Authenticity has become a buzzword today. Zac Painter of Fatz Cafe joins us to talk about how the southern kitchen concept works to bring authenticity to life.
Want the transcript? Read here.
Authenticity has become a buzzword today. Zac Painter of Fatz Cafe joins us to talk about how the southern kitchen concept works to bring authenticity to life.
Want the transcript? Read here.
[00:00:09] Adam Pierno: Welcome back to another episode of Food and Restaurant Marketing. I am excited to get this one on the books because our guest and I have been working for a long time to make this conversation that you’re hearing now happen. Today, we have a really, really interesting guest with an interesting story. Joining us today is Mr. Zac Painter of Cafe Enterprises and Fatz Cafe. Welcome, Zac.
[00:00:56] Zac Painter: Hello, Adam. Thank you for having me.
[00:00:58] Adam: Of course, it’s been a long time coming. I would love to just let you tell the audience who you are and where you’ve been, and just give them the highlights so we can get a little context for who we’re hearing from today.
[00:01:11] Zac: Sure. Well, I’ve been with Cafe Enterprises for a little over a year. Cafe Enterprises operates- we have 46 casual dining restaurants in the southeast, 45 under the Fatz Cafe brand and one under the Tavern 24 brand.
Prior to joining Fatz, I spent the last nine years or so on the agency side. I was working with Erwin Penland Advertising which was part of the inter-public group. Most recently, we were- I served as the Group Account Director, Senior VP of Account Management for account. We’re agency record for Denny’s. We handled everything from their social media brand strategy broadcast. Really, everything except for the media buying and planning and the scope.
So, a lot of experience with Denny’s. Prior to that, I worked on brands like Dunkin Donuts, Firehouse Subs and a few regional players. So, really, restaurant is in my blood. I grew up– my father was a restauranteur. My mother was a Director of Human Resources with a restaurant chain based in the Carolinas. Worked my way through high school and college, serving and tending bar and then I got into the restaurant marketing world. This is the perfect spot for me here.
[00:02:33] Adam: Totally. So, two things I want to touch on in what you just went through. Number one, if you’re listening to this and you compare our bios, you’ll notice that Zac and I both worked on Dunkin’ Donuts but at totally different times and places.
We’ve crossed paths a few times but we actually did not know each other until just really recently. But you’ve worked on a lot of really killer brands that the topic for today is all about Living Brand Authenticity. You’ve got the experience on the one hand with the brands that you’ve worked on. Danny’s Duncan which I know personally is just– they really do try to live their culture. Then Firehouse Subs which is another great brand that even as they extend and get bigger and bigger, they don’t lose touch with who they are. do they?
[00:03:17] Zac: That’s right. There’s a reason for that authenticity, I mean, especially with Firehouse Subs. The brand story behind that is really not exaggerated with the heritage in the– I think of a hundred years of the firefighting experience in the family, that was all very true and that’s a great story.
[00:03:36] Adam: You can’t fake that. That’s amazing. Also, something else you can’t fake, your background growing up in the restaurant business and seeing it from the side of operating, running a restaurant, being on the floor, and be in front of house and really see how it works. You’re not an empty suit that’s saying, “Well, I think we can do A, B, and C.” You’ve seen it firsthand and seen the effects of these decisions have on people.
[00:04:01] Zac: Yes, that’s something that I think has really helped me win credibility and build relationships with numerous franchisees, identities, or the general managers and operating partners at Fatz Cafe. The CEO of Cafe Enterprises has a culinary background. I worked in restaurants. Our CFO was a General Manager while he was getting his Master’s in finance.
So, the cool thing about our leadership team is really all of us have spent time working in the restaurant and understanding what it’s like on the frontline.
[00:04:36] Adam: It helps so much and I’ve done the same thing. I did a lot of jobs inside the restaurant industry. So, I have a little bit more of a sense of it. I don’t know if credibility is something I ever have but I think you have it for sure.
So, the topic we’re going to talk about today is Living Brand Authenticity. I wanted to give Zac a chance to talk about Fatz and the project, Zac, that you inherited there as you’ve explained it to me. What was the task and what did you walk into there?
You may need to talk a little bit about what Fatz is as a concept to make that more relevant for people. But just give us an overview of that of what you were trying to do and then I think we could dive into how brand authenticity has been playing out.
[00:05:20] Zac: Sure. So, Fatz was founded in 1988 in Spartanburg, South Carolina. We say it was founded with humble beginnings because the first location was literally a converted peach shed. So, that was kind of a farmer stand on an exit off of Interstate 26 in Spartanburg that you would never put a casual dining restaurant.
Really, it was just the founder, he was about southern food, big portions buying that [inaudible 00:06:01] and really that was one of the reasons it’s named Fatz is there’s this retro logo that we’re actually using on our uniforms now because after I think a few years of trying to keep it in hiding which we want to embrace how we probably started of– it’s just a fun place with you can get fantastic, [unintelligible 00:06:21] and cold draught beer in a very casual setting. So, that’s how we started.
In the ’90s the restaurant brand became very successful, started growing pretty rapidly. We have 45 Fatz in five states right now and we call it– it’s a southern kitchen. We’re best known for calabash chicken which is a seafood method of frying chicken, our baby back ribs, fantastic steaks.
So, the brand was really about southern food, southern hospitality, and this community engagement and the attitude and relationship among the employees, so just being a really fun place to work and a fun place for our guest to be.
[00:07:15] Adam: All right. Now, I want to stop you there. This is where I want to interject. So, it starts at a peach shed, it’s all– for crying out loud, it’s called Fatz. It’s all about southern hospitality, big portions, good times, great food, and let’s not be shy about either which is awesome; great brand promise.
When you got there, were they still living that peach shed dream or what did you walk into when you came back or at least when the management team came back and started putting it on the trajectory we are on today?
[00:07:50] Zac: Sure. So, I think after the recession 2008, 2009, what happened with a lot of casual dining brands, the segment and the industry started to decline. You look for answers in various places, whether it be low price points or looking at what some of the other brands are doing, throwing things on the wall to see what sticks.
Over that five or six-year period, I think some things were put on the menu and the menu went into a place that really just didn’t fit the core brand of what Fatz was founded to be in 1988. As a leadership team, we’ve committed to our– it’s really making Fatz in 2017 being what the founder would have wanted Fatz to be in 2017.
[00:08:47] Adam: Yes, you want to go back in time?
[00:08:48] Zac: So, not another– well, not go back in time. It’s sort of funny. We don’t want to go back to our roots, it’s really more of a Renaissance. It’s where we would have been in 2017 if we had not maybe gotten off track or the recession hadn’t cost some things to go off track. So, you talk about all these things of what Fatz was founded to be and it’s a pretty cool thing. Not a lot of folks are doing that.
[00:09:23] Adam: Yes, and that’s a really great distinction. It’s not going back in time, it’s going back to the roots of, “Hey, what was it created to be and how would that have been translated if nothing had interrupted it? Which parts of those would still make sense?”
I think as we define authenticity, you were able to help pick and choose. I think we should jump in and talk a little bit about the menu and what happened during the recession. You said everybody was scrambling to keep their share and keep traffic up and we were all doing things to try to wrestle that extra visit that we could. There was some funny things that happened with the menu from where we started in a peach shed.
[00:10:11] Zac: Yes. When we just introduced our new menu, it’s only been out for maybe 12, 14 weeks now. We changed or enhanced most of the items on this menu. We delete a lot of items off the menu. One of the [inaudible 00:10:31] talked about, we took this brand DNA filter of southern kitchen, fast as a southern kitchen like that, the portion should reflect that, the presentation should reflect that.
So, there are some recipes we didn’t touch but we changed the vessel to better deliver us. We got a lot of white plates. Now, some things goes on trays or cast iron skillets or in that sort of way.
Then some of the items we deleted, when you supply a filter, my favorite example is we had an Asian chicken salad on the menu. It’s a good salad, sold fairly well, but there were some items that we had on that salad that we only used for that salad and we couldn’t find other applications in the menu and any person that’s worked in a kitchen will tell you that’s probably a sign that you should cut that out on the menu.
[00:11:25] Adam: That’s is a killer.
[00:11:28] Zac: Right, we deleted that from the menu. We had a Mediterranean Tilapia. We had some of these other things that were fine, but they were added to the menu because at some point or another someone said, “Oh, we don’t have most of our competitors do.”
[00:11:45] Adam: It’s invented or added into the menu as a veto breaker and until somebody has the willingness or the stomach to say, “Well, if we’re a southern kitchen, is there a Chinese chicken salad?” [laughs] Anywhere in Spartanburg, it was somebody expecting a Chinese chicken salad. That example really cracked me up and is a great way to crystallize the project that you guys are doing there.
[00:12:10] Zac: Right.
[00:12:13] Adam: Let’s talk overall about what else happens inside the four walls. You described the macro scenario of what we’re talking about when we think about authenticity, it has a menu for sure, we can come back to menu. What about decor and even things like I think you mentioned music. What are some other areas that where you looked for ways to add to the authenticity and what did you do to impact it?
[00:12:45] Zac: So, for any brand that’s been around for 30 years, we’ve got buildings of various ages. We can’t go out and update the decor in 45 restaurants to be universal and brand new to reflect this new menu. But there are things like I mentioned the plate ware, the glassware, we’re serving some items on quarter sheet trays and butcher paper because that’s an appropriate delivery for our southern sampler, for example. It’s fried pickles, it’s pimento cheese dip in a cast-iron skillet and calabash fried chicken. That doesn’t belong on a white round plate. There are some better vegetables that better deliver on the experience.
Our staff uniforms, I think they’re a little formal for what we were. It didn’t reflect what we were intended to be going back to the peach shed. They were wearing shorts and t-shirts. We got to a point where it was black, white pants and colored shirts.
So, we’ve gone back on t-shirts with southern sayings and our most popular one because we’re actually selling them at retail now because they’ve become something that our guest are requesting. It’s great and this originally was intended for bartenders to wear, it says, “Talk southern to me.” We’ve got things and say they are around, here you all as a proper noun.
So, things that deliver on that– the southern kitchen aspect of it. I think when you– what the team members are wearing in the restaurants reflect– make them more comfortable and we want them to be more personal. We don’t want them to be scripted.
I think it creates a more casual environment and the music. The music was a big one. For me, I love music and I love music that has southern roots. I think we’ve been here. I have been here a few weeks and we were having lunch in one of the restaurants and an Imagine Dragon song was playing. [inaudible 00:15:04] was fine but–
[00:15:06] Adam: As southern as it gets, Zac. It’s as a southern as it gets.
[00:15:10] Zac: [laughs] Imagine Dragon should not play in the Fatz. We worked with a company and actually built a custom playlist that consists of blues and R&B and southern rock and Americana music. No offense to Imagine Dragons, I said, it’s not something that I think should ever be played in a Fatz, it doesn’t really fit the experience.
So, we worked with a company to develop a custom playlist specifically for Fatz that consists of blues, southern rock, Americana, R&B [inaudible 00:15:50] as far as regions of the country go, you would be hard-pressed to find an area that didn’t have the same roots and music that has influenced so much music as the south.
So, we really needed to deliver on that. Between the upgraded plate ware and glassware, the uniforms, the menu, the music, and most importantly the food, I think we’re delivering much better on that brand promise that we have in Fatz.
[00:16:25] Adam: As it relates to music, it’s really smart to say, “Well, let’s go back a little bit towards when we were founded and start thinking about what the roots were.” Including blues and including some more soulful expressions of music. It would be an easy thing to say, “Well, let’s just call Muzak or whoever the vendor is and have them put together a country hits list.” Jesus, that stuff would be missing by a mile for you guys, a lot of the commercial country that’s on the radio today that I just feel like misses the soulful part of what you guys are assembling for the brand.
[00:17:01] Zac: Yes, that’s exactly right. We actually put together really a creative brief for what the music is and we specifically said this is not pop country. We can have some country music. I think you would hear Jason Isbell more than you would hear Tim McGraw in a restaurant, right?
[00:17:19] Adam: More soul.
[00:17:21] Zac: Right, it’s that Americana– the type of country that I think you would be more likely to hear on Sirius XM radio rather than your standard pop country radio station. I hear a lot of Blues.
You can sit down in an hour, you hear the Allman Brothers, Aretha Franklin, Sturgill Simpson, and the Grateful Dead and that is not an uncommon bachelor music to hear. I think there’s– one of the things that I thought was interesting right after we made the change, I visit the restaurants pretty frequently and I’ve had dozens of employees saying that it’s made working there a little more fun because they’re not just hearing the same top 40 over and over and over. They’re really hearing some diverse, fun music.
[00:18:10] Adam: Yes, and not only that from a guest experience perspective. They can’t go into Chili’s and hear the same songs. It’s a unique take on it and for their– I don’t know what your average duration of a visit is, but let’s call it 60 minutes. They are hearing things that they normally don’t hear but I’m sure they respond to and it makes the experience have that authentic feel. It’s unique and it’s hard to track down that combination of songs you just laid out. Even on Sirius XM, there’s not really a station that plays the playlist you just described which I think is really powerful.
[00:18:45] Zac: We actually play the same music in the office here and been funny because it’s like I actually enjoy. It sounds like it’s my iPhone on the office speakers. That’s been fine. I mean, really, it’s interesting and it’s fun to talk about and it’s really what we’re trying to do with everything because you think about that music and you think about some of the food we’re talking about.
You just think about what’s happening with casual dining. If you can find those things that appeal to both boomers that have the disposable income and are still using casual dining often, and we’re all fighting to win Millennials, right?
There are certain things that really hit both but they hit both for different reasons. That type of music we’ve gotten compliments from boomers because it’s what they– it sounds like what they used to listen to. In a lot of cases when we’re playing some of the older blues or R&B and southern rock, it is what they used to listen to.
But that type of sound, I mean, you can tell by looking at the recent Grammy winners is back, especially the Americana feel which 10 or 15 years ago just didn’t have the popularity that it has now.
So, I think you can make that same parallel with some of the foods we’re talking about, some of the comfort food. One of the top items on– we call the Big Fatz Chopped Steak. It’s a 14-ounce smothered chopped steak. We’re seeing younger and older, I mean that’s something that a chopped steak is an item that boomers, that type of [unintelligible 00:20:28] appeals to them. But we’re seeing younger people get it because we’ve made this item at as a certain connotation in the new premium way. We’re using certified Angus beef and the presentation is really impressive and we found that common thread between the two.
[00:20:47] Adam: You just said something that really struck me which I think a lot of brands and marketers and side brands really miss. The notion you were talking– you started by talking about music, but you just brought it back to culinary. It hits boomers and Millennials but it hits them for different reasons.
I think so often brands feel like, “Well, I have to– either I have to choose or I have to get Millennials so that means I’m going to have a smartphone app at the table and that’s the only way you can talk to a waiter who stays behind glass.” It goes so extreme to try to get on trend but I think your formula is working, is smart because you’re creating– you’re making it work on two levels so that if I bring my father who’s a boomer and I’m actually a Gen X’er technically. So, let’s just say I was a little younger, Zac. Let’s just pretend.
[00:21:39] Zac: I’m the oldest Millennial for the record by the way.
[00:21:44] Adam: We can both agree to go and we’ll take slightly different things away but it’s a pleasant enjoyable experience from both of us because we’re both finding things to pick out of it that we can enjoy. As we talk about Millennials and boomers and essentially personas which is something I love, spend a lot of time thinking about and creating and I’m sure you do too, Zac.
What do you need to know about your customer to help avoid pitfalls that break up authenticity for guest? It sounds like you’re making the decisions in a very strategic and thoughtful way about making sure you’re touching– creating an emotional connection to your guests. What is it that you look for and that you want to know?
[00:22:25] Zac: Understanding your guests, knowing your guests, how they’re using you, and how they’re using you on different dayparts and occasions and how we can be relevant and as many of those as we possibly can.
We talk about the layers of sales here where we’ve got a– we’ve recently introduced a brunch on Saturday and Sunday mornings starting at 9:00 AM. Sunday is a huge day for us and I think partly because the type of food we serve. The nearest what’s out there is a wait at a Fatz on a Sunday a few moments later and I think it’s because of those southern comfort foods.
Through our eClub, through data that we’ve been able to gather from various partners and looking at our eClub and where else, what hobbies those people have, what interest they are, where they fall on. Our demographics are pretty well representative of the areas that we’re in.
We have a little bit of everyone, 50% of our guests have children in the home, but 30% of our guests are 55 or older. When you start looking at some of these things and how they’re using us, we really– here’s a good example.
Previously, there was a program we did on Tuesday nights called Classic Tuesday’s which was originally intended to be for those 50 or over, it was a menu that had smaller portions and smaller prices. As we’re doing similar things, this is something that we went away from but we didn’t take away without giving.
What we felt like after we talked to the users of that program, what we found is they wanted more than one night a week and Tuesdays weren’t always the best night for them. Really, all we did was take existing menu items and knock a few dollars off and serve a smaller portion.
So, we created this program called the Classic Club which is only available to those in that age range. They can come Monday through Thursday. They get 20% off their entrée. They can wear anything they want, not only the select items we had on that menu.
On Friday and Saturday, we offer them guaranteed call ahead seating and on Sunday, they get a free beverage with any entrée. So, what we tried to say is, “How do you use us and how can we be relevant?” The first thought is, well, you can’t take away classic Tuesday’s because then we’re going to alienate all of our boomers and matures that we’ve created this relationship with.
Well, we don’t want to do that but we want to make Tuesday night relevant for everyone and we want to do something that’s going to make those people even more loyal and be able to come to us more often and use us for different reasons.
[00:25:21] Adam: Well, no. I mean what’s really smart about what you’re saying again, you wanted to upgrade the program but you wanted to make it so it was more valuable to them based on what they’re really looking for. It’s not just the day part or the program. They weren’t in love with Tuesdays, it’s really more about figuring out what they value and how to expand that and make it– you made it more accessible even though you may have pulled some items off the menu, you actually gave them more ways in and more ways to engage based on their habits. That’s awesome.
[00:25:54] Zac: Right, and with families with kids are the other side. Let’s go to the Millennial and Gen X crowd. I think after we did some extensive research in the last year on who our guest is and how they’re using us, I think most people were surprised by how young and how many young families we have that are coming to us on a fairly regular basis.
It’s not a surprise to me but I guess for those in the system there have been older guests can tend to be the most vocal. That’s maybe who you’re listening to when you’re making changes. The kid’s menu had historically been something that was much of an afterthought.
[00:26:38] Adam: It almost always is totally just like, “Well, we’ll have a hamburger and chicken nuggets.”
[00:26:43] Zac: But you look at some of the brands that are really thriving, I mean, some of the casual dining brands that are doing really well right now. They put a lot of effort into their kid’s menus. I have two young children and– knowledge of food and not just because of what I do but their awareness and knowledge of food is so much more than when I was five years old just because of what’s happening in America right now with all the options.
Right after we enhanced our core menu, we immediately tackled the kid’s menu. We put more options on there, bigger options not just for kids that are in that four, five, six age range, but giving those seven, eight, nine-year-olds something to look at, some healthier options but not grilled chicken and broccoli. Like everyone checks off the box with that item.
So, we’re looking at all of those segments and the weekday lunch and the brunch and what people are wanting from us on various nights. So, we’re trying to give that very diverse group of guests we have multiple ways and reasons to use us.
[00:27:54] Adam: And ways that tie into the brand and are authentic to that vision you have for the menu and for the experience that still makes sense. Well, that’s awesome. I think I have used up enough of your time. Thank you very much for making time for us. This was an awesome conversation, Zac. I really appreciate it.
[00:28:14] Zac: Thank you.
[00:28:16] Adam: Yes, cool. Anybody listening, please if you have questions for Zac or for I, you can reach out on Twitter @FandRM or through the email Adam@foodandrestaurantmarketing. Please subscribe and feel free to share this. Zac, anything you want that you have going on with Fatz or personally that causes or anything that you support that you want to–?
[00:28:39] Zac: Yes, we just completed– this was the first time we worked with Autism Speaks. So, it’s part of autism awareness month. The last week of April, we did an in-restaurant fundraising program where in-guests could give a dollar or a $5 donation and get something in return on their next visit.
The first time we’ve done something like this in Fatz. Since I’ve been here and from what I understand in recent memory, we raised over $30,000 in five days of fundraising for 45 restaurants.
[00:29:14] Adam: That’s fantastic.
[00:29:14] Zac: We were thrilled with that. So, we’ll be doing a formal announcement to check presentation and we’ll continue to announce how we’re going to work more with Autism Speaks in the future.
It was really encouraging to see– that’s another part of the brand promise, that community engagement, the way that our team members really got behind that and really broke every goal that we had, even our ambitious goal that we didn’t publicize. So, that was really encouraging. That’s some good news.
[00:29:48] Adam: I love that. Do you think you’ll be doing more of those types of events even beyond Autism Speaks or is that a project or a cause that you really believe in as a brand?
[00:29:59] Zac: [unintelligible 00:29:59] that we believe as a brand and both our CEO and CFO are actively involved in that and have been personally touched by autism. So, it’s something that’s very important to us, but what we also found for our associates is just the calls that everyone can rally around. Unfortunately, so many people now know someone who has been affected, [unintelligible 00:30:24] families that have been affected on this.
[00:30:26] Adam: Absolutely.
[00:30:28] Zac: It’s just something that’s been so much more in the conversation in the recent years. So, we’re excited about that. We also encourage each of our restaurants to do– we do this thing on Saturday morning called Pancake Breakfast where we work with local nonprofits. The nonprofit’s come in and actually volunteer to be servers and they get to keep a portion of the sales for that day. So, we’ve been doing those for a decade. This was just the first time that five days all restaurants–
[00:31:01] Adam: Yes, a concentrated effort.
[00:31:03] Zac: Everybody has a laser focus on this and it had great success. So, we’ll definitely do thinking’s like that in the future.
[00:31:09] Adam: Excellent, that’s awesome. The next one you do, let us know. We will help you promote it for sure.
[00:31:14] Zac: Awesome. Other than, I’m about to head to NRA. So, I’ll be in Chicago the next few days looking at-
[00:31:29] Adam: Beautiful.
[00:31:21] Zac: -what’s coming up on [crosstalk].
[00:31:24] Adam: We’re sitting that one out but I’ll check in with you after for a good recap of what you found.
[00:31:29] Zac: Awesome. Well, thank you, Adam. I appreciate it.
[00:31:32] Adam: Yes. Thanks a lot, Zac. I really appreciate it. We appreciate you making time for us. Thanks again. It was a little bit tricky, but [laughs] I’m glad we’re finally able to get it on the books.
[00:31:42] Zac: We figured it out. [laughs]
[00:31:43] Adam: There we go.
Listen to the episode here.
[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.
[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.
[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.
[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.