setup, is it a little crazy?
[00:00:23] Dan: I like it but it’s handsome too. It’s very artistic.
[00:00:26] Adam: It’s beautiful, yes. I got to work. I got my craft on everybody, if you’re listening. I got very crafty to make this sound a little bit better for you so thank you for your patience.
[00:00:36] Dan: Did you get this off Pinterest?
[00:00:40] Adam: [laughs] How dare you, sir. How dare you, although that’s a great topic. We should do a topic on Pinterest and maybe have [unintelligible 00:00:47] join us for that.
[00:00:48] Dan: There you go, that sounds like a great idea.
[00:00:50] Adam: See, now we’re thinking.
[00:00:50] Dan: Good.
[00:00:51] Adam: Today we do have an interesting topic that takes us out of the restaurant and then I’m hoping bring us back into the restaurant. We read a lot about media, we work a lot with media and we’re going to be talking about the phenomena of cord-cutting and actually even cord-nevering. What we want to do is, talk a little bit about the behavior of people walking away from cable and television, talk about the reality of that, then talk about why that should matter to you if you’re a restaurant brand. There’s a couple of really important things that will circle back to that, make it relatable to those listening from inside the four walls of a restaurant and running a brand.
[00:01:31] Dan: Yes, I’m really glad we’re talking about this because the maddening part for me is, I think most of you have come to know I’m a bit of an advocate for television, the cord–
[00:01:42] Adam: You’re a dog with a sock. [crosstalk]
[00:01:44] Dan: I’m a dog with a sock because it’s obvious.
[00:01:46] Adam: But today we’re going to learn– I think you’re on to something.
[00:01:49] Dan: Well, I think there’s just a lot of misinformation about the demise of television. The stats just turned reflecting the demise that everybody has been talking about for quite sometime, quite frankly. I’m excited about this one. I’ll try to be polite and not too rabid with my sock.
[00:02:09] Adam: No, I actually like- I like little passion when we’re having things, so I think, we’re good. Let’s talk a little bit about the phenomenon itself. If you’re not familiar with the expression, cord-cutter, I don’t where you have been. You have not been reading the internet very much. Quite frankly, I’m jealous. Cord-cutting is what we describe people who are quitting your cable subscription, walking away. They don’t watch any TV and have moved on from that behavior.
According to the media, if you read it, and one brand that we work with has been asking us for about three years since the headlines really started popping up, it sounds like everybody is leaving TV. If you read the media, nobody is watching television anymore. Nobody has a cable subscription especially millennials. The big capital M word. They don’t have any part of television. Dan, how say you on cord-cutting?
[00:03:05] Dan: Well, again, it’s happening. It’s like so many changes that are happening in the marketplace. There’s no doubt. I’m not a climate denier, the climate is changing. I think the debate is, at what phase truly and at what impact for our guests that are listening to the show who are concerned about marketing their restaurants. TV’s been a cornerstone of some of the greatest restaurant marketing over the years and in my opinion, is still viable.
I’m going off on a bit of a tangent but I definitely think that it’s being overstated but I say that with the caveat that I don’t have my head in the sand about the change that is evolving, especially as millennials and gen z start getting into true adulthood and they begin their behavior without a cord. That’s when I think we’re going to see the real change start to happen.
[00:04:07] Adam: What you just touched on is what they call the cord-nevers. Those are people. What that means is that, they’ve never had a subscription; they never even got indoctrinated into watching television. Again, the media will tell you that, that is huge segment and there’s this huge population. People who have never seen, they don’t know what a television is and when they walk into your house, they try to color on it and they’re not sure what it is. It’s overblown by quite a bit.
[00:04:35] Dan: [laughs] Can I share with you why I think that’s overblown?
[00:04:39] Adam: Yes, please.
[00:04:41] Dan: My 22 year old college graduate son had to get that in there just a couple weeks ago.
[00:04:45] Adam: Yes, congratulations.
[00:04:47] Dan: Thank you. He’s a cord-never but guess what? He was a cord-always because he was watching cable TV at my house. [laughs] He currently is a cord-never, I don’t know–
[00:05:01] Adam: He’s never had his own subscription?
[00:05:03] Dan: Exactly.
[00:05:03] Adam: Right.
[00:05:04] Dan: Again, it’s trying to dissect the data to understand the true behavior versus–
[00:05:10] Adam: Now, will he subscribe to something when he–
[00:05:15] Dan: You know, it’s a great question because he’s a huge Netflix consumer which he typically does in his laptop. and quite often on his television screen through his laptop, like an apple TV. It’s a great question. I think it starts to come down on money. I think they will decide when the time comes. I really do want more, let’s just take sports, for example.
[00:05:46] Adam: Right, that’s still the last [unintelligible 00:05:47]
[00:05:48] Dan: Right, that could be the thing that puts him over the edge for some level of service.
[00:05:55] Adam: Yes. This is interesting, I have some younger kids at home and they will watch TV, they prefer to watch time shifted TV. They all want to watch whatever show they want to watch. They go to the on-demand channel first and see if there’s an episode there and then if there isn’t, then they’ll go find a channel that they can watch in real time. If they can’t find an on-demand version and–
[00:06:19] Dan: Turn that on-demand environment; they’re looking for their favorite shows.
[00:06:23] Adam: Exactly, but they will watch on a physical television. They have tablets and they’ll watch on those as well but they’re not shy about the TV set.
[00:06:32] Dan: Right, yes. Well, nice resolution. [laughs]
[00:06:35] Adam: Yes, it’s not bad. That’s right, exactly. The 44 inch TV is a little bit better than the 10 inch tablet that you have.
[00:06:41] Dan: Yes.
[00:06:42] Adam: Let’s look at some stats. I know you have some different stats than I have here. I have some others I can pull up from some of the docs we’ve shared back towards the end before this. Cord-cutters, according to a study that’s pretty recent from GfK MRI, who we pull a lot of data from here to help our clients with cord-cutters account for only 8% of the US population today. The average age though, this is pretty surprising, is 43.
[00:07:11] Dan: Wow.
[00:07:12] Adam: Older than I would’ve thought for cord-cutters. 35% are Millennials. I guess if they are the older set of those millennials, that’s getting pretty close to that average anyway.
[00:07:24] Dan: Right.
[00:07:25] Adam: There is that but that 8% of that population is what to me, when you read it in the media, the media media I call it, it’s the media that just reports on the media. Just wants to eat itself on Twitter.
[00:07:36] Dan: Yes. [laughs]
[00:07:38] Adam: They make it sound like nobody’s ever watched television in the past 15 years. Who’s Johnny Carson, I don’t even know what you’re talking about. But 8% of the US population, it’s nothing to sneeze at, but it’s not exactly indicative that nobody is watching physical televisions anymore, is it?
[00:07:55] Dan: Absolutely not. The average adult consumes 2,295 minutes of video a week, right? Guess where 84% of that was, live TV.
[00:08:09] Adam: Yes.
[00:08:12] Dan: You can see the distinction there, right? And why there’s so much confusion. Only 9% of those minutes were time shifted. Again, very fascinating. Th1en when you start getting to devices Roku, Apple TV and so forth. Obviously, you’re at 3%. You can see the penetration is extremely low but once again, I will admit that, I’m sure that it’s coming.
[00:08:41] Adam: I subscribed to cable but I do watch Netflix through Roku on my television. I don’t know how they would count me. I guess I subscribe so I–
[00:08:49] Dan: You just described us, Lisa and I, that’s exactly what we do.
[00:08:53] Adam: If there’s nothing on TV, I just go to the Roku and I’ll find an episode.
[00:08:56] Dan: We’ll have to talk about the Roku versus the Apple TV. We have seven in our house.
[00:09:00] Adam: I just have a Roku and then we have a smart TV that we can plug Netflix directly into from the internet. That’s a game changer.
[00:09:06] Dan: Okay.
[00:09:08] Adam: Life [unintelligible 00:09:08] Roku is a disaster for us. Those cord-cutters had a subscription and bailed. They gave up on it. They may have a number of ways– Now what’s interesting is, Dan has some stats on this on how they consume TV because it’s a little deceptive. Cord-cutting means they’ve canceled their cable subscription but they still have internet in almost all cases. They’re still consuming video on what kind of device they have.
[00:09:39] Dan: Well, 84% live television.
[00:09:43] Adam: Right. That’s your regular group, but even for cord-cutters, they’re finding ways to have the internet streamed to their physical television.
[00:09:50] Dan: Absolutely, yes.
[00:09:53] Adam: I plugged in my Roku the other day and it showed me two ads before it gave me a menu. I’ve never seen that before. I don’t know if I pushed the button that I wasn’t supposed to push. But, it showed me a Wells Fargo ad and it showed me something else. Up in the top left, it said, ad 1 of 2. It hasn’t happened since. I’m praying it doesn’t.
[laughter]
[00:10:17] Adam: Because I don’t have to watch two ads every time I turn the Roku on.
[00:10:18] Dan: Please, especially from Wells Fargo.
[00:10:21] Adam: Yes. The cord-cutters, 8% of the population, not as much as the media of media would have us believe that the world’s ending and nobody is watching television anymore.
[00:10:32] Dan: Exactly, in another stat I have here, just TV view- average live TV viewing. Okay, and I thought this is interesting. Again, the media calling out the demise of the media. Viewing drop from four hours and seven minutes a day to four hours and six minutes a day, year over year.
[00:10:54] Adam: It went from four hours and seven minutes-
[00:10:57] Dan: A day.
[00:10:58] Adam: -to four hours and six minutes.
[00:11:00] Dan: One year later.
[00:11:01] Adam: So one minute?
[00:11:02] Dan: One minute less.
[00:11:03] Adam: That means, 2,400 years.
[laughter]
[00:11:11] Adam: My Math is not good here.
[00:11:10] Dan: Oh my gosh, it’s a free fall.
[00:11:13] Adam: 240, yes. It goes every minute. Yes, over the year.
[00:11:16] Dan: Well, I always like to say that, change is happening. I don’t think some of the change that is being reported is as traumatic as they claim it to be. Some of the change that’s coming is coming. I mean, not in denial about that it’s changing and it will continue to change. But right now today, when we talked to our clients, we talked to them about how to reach the consumer in a meaningful way. Television remains on the top of that list because it is the reach medium if you need–
[00:11:53] Adam: For awareness, yes.
[00:11:55] Dan: Yes, exactly.
[00:11:56] Adam: It’s still the way. It’s still the way to do it. When you’re talking about change, if you listen to the fantastic Exponent podcast, that team talks about these changes that are happening, technology. They make some really good– You can find some really good episodes on Netflix and the change in TV viewing. Even so today, it’s not what the media is purporting it to be. They were already reporting three years out. We don’t know if that’ll happen.
[00:12:25] Dan: Right.
[00:12:26] Adam: But let’s talk about cord-nevers. Cord-nevers are just what it sounds like, never had a subscription, never had a plug-in, never had cable or satellite. They’re probably just using internet to stream things or else not watching TV at all. Now, you have as cord-never in your family, do you not?
[00:12:43] Dan: I do. Yes, my young 22-year-old college graduate just–
[00:12:48] Adam: Congratulations. You made it. You survived.
[00:12:50] Dan: Thank you. Yes, that’s good. Financially and otherwise.
[laughter]
[00:12:56] Dan: Yes, he would probably be counted if they surveyed him as a cord-never. However, that’s not true, because he has always had a cord, especially when he’s been at my house, 100%. Now, he doesn’t have a cord today as a college graduate yet, but it’ll be interesting. You were talking about this earlier, what will he ultimately end up doing.
[00:13:19] Adam: Yes, once [unintelligible 00:13:20] be really, really out of the nest. He gets to really make the choice that he wants to make. It’ll be interesting to see what he does.
[00:13:25] Dan: Exactly. Yes, because that takes us to that– He is a sports fan so live sports is one sure fire away to get live sports. Yes, I know where I can get some streaming and some devices and whatever, but we all know the NFL looks beautiful on that 50, 60 inch plasma on the wall.
[00:13:46] Adam: It sure does. It’s something– Twitter streamed a couple of games last year. Facebook, I guess is going to stream some games this year. It was an interesting experiment, but if I had my brothers, I’m watching it on the 40 inch TV. I’m not messing around with my phone or whatever.
[00:14:01] Dan: Yes, I don’t know why I’m relegated watching a basketball game on a Twitter feed.
[00:14:05] Adam: Yes, it’s nice for highlights or little moments, updates, but three hours of NFL game was pretty rough. Even watching my Jets which is even rougher. But let’s talk sports before we start recording. Dan and I were laughing because for a long time, ESPN was the big savior of cable companies in preventing the cord-cutting. Because of the live sports factor, and they’ve invested so much in NFL, MLB, NBA, College, everything.
They had 20 hours on the [unintelligible 00:14:40] this weekend, which is an awful lot of the cross watch. They invested in soccer until they got outbid by Fox who started coming in. We’re watching every year, the stock just keeps on getting crushed, and a dizzy stock, I should say. We were laughing, we were making some theories as to why we think that is because as much as they’ve invested in live sports, they’ve also made some weird- not weird choices, but there’s a lot of programming that’s a little questionable.
[00:15:08] Dan: Yes. I was just jerking around with that. I mean, I said, “Can you imagine that you were the guy who went into the head of ESPN and said, ‘I’ve got this great idea. Let’s broadcast these radio personalities doing their radio show.'” It’s like, “Why am I watching this guy talking to a microphone?” It’s just odd.
[00:15:33] Adam: It’s awful, yes. It’s good background noise, I guess, but you can’t sit there and actively– If you’re watching a football game, you’re sitting and aim that the television you’re watching it–
[00:15:44] Dan: Absolutely.
[00:15:44] Adam: I don’t want to watch a host talking to a microphone. I’m doing it now with you across the room, but that’s about as much as I can handle. We’re actually conversing.
[00:15:54] Dan: Yes, and if I’m spending money on that show as an advertiser, and it is indeed being used as background noise. Well, a radio commercial, I believe, is a lot less expensive than a television commercial. Obviously, there’s a lot of variables there, but and I lose 50% of the value of what television brings to my restaurant clients which is that much more than the whole– I can show the unbelievable credibility of whatever product my clients are showing. We tell them to invest a lot of money into the credibility of the product, and they do. Then all of a sudden, we’re buying programming and they don’t see it.
[00:16:36] Adam: When we talk about why does this matter to restaurants, I think this is one of the stories that came to my mind, although it’s not here in my notes. But hearing you say it, part of the value of television is the visual, the sight and the motion of it, right? Sound is the third element. In an environment where you’re not sure how consumers are reacting to TV, if they’re still watching TV. A lot of times, people just buy points. They buy spots and dots.
They just say, “I’m going to buy. I need to have this much coverage, this many points.” If you’re not pushing your team, your marketing team, your agency, whoever it is that’s buying that shit, to really dig in and choose programming that aligns with your customer and aligns with your values and has something stimulating that sets up your ad, you are missing out and you are not making the most of your investment at all. You’re throwing that money away.
[00:17:30] Dan: Absolutely. You’ve got to dig in to the buy in different ways than you ever have before. I am the rabid dog about television, but it is not without other mediums. It is not without other channels.
[00:17:46] Adam: Well, nothing works by itself. I think we–
[00:17:47] Dan: Yes. I think it’s important to bring that up but there’s nothing more powerful than using television for an awareness and reach standpoint, and certainly to blow out the beauty of that product.
[00:17:59] Adam: I think if you’re choosing, in the example you just gave. Man, if you’re putting your ad in between a 90-minute segment of two guys sitting at a microphone talking? Yikes. People are definitely not watching that without having a laptop or a phone in their hand or doing– You know what I mean? Co-viewing and being distracted, and your ad comes on, and they’re not perking up for that.
[00:18:22] Dan: Yes, absolutely. I agree.
[00:18:24] Adam: I think you have to rethink that. I think that’s why ESPN’s hurting.
[00:18:27] Dan: Yes, they are. There’s no doubt.
[00:18:29] Adam: So much of their programming is dedicated to talking heads and replays of talking heads. I mean it’s–
[00:18:34] Dan: We should try out.
[00:18:37] Adam: Video. How’s that? We’re going to video guys, get ready. But still, Dan you said it, TV is still your top reach vehicle. I think what people seem to forget in this debate about the cord-cutters and the reach of television shrinking– Okay, so cut out TV, what’s your plan?
[00:18:56] Dan: Right.
[00:18:57] Adam: It’s still the best way, and it will still continue to be the best way at least for the next five years. I mean, the internet is a great reach vehicle but not any particular channel on the internet.
[00:19:07] Dan: The fragmentation of it is ridiculous.
[00:19:11] Adam: I could reach every person on earth just about, but it would be a ridiculous thing to do.
[00:19:17] Dan: Yes, because what is there? What’s that stat we saw the other day? How many millions of websites there are in the world?
[00:19:22] Adam: Billions, yes.
[00:19:23] Dan: Billions, yes. Yet, two players dominate that space at the tune of- depending what study you look at, 65%, 75% only two players. Anyway, I’m going off on a tangent there.
[00:19:39] Adam: No, it’s important to talk about Google and Facebook dominating at- where was it? 70%? Is that what’s off for now?
[00:19:44] Dan: Yes, the two stats we saw, one was about 66%, the other one close to 75% of all digital ads span, advertising span goes to those two channels.
That leaves so little for every other channel. Think about some of the other channels out there. Pinterest, Twitter, they’re not tiny either.
[00:20:07] Adam: I would say Google and Facebook have their place. Definitely, you need them. For Google, you need to have your location searchable and ready to be found. Neither of those things, even if you bought the top video unit you could buy on Facebook and get in someone’s feed, it doesn’t have the impact of taking over my entire television screen. If I buy a pre-roll ad on YouTube, it doesn’t have– I know the word interruptive is now negative, but it’s actually an extreme positive in earning my attention.
I think there’s a way to create content that people will volunteer to watch and that’s really great, but the majority of people are not going to raise their hand to watch your content. More than likely, the people that are, you’ve already won over.
[00:20:53] Dan: Right. They’re a fan.
[00:20:54] Adam: What we use to refer to as media waste, which would be, I want to reach Dan but I also, by proxy, reach his family who’s sitting in the living room with him. We used to say, “That’s a waste.” Waste is actually good, because maybe your wife or your son sees the ad and says, “Hey, dad, I want that.” Now, you’re buying it. Unless, you already bought in and you’re, “I already have that, I don’t need that.” You know what I mean?
[00:21:16] Dan: Absolutely, yes. I think the waste in digital is extraordinary and it’s been going on for a long time. I think that’s why we’re seeing a lot of conversation out there about transparency today. I think the digital media landscape has gotten away with murder over the last decade delivering at the rates they do, and the viewability standards they have which are just ridiculous. I know you could argue. Well, Nielsen, only has 2,000 books or whatever the count is, right?
[00:21:53] Adam: Yes, no system is perfect.
[00:21:54] Dan: No, it isn’t, but I will say this about television. As the clients, we continue to keep in that space, their businesses are thriving. They’re not watching, they’re not continuing to spend and yet watch their sales number decline.
[00:22:11] Adam: No, they’re staying ahead of the sales, the head winds that we’re seeing in the marketplace a lot. That’s really good to see. Part one, is why does this matter to restaurants? It’s still the major reach vehicle and it’s going to stay that way for a long time. If you’re buying smart, you’re going to really make it work, and you can do it really affordably. Even for small regional brands, even for local brands, there are ways to buy television that are extremely affordable. If you’re smart, you can really maximize it.
The other reason though that we think is interesting and part of the work we do, is we study audiences and customers is that the television has been at the center of people’s homes for- I don’t know, 70 years, 60 years? With this conversation about cord-cutting, and cord-nevers, we have to admit that cultural norms are shifting, things are changing, we’re seeing it. We’re always at the front of that chain of examining new media, new technology, and new behaviors.
Departure from TV, even at this level, which is about 10% of the population, demonstrates that younger consumers aren’t bound to “tradition”. Let’s talk malls and retail. Holy molly, we have an article cooking right now that is all about how to- if you’re a restaurant, what do you do to survive the lack of retail traffic that’s surely impacting your restaurant traffic. That’s a different, that’s a topic but I–
[00:23:52] Dan: I am glad that I’m not in the retail businesses, meaning true product, consumer products like clothing and other stuff, because the ability to buy those things online, the ease at which they allow for returns, the free shipping offers–
[00:24:12] Adam: They’ve just eaten the foundation of it.
[00:24:14] Dan: They just are– Talk about change coming at a rapid pace, I marvel at the fact that some of these malls are still expanding and it’s mind boggling.
[00:24:26] Adam: In my youth, the mall was the place to go to socialize.
[00:24:31] Dan: Right, that was your internet.
[00:24:32] Adam: That’s gone, because I have the internet, right? I have my phone. I don’t need to go to socialize. I could socialize wherever I am. That means that, brands that we grew up with are also not safe. The very structures are not safe. There’s plenty of empty malls here in town. Brands, I mean Ralph Lauren, there’s some crappy brands out there. RadioShack, they survived 30 years longer than they probably needed to. Ralph Lauren, as a brand that’s being punished. Sports Authority going bankrupt and just gone.
Those are major– That’s like Macy’s, J.C. Penney, these are anchored tenants. These aren’t, “Oh, it’s a small crappy retail brand.”
[00:25:11] Dan: Sears, Kmart, I don’t even know–
[00:25:16] Adam: The malls couldn’t be built without them.
[00:25:18] Dan: Those two brands, Sears and Kmart, I have no idea how they continue to survive. It’s mind boggling.
[00:25:24] Adam: You’re right, and that’s exactly– If I were them, they must just be trying to pull every dollar out of those stores while they know they’re closing, because we know cultural norms are shifting and young audiences, young consumers have the cord-nevers, have proven that they don’t give a crap where their parents shopped or their older siblings, right? If Ralph Lauren is no longer cool, that’s it. The faucet just turns off.
What we used to see is aspirational behavior where younger imitates older. Now, we see the opposite, where older imitates the younger, especially in metros like this one in Scottsdale where we look to the youth to say, “Okay, this is acceptable now.” It’s the opposite of what we used to get.
[00:26:07] Dan: That’s why sneakers like Stan– How do you like that, I said sneaker. Sneakers like Stan Smiths come back because that younger demo said, “Hey, those are cool and by the way, they’re only 75 bucks. I can afford that.” All of a sudden, the next thing you know, Stan Smiths are popular again. Guess who has himself a pair of Stan Smith? [laughs]
[00:26:30] Adam: I know you’re very hip. You segwayed right into my next point, they buy on merit. They’re not going to be convinced to buy it, because somebody told them it’s cool, although influencers are, I guess, very powerful marketing force. They like the look of them or they figure out the value of them. They figure out the use of them and they buy it. They patronize it based on that. They don’t go to Sears, they go to Target or they go to freaking Amazon. It’s just one website to buy every single thing they buy. I’m pretty guilty of that myself.
[00:26:58] Dan: That’s my son. Called me up the other day, “Hey, I need some shoes for this new gig I’m getting. They’re 75 bucks. Can I buy them?” I’m like, “Where are you?” “Oh, I’m online.”
[00:27:11] Adam: Right, in front of my computer, yes, or I’m on the phone. Just to tie it back here, as we’re rounding third on this conversation. Why are they cutting their cord and moving away? Because the cable company doesn’t offer them anything that’s an experience or any value. They want to get the programming they want to get and they can get it through Netflix, Hulu, their Roku, their Apple TV, whatever the device is. They don’t need that Cox cable box. Sorry Cox to name check you, but they don’t need that.
If you’re a restaurant now, as our listeners are, that means they’re coming in and they’re saying, “I don’t get any value out of this place.” or “I didn’t get an experience that I think is worth.” “That doesn’t merit my purchase.” They do not come back. What you have to think about is how do we offer that, how can we be useful with an experience or a value or a meal or something, service, technology. Something that you put on those four walls that makes them come back or even through delivery off premise.
[00:28:16] Dan: Delivery off premise is huge. Just please, they know how to mention technology. Technology can be a lot of things and we admire the hell out of Domino’s Pizza for everything they’re done with tech. Technology is not putting a tablet on the table in order to order. That is not an experience. Many times, that’s a very frustrating thing. Be careful to not mistake technology with putting a device on the table.
[00:28:47] Adam: It’s not just dropping a bell and a whistle on the table, for sure. It’s more about propping up the experience because as you can watch in the stats, I suspect if we revisit these stats on cord-cutting and cord-nevers that we read at the top of this, those numbers are probably going to increase next year. I don’t know how dramatically. That’s probably true for the list of brands that went bankrupt, retail brands and otherwise. That number probably increase too as taste change and they shift really dramatically now as the internet can really enable trends and get people all to turn their backs on a brand. At the same time, if there’s another brand that fills that gap, gone.
[00:29:27] Dan: Yes, disappear.
[00:29:29] Adam: That’s all we have. I think we’ve knocked the crap out of this one.
[00:29:33] Dan: I think so and we always want to say thanks so much for listening. If you disagree, please tell someone who cares. No, we’re just kidding. If you have a counterpoint to any of these, please let us know. We welcome it, we love it, love the debate.
[00:29:49] Adam: Definitely, you can email us at adam@foodandrestaurantmarketing or dan@foodandrestuarantmarketing, or on Twitter which is really the best way, @FandRM. Keep the feedback coming. It’s been great and we’ve really enjoyed the conversations that we’ve started. Please subscribe and if you like this or if you were inflamed by it, share it with your friends. We’d love to hear more feedback.
[00:30:12] Dan: Yes, eat well.

Listen to the episode here.

Transcriptions by Go Transcript.

The demise or success of Casual Dining.

Is your brand going to just give in to the prognosticators or fight like hell?

Everyday there’s another article about the demise of casual dining. Denny’s CEO stated, “ongoing and pervasive challenges” in the restaurant industry. We recognize that the environment will most likely remain challenged for the foreseeable future and we are committed to delivering profitable system sales growth as the industry and consumer expectations evolve.” No one said success would be easy.

In addition to competing with fast-casual chains, casual-dining chains have to win over consumers who will be increasingly choosing to eat at home in 2017, as grocery prices plummeted in 2016. In 2017, fast- casual restaurants will continue to be seen as trendier places to eat that typically beat casual-dining chains when it comes to convenience and pricing. The head winds are strong and new competitors enter the market daily. But what you have in recognition A locations and traffic coming in daily.

How to create success

The key to success is leveraging those things to your advantage. So if you’re a fighter and believe in your concept and plan to steal share, here are the five fundamentals to success. The competition in casual dining is fierce and brands struggle everyday to drive traffic into store. Never before has marketing been more important to the category. First you must focus on the core items that your customers love and consume regularly. If you’ve gone off trying to match Fast Casual brands and been changing up your menu it creates confusion. The key is to simplify your menu offerings. Use ordering data to create a streamlined menu strategy. We call it focusing on the craveable core offerings. Second, is to leverage limited time offerings on those core items to drive traffic.

It doesn’t mean discounting either. Many brands find success in reminding core guests and lapsed gusts about the items they’ve been enjoying for sometime. It acts as a reminder that you’re here and implies a discount when you show the price as limited time. In addition, LTO’s are great ways to give new customers a reason for trying your brand. Of course if you really want to be aggressive offering your LTO at a discount never hurts and can actually drive considerable traffic. Ok so now you’ve streamlined the menu to focus on your core offering. and put in some near term traffic driver offers, what next.

Now it’s time to think about the long-term success of your marketing program. In this third step to success conduct a media audit of all your spending and it’s efficacy at driving traffic and sales. Are you spending in the right places and getting an effective reach and frequency with your messages? The bottom line is without awareness you can’t build sales. We know through our years of research there is a direct correlation between awareness and trial. Share of voice equal share of stomach, as we like to say.

Analyze and optimize

When examining the digital components of the plan use advanced, precision targeting to grow your audience. What you will be doing is targeting the type of people who have shown a liking to your offering. It’s all about finding lookalike audiences to grow your base of customers. Look at geographic, demographic and interest based data of your core audience to date. Finally, deploy your new plan with a test and optimize mind set. The beauty of today’s media landscape is our ability to continuously analyze the performance of each channel.

As you examine the information make revisions based on the data collected. Within each channel you can optimize for ad types, audiences messaging and so much more. The test and optimize approach gives you flexibility to react not to ad performance but also market conditions. Perhaps you have a weak day part. Perfect opportunity to test and optimize ad units promoting that period.

The fact remains not every casual dining concept can survive these challenging times for the industry. As in all industries the strong survive. But so do those that pivot and change and don’t let the chaotic times control their destiny. Having the right tools and concepts and discipline to deploy them will push to success. Because, success depends more on what we do than what the world does to us.

Listen to the companion episode of the F&RM Podcast for this article.

Light users and the long-tail of your customer base

So much of a restaurant brands marketing energy is dedicated on the heaviest users. Obviously, focusing on the smaller percentage of customers that drives the majority of sales makes sense in a mass media environment.

Good news, bad news. The mass media environment no longer applies to most brands. Enter the long-tail. By the end of the dot com era it was clear that anyone with an interest in an obscure subject could find the content to satisfy them. Apple’s iTunes store offered people the chance to find and explore tons of music they would have never heard about on FM radio. And dozens of publications like Pitchfork sprung up to feed interest in lesser known artists.

Top 40 pop radio still reaches the broad majority of music listeners. The obscure tracks occupy the long-tail following that the majority. Starting in the early 2000’s, marketers developed long-tail strategies aimed at capturing attention from those interested in long-tail subjects.

For example, a customer who always orders veggie items should be offered pork sliders.

When mass media budgets aren’t viable for a restaurant brand, the long-tail strategy can be flipped to apply to light users of the brand. A typical long-tail strategy aims to align the brand to content that reaches fewer people who are more engaged and passionate about what they’re reading. Digital media targeting makes this simple to execute.

For restaurant brands, the light users are the long-tail. The lower their visit frequency, the further out on the tail they are. By NPD estimates, light users make up just under half of all restaurant occasions. Media targeting still applies, but restaurant brands can target them more directly. Anime, non-GMO farming, Lars Von Trier films. These are examples of interest groups that might appear in a long-tail brief. Media would be targeted towards digital publications and content focused on these topics. In the case of restaurant brands, the interest groups are around specific menu items, LTOs or price points that interest them. Brands have the data to know what items individuals love, and not just the most frequent customers.

Loyalty programs and apps are geared towards the reward for many visits or purchases. But to attract light users, create incentives that are smaller but more specific to the individual. Instead of starting the program with a known reward, create a reward based on the initial purchase. A customer orders an Italian sub, offer them a discount on their next Italian sub.

Beyond that example, brands should respect customers enough to offer something relevant. If exact preferences aren’t known, start broad but custom. For example, a customer who always orders veggie items should be offered pork sliders. A customer that frequently buys kid’s meals might not want an alcohol based offer. Extend the length of redemption based on that customers frequency.

A brand can also offer a win-back reward based on the length of time from registered visit. A reasonable time frame might be 1.5x the average duration between visits of all customers. If your average customer visits twice monthly, offer a light user a discount at three weeks. Offer a richer reward at six weeks.

Simple technology can be used to quickly assess and create custom rewards based on a pre-set group of qualifiers. The user specific (but not personal) data consumers provide can be used to make them happier – and more frequent – customers.