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.
[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.

Transcriptions by Go Transcript.

The case against mobile apps for restaurant brands

The conversation inside every restaurant brand about apps is heated. There are technology providers, white label solutions and solo coders trying to sell your brand an app. Despite the glossy sales pitch, there are some things you should know about building in app. They definitely aren’t for everyone. Here, we lay out the case against building an app, and the ways to build traffic and sales without one. Want to hear the flip side? Read the companion piece that makes the counterpoint: The case for mobile apps for restaurant brands. On with the negative case.

An app won’t generate new customers alone

For every brand, driving customers into the restaurant is the lifeblood of your business. As marketers and operators, we tend to look at every new tool as if it can drive our business. It seems we are always one tool away from cracking our business wide open. Here’s the fact – no restaurant brand has successfully launched an app that wasn’t already having success. Vendors celebrate the successful case studies like Starbucks or Domino’s. Those brands were doing just fine in the traffic department prior to launching apps that were specifically designed to improve frequency and loyalty from their legions of customers. Brands think they can launch an app without including rewards or at least special offers are not being honest with themselves. If incentivized, intelligent discounting isn’t part of your plan, do not expect mobile apps to drive trial unless the app is truly ground breaking.

A growing number of mobile users report downloading zero new apps per month.

90% of mobile usage time is in apps.

This may sound like a pretty pro-app argument. The reality is that those apps are well established corporations investing billions into user acquisition and ongoing engagement. Congratulations, your brand will now be competing against Facebook, Google, Snapchat, Pandora, Netflix, Amazon, Apple and every media and entertainment company for screen real-estate. Think your brand is as much fun as Candy Crush?

Fewer app downloads every month

Despite the dominance in usage of mobile apps on smart phones, people are seeking out few new ones. According to comScore, new app downloads per user are trending down. In fact, a growing number of mobile users report downloading zero new apps per month. This means the battle for real estate on the home screen is getting more and more serious. How serious, half of all smart phone users fall into this zero app category.

Without serious innovation it won’t drive awareness or usage

Go ahead an try any five restaurant apps for brands you never use. They likely have the same feature set and he same set of flaws. If you’re not familiar with the restaurant, the app does little to drive a visit or a sale. People inside many brands believe the mere creation of the app will be newsworthy. It won’t. To break through with consumers, the app has to offer a truly interesting experience. That might mean a novel design or an integration with the store.

Are you prepared to market mobile apps?

In many cases, brands tell us the app is a solution to the problem of low awareness or increased competition. If you’re already challenged by marketing this new app will create a new problem. The app is a product of its own. Like any product it requires a marketing plan, a budget, support and maintenance. That’s a full-time commitment. Many brands looking to the app as a savior know how hard successful launching a string of LTOs can be. Marketing the app is no simpler.

Think social media blows up when there’s a problem in one restaurant? Wait until someone has a malfunctioning app in their hand. The app is not just an extension of the brand, a successful app can become the brand – and that is a double edged sword. Spend some time on the app store to see how competitive listings are for mobile apps. Seems almost as tough as marketing a restaurant, no?

Wide adoption of mobile web

Over two years ago, the number of smart phone users surpassed the number of desktop computer users. Not only are more people than ever using smartphones to browse and shop, but this tells us that more technology investments are being made to improve the basic infrastructure. The mobile web has arrived and is getting stronger everyday. This means that having a great mobile website will accomplish most of the things the average brand hopes an app will do. At least it will provide proof of concept that your customers want an app.

True, a website will lack some of the functionality for loyalty, but testing guest interest and understanding usage patterns on the web will allow you to design and build a more useful app. A mobile website will also allow for use on iOS, Android, Windows, Blackberry and any other platform out there and keep brands above the fray between mobile payment services.

As you can see, much consideration must be made before leaping into development of an app. The investment of time, resources and of course money are critical. Want a look on the bright side? Read the companion piece that makes the counterpoint: The case for mobile apps for restaurant brands.