Transcript of Food & Restaurant Podcast – Does this Sandwich Offer Make Starbucks a QSR?

Transcript of Food & Restaurant Marketing Podcast – Episode: Does this Sandwich Offer Make Starbucks a QSR?
Starbucks, sandwich, LTO
The sandwich combo LTO that sparked this chat.

[00:00:06] Adam Pierno: Welcome back to another episode of Food and Restaurant Marketing. Once again, with me is Mr. Daniel T. Santy.

[00:00:18] Dan Santy: Hello.

[00:00:20] Adam: We have a fun topic today because we are experts in restaurant marketing, but we are also consumers of restaurant marketing. This topic came up pretty organically over the long weekend with some exchange of some texts and some kind of quippy humor, and also sparked from a conversation about a post that we published a couple weeks ago about a brand that you might have heard of. It’s a new upstart. What’s it called again, sir?

[00:00:48] Dan: I think it’s called Starbucks.

[00:00:51] Adam: That’s correct. That’s correct. Yes, Starbucks. I always get it mixed up. It is a fantastic brand and we will definitely link to the original post that relates to this, although is not 100% related to this conversation, but they’re loosely siblings to each other, I guess. It’s interesting because I got a text from Dan and we both kind of shared a chuckle. Go ahead and tell them what you sent me.

[00:01:19] Dan: I was in Instagram, my Instagram. That’s a social media platform.

[00:01:25] Adam: [laughs] I’ve read about it.

[00:01:29] Dan: That at an ad for Starbucks that has– what’s their small coffee called?

[00:01:36] Adam: Tall.

[00:01:37] Dan: Get a tall and a breakfast sandwich for guess what price point; five dollars, the famous QSR price point.

[00:01:45] Adam: The five-dollar-foot-long.

[00:01:46] Dan: Yes. It’s been around forever now.

[00:01:48] Adam: Yes, and I was pretty surprised too. The visual did not lead with the coffee. The coffee was background to the breakfast sandwich. If you changed the colors out, it could’ve looked like a McDonald’s ad.

[00:01:58] Dan: Right and they were pushing breakfast exactly as what the occasion that they were driving. So, I found it very interesting and then it wasn’t too much later that day that I was watching television and here comes a 30 on the same promotion. So, breakfast at Starbucks, five bucks, sandwich and a tall coffee.
I was so fascinated because the brand really hasn’t used television very extensively number one. Number two; when they have used it they’ve really promoted more their high-end brand or clover or different high-end beans and so forth, which makes sense because it’s on brand with who they are and who they’re continuing to want to be as a luxury brand. But to see them pushing a five dollar price point was fascinating, I thought what was equally fascinating is when I toured three stores only to discover that there is no POP in the stores; zero.

[00:03:01] Adam: We had some fun with the media that you saw on Sunday or Monday, but that was the big aha. I went into Starbucks today for another points challenge because I’m addicted to that game. I was looking around too knowing that you had seen all that media, which I haven’t seen anything, but when I opened up the app walking into the store, there was a promo for that same offer. In the store, though, I didn’t see any POP. The POP was still classic Starbucks, like high-end very brand–

[00:03:32] Dan: Yes, they were selling some latte [unintelligible 00:03:37]

[00:03:37] Adam: Yes, they have a new one that I can’t pronounce either [Editor’s note: It’s called Cascara]. I’m not even going to try.

[00:03:40] Dan: Right. [laughs]

[00:03:42] Adam: They always have a new latte that they’re pushing it seems like.

[00:03:46] Dan: I guess on the surface, I was startled because I thought, I wonder what’s happening from sales perspective. What’s the strategy behind this LTO if it’s indeed an LTO? Is this something they’re going to continuously push? But because they’re going head to head with McDonald’s obviously, and their huge push and huge success, I know Subway’s now doing breakfast. BK is doing breakfast.

[00:04:20] Adam: Taco Bell.

[00:04:20] Dan: Jack in the Box

[00:04:21] Adam: Everybody now is getting into the breakfast day part. [crosstalk]

[00:04:23] Dan: Yes. So, I guess you could argue based on that, that maybe all those brands were beginning to erode-

[00:04:31] Adam: Do you think? That’s my question.

[00:04:31] Dan: -traffic at Starbucks.

[00:04:33] Adam: It has to be a defensive move, right?

[00:04:36] Dan: Right.

[00:04:37] Adam: It has to be.

[00:04:37] Dan: Absolutely, yes.

[00:04:39] Adam: Because otherwise– that’s the day part they’ve been trying to build off of. They closed down their wine test that they were doing. They just shut that down kind of overnight. They gave up on that evening day part, which it was a noble effort. I wouldn’t have been surprised if they could’ve pulled it off, but maybe they’re just retrenching about on their craveable core like we’ve discussed in the past.

[00:05:02] Dan: Yes. I should’ve ordered it, to be honest with you.

[00:05:05] Adam: Just to see what the experience was?

[00:05:06] Dan: Yes, see what the experience was and to see if they even– to see whether the staff, the barista even knew about it.

[00:05:16] Adam: If they knew it was an offer or a special or something worth talking about, or if they just wrung it up and gave you a microwave sandwich.

[00:05:21] Dan: Yes. I also wouldn’t mind tasting it to see if it’s– to see what the quality is behind it, too, because I have a– excuse me, I have a high expectation for quality there. Food’s a risky business especially when you get it out of the package. I think they’ve done a good job with their packaged product that they have. You can pick up that snack box, obviously, the yogurts and some other things like that. But all over sudden when you’re doing prepared items that are getting microwaved, you just want to go–

[00:05:56] Adam: It’s not a good look. I don’t order the food there for that reason. I see them unwrapping it and I see them putting it in a microwave and it doesn’t feel like you’re saying. It doesn’t match my expectations of the high-end experience. I wonder how they’re planning to address that going forward or if they– I guess it doesn’t seem to bother them too much.

[00:06:17] Dan: Yes. It’ll be interesting to see what they do. Clearly, there must be a traffic issue.

[00:06:23] Adam: It’s got to be and to drive traffic to an item like food where they know there is a potential for a disconnect in the experience, that’s pretty interesting move, but it’s got to be a traffic and upsell move, right? Five-dollar combo?

[00:06:38] Dan: I guess, but think about this. Their margins on a latte are ridiculous, right? They’ve got to be.

[00:06:46] Adam: Right.

[00:06:46] Dan: So now all over sudden, your sending me to get a sandwich and we all know food and paper cost. Now, all of a sudden, you’ve got a whole another dynamic and food’s so much more expensive and the margin on food is difficult and you’re giving me a cup of coffee for five bucks. It’s a interesting play all the way around.

[00:07:06] Adam: Well, yes. It was a tall coffee. When was the last time you ordered a small coffee anywhere? I don’t think I’ve ever ordered a small coffee.

[00:07:15] Dan: Yes. No, I haven’t either.

[00:07:17] Adam: So, you’re upgrading that and contributing to the margin?

[00:07:20] Dan: You think maybe I’m getting that sandwich, but saying give me a Grande?

[00:07:24] Adam: Yes, or you’re turning that coffee– I think that’s a drip coffee. You’re turning that into a chai or something fancy.

[00:07:29] Dan: Maybe.

[00:07:30] Adam: You’re a fancy gentleman.

[00:07:31] Dan: I am very fancy.

[00:07:32] Adam: For sure.

[00:07:33] Dan: That’s interesting, Adam. I never even thought about that. I wonder how they would price that. We ought to test that. I want that five-dollar special, but I want a Grande.

[00:07:44] Adam: I bet you that’s what the baristas– if there’s any training, that’s what they’re trained to do. You sure you want a tall?

[00:07:48] Dan: Yes.

[00:07:49] Adam: You sure you don’t want a venti?

[00:07:50] Dan: Yes.

[00:07:51] Adam: Right? You sure you want a–?

[00:07:51] Dan: Or a Latte.

[00:07:52] Adam: Right, and just, “Cha-ching, cha-ching, cha-ching.” Because when you think about the original brand promise, when you were introduced to Starbucks, you weren’t introduced to it at a QSR level at all. It was this special experience. It was experience coffee.

[00:08:11] Dan: It’s experiential.

[00:08:12] Adam: The coffee house experience.

[00:08:14] Dan: Right. The whole concept was to come on in, relax, as you pointed out in your article, get yourself a cup of coffee, sit down, relax, visit with friends, use their free wi-fi–

[00:08:26] Adam: Spend time.

[00:08:27] Dan: Yes.

[00:08:27] Adam: Spend time, but now the question that I’m asking is with– you start out with this exclusive experience. You start out with this perceived luxury where I feel like I’m treating myself. Now, we’ve moved so far towards mass acceptance. I mean, there are honestly places where– who we were just talking to that was telling us there was a place in Portland where there were three Starbucks on a four-corner street?

[00:08:52] Dan: Yes, exactly.

[00:08:55] Adam: They’re so mass, it can’t still be luxury. So, now when I see QSR messaging, I really get curious about what they’re thinking about strategically inside there.

[00:09:06] Dan: Yes. I think that they’re probably– there’s got to be stress. There just has to be stress. The brands matured significantly. There’s so much competition especially from the independents. Let’s face it; the hipsters, the Millennials, they tend to really like to support local. There’s about a push for local. American Express does that at the holiday [crosstalk]

[00:09:35] Adam: Yes, Small Business Saturdays.

[00:09:37] Dan: Small business. So, all of a sudden, there’s a lot of push-back for a big massive chain like that and the ubiquity of it.

[00:09:46] Adam: Well, let’s take that fork in the road. Would you expect then because I’m thinking of places locally around here like Cartel or other places here in Arizona, there’s also Blue Bottle which is like a bigger chain. There’s a lot of places that are more–

[00:10:02] Dan: Dutch Bros.

[00:10:03] Adam: Yes. They have a more local, cult feel to them than Starbucks, which is your mass brand, your McDonald’s of the coffee industry. So, they have two choices; they can just say, “We’re the guerrilla. We are the McDonald’s of coffee, get on board. We’re everywhere. You can’t avoid us.” Or they could try to figure out how to make themselves seem smaller. They could camouflage themselves as a smaller brand, but it seems like this is a very QSRy [Editor’s note: QSRy is definitely not a word] offer.

[00:10:33] Dan: This is just saying, “We’re the gorilla and we’re going to keep going down this path and act that way.” They might be winning or surviving, or thriving because we don’t have their numbers, obviously, by sheer mass, by volume. Convenience is their big play today to your point about that Portland corner. Maria and I were in San Francisco and there was one directly across the street from the other.

[00:11:04] Adam: Right. Right, exactly.

[00:11:05] Dan: You see that a lot, especially in the major metros where there’s a lot of walking. But all of a sudden, it really becomes– it’s not a choice, it’s a convenience. It’s like when I set a meeting with somebody and they want to go have a cup of coffee, typically it’s like, “Well, let’s meet at that Starbucks at the corner of.” So, it’s just convenient.

[00:11:25] Adam: You almost could name any corner and there is actually a Starbucks there, whether you knew it or not.

[00:11:30] Dan: That’s exactly right.

[00:11:31] Adam: I think that’s true.

[00:11:32] Dan: That’s exactly right.

[00:11:32] Adam: Well, do you think that’s a negative? That it’s so ubiquitous, that I say, “No, no let’s go somewhere else. Let’s go somewhere special. Let’s go– meet me at this place. Meet me over here, or let’s do something else.”

[00:11:47] Dan: I know McDonald’s doesn’t exactly parallel this, however, McDonald’s is just now eking themselves out of a long-term traffic problem they were having. They were convenience play, right? Because think about the sheer number of stores that they have.

[00:12:05] Adam: And locations. They’re the A, A, A, real estate.

[00:12:08] Dan: Always, always.

[00:12:09] Adam: Easy on, easy off.

[00:12:10] Dan: They’re upgrading all those locations, too, to make it easier for drive thru. So, they’re really upping the convenience play there, but that’s what I mean is that McDonald’s got there, and now they’ve had to really reinvent themselves to win back customers. The breakfast day part was huge, a big play there. They’re obviously doing variety things, but I wonder if they’re not really damaging the brand with this strategy. It doesn’t seem to make sense to me.

[00:12:42] Adam: Something’s weird with both of those because McDonald’s had great luck when they launched all day breakfast, but it’s cooled off now they have a traffic problem again. That’s kind of a relapse of a traffic problem, if you will.
As people adapted and said, “Okay, I’ve had an Egg McMuffin at 2:00PM. That’s not interesting anymore.” So, they’re sort of probably retreating back to pushing breakfast at breakfast time, and Starbucks is saying, “No, no, no. We’re going to– you gave up this spot, we’re going to try to hold it.”

[00:13:09] Dan: It’s not a defensible competitive advantage, breakfast offerings.

[00:13:14] Adam: It’s not.

[00:13:15] Dan: Everybody just followed suit.

[00:13:16] Adam: No, and you could go to–

[00:13:17] Dan: Boom, boom, boom.

[00:13:17] Adam: I can go to QuikTrip. I mean, you can get a pretty good breakfast almost anywhere. I mean, compared to a breakfast sandwich, it’s not hard. So, it’s–

[00:13:26] Dan: So, all of a sudden, they’ve got challenges that aren’t familiar to them.

[00:13:33] Adam: Yes, I think so. So, trying to get into that QSR space for Starbucks is not familiar to them at all. I don’t think it’s familiar to their core customer. I think their customer, in general, has obviously grown up seeing that stuff, but the customer that they covet, I don’t think is responding to that $5 offer.

[00:13:53] Dan: Right, because their core customer is that person who goes and gets that exact drink that they love, and get– you know, my ex-wife got the PITA, the pain in the– I called it the pain in the– yes.

[00:14:07] Adam: [laughs] Because you got that fancy drink and I need it shaken three times, and exactly 176 degrees.

[00:14:11] Dan: Exactly, and that’s their core. Think about the people that come in and just– they have their white cup with the green circle on it, and it’s the same thing they get every day, day in and day out. So, interesting play for sure.

[00:14:26] Adam: Well, they’ve been so successful at getting those people. With the way that they have leveraged that app to get people into, really into habitual visitation and going in and ordering that same thing. Now, it’s like, “I hit one button, it orders me yesterday’s order. I don’t even have to think about it.”

[00:14:44] Daniel: Is that right?

[00:14:44] Adam: Yes, it’s amazing. It’s fantastic.

[00:14:48] Dan: Yes, because you don’t have to talk to the barista, that’s why you like it. [laughs]

[00:14:50] Adam: I don’t have to talk to anybody. I’m not very social. If you’re listening, do not call me. You can leave me a voicemail, I guess.

[00:14:57] Dan: You know, one of the other things I want to talk about is related to this, just going back to the marketing. You know how much we hammer on the idea of craveable, right?

[00:15:08] Adam: Yes.

[00:15:09] Dan: That commercial, I didn’t go, “Oh my gosh. I got to get that.”

[00:15:14] Adam: I’m going to post the ad. I took a screenshot of it because actually I was a little bit put off. It looks like what you actually get, which is not how you do it. You’ve got to take some liberties when you’re talking about food and make it look craveable.

[00:15:28] Dan: Yes, where’s the cheese dripping off that thing or-

[00:15:30] Adam: Yes, it looks like it just came out of the microwave.

[00:15:31] Dan: -somebody consuming it, perhaps?

[00:15:34] Adam: Right. Maybe they’re easy on the eyes, as well. Male or female, I don’t care, but attractive to look at.

[00:15:40] Dan: It was none of that.

[00:15:42] Adam: Could it be a local offer that they’re just [crosstalk]-

[00:15:45] Dan: Testing in Phoenix?

[00:15:46] Adam: -10 zip codes?

[00:15:48] Dan: That’s a great point. I never thought about that, but maybe that’s why there’s no POP. Phoenix is a notorious test market for many, many brands, national brands.

[00:16:00] Adam: But we’ve seen it on TV. They’re too sophisticated. They wouldn’t miss that. It would be in the store if they wanted it in the store.

[00:16:08] Dan: They could be testing– maybe they’re just testing the offer, see if it has any measurable impact on traffic.

[00:16:20] Adam: Yes, that’s probably part of it. It’s definitely an interesting move. But now, it looks like they are in QSR mode. Let’s talk pricing. You brought up margins on coffee, and those margins used to be more ridiculous. Starbucks sort of hurt themselves by becoming so successful that the supply cost more money, so they cut their margins. I’m sure they do okay.

[00:16:44] Dan: I’m sure they do.

[00:16:46] Adam: But getting into that $5 game, and having like a meal offer, weird?

[00:16:52] Dan: Very, and dangerous. I think you said it. If the audiences tends to be a little more upscale and willing to spend that 3.50 to 5.50, whatever it costs to get their latte there, now all of a sudden you’re telling me I can have a coffee and a sandwich for less than my latte cost?

[00:17:12] Adam: Right, yes. What about the brand perception? Their value prop is not– the word value doesn’t belong anywhere near their value profits. You don’t go in there to save money.

[00:17:27] Dan: No.

[00:17:27] Adam: Right? Like Subway, a $5-footlong? Let’s go.

[00:17:28] Dan: You expect it. Right.

[00:17:31] Adam: Right? But I know what I’m getting into.

[00:17:33] Dan: You just put yourself on, I think, which is our point about this whole thing is you’re now putting yourself on par in a competitive space with QSR, which is a male 18 to 24-year-old [laughs] audience in spades.

[00:17:44] Adam: Yes, it’s not your audience.

[00:17:45] Dan: So, is that what you want? You want men 18 to 24 coming in the restaurant? I don’t think so.

[00:17:52] Adam: Well, let’s talk about the flip side of that because I hadn’t thought about it until you just said that audience, that demo. Are you going to compare favorably? If I go to McDonald’s and I get their coffee and whatever their breakfast sandwich is, and then I go to Starbucks the next day for five bucks, and I get their coffee which, in my opinion is better, and their sandwich, which probably isn’t all that much worse, does that $5 feel like a deal at that point? Does that change perception?

[00:18:21] Dan: Think about this.

[00:18:22] Adam: But it’s a small coffee versus a 20 ounce coffee at McDonald’s, probably.

[00:18:25] Dan: Right, there’s that, but then there’s the experience. So, QSR is known for, what? Being quick.

[00:18:33] Adam: It’s in the name.

[00:18:33] Dan: You could–
It’s in the name. I’ll give you three guesses. You can find yourself in a Starbucks and it’s not quick, because depending on what time of day it is, if you’re being driven in there for breakfast, it’s going to be morning rush hour.

[00:18:50] Adam: I mean, prepare yourself to stand there and wait with this rush of online orders.

[00:18:54] Dan: Really? That’s going to be an experience downfall for them-

[00:19:02] Adam: Great point.

[00:19:02] Dan: -if they drive traffic. So, if they do successfully drive a QSR– if they steal a QSR occasion, which appears they’re trying to do, then that QSR customer is going to go, “What is this? This isn’t–?”

[00:19:19] Adam: Right. I’m standing here waiting for 10 minutes for this thing to come out of the microwave. At least McDonald’s has the courtesy to hide the microwave behind the–
There’s nothing wrong with microwave breakfast sandwiches. We love them. It’s delicious. Well yes, but I think that offer in particular tells me they’re looking at the QSR model. The pricing tells me that. TV, as a medium, mass market, QSR model, I mean we’re just talking about-

[00:19:50] Dan: A hundred percent.

[00:19:51] Adam: -Burger King, it’s the number one driver for craveability, now they’re on TV. What did the TV spot look like?

[00:19:58] Dan: You know, it felt a lot like that Instagram post. It was like a voiceover with–

[00:20:06] Adam: Solid green.

[00:20:07] Dan: Yes, the camera moved towards the sandwich and the coffee and five bucks.

[00:20:14] Adam: I’ll find it on YouTube and try to post it with this, so people can see it and see what we’re talking about here but–

[00:20:22] Dan: Obviously, the production quality was fine, but there was not a lot of thought put into how to position that sandwich.

[00:20:33] Adam: The food styling.

[00:20:34] Dan: You’re right, and all of that. The audio wasn’t something about the ingredients and–

[00:20:42] Adam: Was it just a straight up? Come in and get a five dollar–?

[00:20:46] Dan: What I remember. Keep in mind, I’d be careful because I did just see it one time and I probably [crosstalk]
But again, it wasn’t– I think about what Carl’s Jr. does with that burger and all the QSRs. They show off that food we call the food porn. There was no food porn going on here.

[00:21:10] Adam: Yes. They aren’t trying to make it look like, “Just come in and get this deal. We have got to get rid of these sandwiches. They’re going to go bad.”

[00:21:15] Dan: [laughs] We got to get rid of these sandwiches.

[00:21:17] Adam: But what do you think of TV? You said earlier and I agree that when they’ve been on TV it’s been more lofty. It’s either been their packaged product or CPG kind of angle on Starbucks or brand. They’ve done holiday themed or like Frappuccino branding but they haven’t done, “Here’s your offer LTO stuff.” That’s it. They have the pricing. They have the offer and they have their on TV, the number one driver of craving, where are they going from here? Give me some prognostication.

[00:21:49] Dan: I think it’s going to fail, and the reason is what I was just talking about earlier. We know that television is a highly effective medium. So, if TV proves out in this scenario and does drive that occasion, I think the experience is going to not live up to expectations in terms of wait time to get the product and so forth and how I have to order and the environment I’m in, too. I think it’s flawed.

[00:22:25] Adam: So, if they get those people that they are trying to get–

[00:22:28] Dan: I don’t think you’re going to get it. I don’t think you’ll get the second occasion out of them.

[00:22:31] Adam: No, but I don’t think you’re going to win the Taco Bell audience that just defected from McDonalds and back again, and now back again, it’s not going to Starbucks to try.

[00:22:42] Dan: No way.

[00:22:43] Adam: They have to deep fry the sandwich in I don’t know, Frappuccino. I don’t even know what kind of gimmickry they would have to do to get that audience.

[00:22:50] Dan: Yes. They’d have to wrap it in some kind of chicken fried goo or something like that [laughs].

[00:22:55] Adam: Well, so much of this stuff– chicken, yes that sandwich. So much of this seems about novelty and there’s nothing novel about this, but it’s also not sophisticated. It doesn’t have the Starbucks like polish. Everything they do is really freaking polished.

[00:23:11] Dan: Everything.

[00:23:12] Adam: But this doesn’t.

[00:23:13] Dan: Again, I couldn’t pronounce the name of that latte because I went to three different stores and every store had that POP up promoting that new latte.

[00:23:22] Adam: Yes, you walk in and it hits your right there.

[00:23:23] Dan: Yes, it was on the door then it was right up above [crosstalk]

[00:23:26] Adam: It looks pretty good.

[00:23:27] Dan: It does.

[00:23:28] Adam: The appetite appeal on that is really well done.

[00:23:30] Dan: Right, right. But that’s their core, right? That’s what they do. That’s what they do well. It looked high-end to me. I looked at it and said, “That’s probably five bucks for one of those bad boys.” More power to them if they sell those because five bucks for that probably has a hell of a lot more margin than five bucks for a tall and a sandwich.

[00:23:50] Adam: Yes. I’m not kidding. I just was at Sunoco filling up my car and they had an ad, an A-frame in the parking lot that said “Our New Breakfast Sandwich,” and it looked better.

[00:24:03] Dan: Seriously?

[00:24:04] Adam: It looked better and I’m sure–

[00:24:04] Dan: Sunoco’s got a better–? [laughs]

[00:24:05] Adam: It’s like a roller dog. You know what I mean? It’s an AMPM, it’s not Sunoco, so I stand corrected. Still, though, the photography looked better. Not comparing the sandwich, the food product and the food product, or the experience. But just that food photo, I was like, “Hey, maybe I should go into AMPM and get the roller dog action here.” But I didn’t. I didn’t look at it and think it looked terrible. Starbucks going– it just doesn’t look like their brand.

[00:24:32] Dan: No. Again, it’s very fascinating. It will be interesting to watch. Probably we’ll be doing a follow up podcast on this.

[00:24:41] Adam: Yes, the stock price will be triple and it will be like, “Starbucks booming breakfast sandwich business.” It could have been predicted.

[00:24:47] Dan: Stealing shares from all QSRs.

[00:24:51] Adam: You can almost put it in writing. It’s going to happen. All right, well, I think we’ve covered this one. Thank you all for joining us. If you disagree, you’re wrong, but if you want to try to debate and have some fun with this topic, we would definitely love to hear from you. You can find us on Twitter @F&RM or you can email us Dan@foodandrestaurantmarketing or adam@foodandrestaurantmarketing. Thanks for listening.

[00:25:16] Dan: As always, eat well.

Transcriptions by Go Transcript.

sandwich, Starbucks, experience, brand, LTO, daypart

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Transcript of Food & Restaurant Podcast – What is Your Brand Movie?

Transcript of Food & Restaurant Marketing Podcast – Episode: What Is Your Brand Movie?

[00:00:05] Adam Pierno: Welcome back to another episode of Food and Restaurant Marketing. I am Adam Pierno, and with me as always, Mr. Daniel T. Santy.

[00:00:14] Daniel Santy: Hello. Hope you’re doing well.

[00:00:15] Adam: We are coming to you today from our headquarters in Scottsdale, Arizona, where it is typically sunny but today cloudy, and we’re actually happy about that.

[00:00:25] Dan: Yes, enjoying the dreary weather.

[00:00:27] Adam: We’re not roasting for one day. Let’s all enjoy it, to token it. Today we are going to talk about something a little different. We are going to a have a little bit of a different format. We are both excited as Cinema Files and people interested in the restaurant world. This movie coming out called The Founder. The questions it’s asking of its viewers and the question that it spring boarded for us. If you’re not familiar with the movie, it is the fictionalized story of Ray Kroc who was the famous “founder” of McDonald’s, who actually discovered the McDonald brothers’ hamburger stands and built on that, and turned it from the hamburger stand into the hamburger empire that we all know and love.

[00:01:17] Dan: Yes. It’s such a great story and so near and dear to me, I mean I grew up on and which I met a lot of people, dude, but it was relatively new. I remember that when we used to go to at Des Plaines, Illinois. It was the original, and you know the big arches going through it, just a tiny little sitting area inside and real clean, or talk about a simple menu.

[00:01:40] Adam: That one was more of the hamburger stand model with like a smaller restaurant inside. Oh, that’s funny. You still see those and now they’re repopulating those a little bit. Yes, that small dining room.

[00:01:52] Dan: It was so simple and it survived so long. It’s amazing. My dad and I, we’d go get the McDonald’s for the family and we’d always get an extra order of fries, and he and I would pound them. [laughs] Having fries on the way home. Otherwise we’d end up eating everybody else’s fries, and then would be that bad.

[00:02:15] Adam: Those were the originals. Those were the beef tallow fries. Those were the real good ones. There is a place in my hometown called All American Burger, that is still a hamburger stand with the chrome exterior. Looks like a diner, and I think there’s a few tables. It’s almost no dining room and you just queue up and you go through and you order your hamburgers and you bring them to wherever you are going. Something about that hamburger stand experience, and I don’t know if McDonald’s captured it. If they are still doing that, it’s a much more different brand experience. But just something about that experience, just an All American experience.

[00:02:53] Dan: Well, the company they built around that. You see so many brands like of McDonald’s that have a meteoric rise and then they fall out of grace and they just diminish, but without storing.

[00:03:05] Adam: Keeping up for this long.

[00:03:07] Daniel: It’s just phenomenal. It’s equally phenomenal in light of other competition it has faced since its inception. Think about the restaurant industry since, what was that? 1950 something?

[00:03:20] Adam: Yes, ’55, I think.

[00:03:20] Dan: ’55? Yes.

[00:03:22] Adam: What’s interesting about the movie itself, it’s not a movie about the history of McDonald’s and it cuts to today and the new CEO stepping up and saying, “Yes, everything is great,” or, “Here is what I’m doing.” Nope, not at all. It stops around 1961 before there was ever a Ronald McDonald, before they changed their market focus or had one. Initially it was just American consumers. Before all the things they have been facing, and before our awareness as consumers about some of the downside of just eating fast food or not a balanced diet. That’s how dense and rich their brand story is.
They can make a movie that essentially is a ten year story about the founding of it. It is interesting enough to lure an Oscar winner Michael Douglas to be– or Michael Keaton to be in it. A story that is going to captivate people and I’m going to go see it. I don’t know if all Americans are as geeked out about it as I am. But I am. The question that Dan and I were debating and talking about today, and we’re doing this a little different format than we usually do, there is no outline for today’s conversation. For most brands – what would the movie be?

[00:04:47] Dan: Great.

[00:04:47] Adam: McDonald’s is lucky to have this- not lucky, they have earned this long legacy and something’s good and something’s bad. You can look at two sides of even Ray Kroc himself, there’s positives or negatives. That Founder story is such a magical, you think of Walt Disney’s and you think of Steve Jobs, and like the garage story and the whole stupid mythos that goes around all the huge companies.

[00:05:11] Dan: The Hewlett Packard guys. Those are wonderful made in America stories.

[00:05:18] Adam: So we are thinking, never mind just The Founder story. Through the lens of a consumer what would most brands, what would the movie or the story of that brand be, and using that as a tool for them to perpetuate that story that they would love people to take away.

[00:05:35] Dan: You know what brand I think would make actually probably a very good movie, we have to get a good director though, is the story about Denny’s. Denny’s is a lot more like McDonald’s. They have survived a very long time.

[00:05:51] Adam: They are on a good upswing now.

[00:05:52] Dan: They are on an upswing now. I drove by one of the other day and I literally almost went in. I need to get in one because I haven’t been in a while.

[00:06:01] Adam: A new one.

[00:06:01] Dan: Yes. A new one, yes. I think it’s a great story. I think the story of the Denny’s could be less about the founder and more about all the experiences that happen Denny’s over the years. Families and stoned out kid.

[00:06:18] Adam: Yes. There is millions of stories you can do it, like that would be such a fun way to tell the story over time. Maybe it’s one booth and generation after generation something different happens and the background changes.

[00:06:30] Dan: We should call them up [unintelligible 00:06:31]
[00:06:36] Adam: Yes. Exactly. Love to bring it up. That’s funny that you bring up Denny’s. There is one that just opened here north of the office and seeing that brand opening new stores. I mean, 10 years ago did you think they would be opening up new stores?

[00:06:51] Dan: Their demise has been predicted for a number of years now.

[00:06:55] Adam: Right? Like everybody in casual dining. I guess that’s the space they fit in.

[00:07:00] Dan: Absolutely that’s casual dining.
[00:07:02] Adam: If I ask, Denny’s is a great one because I can go outside into the office here and just shout, “Hey. Does anyone have a funny story about Denny’s,” or, “Does anyone have a memory about Denny’s.” I know from those 40 people, I will get 10 stories at least I can count on. McDonald’s the same thing. Can i get the same thing at Pei Wei? I don’t know, it’s a different animal.

[00:07:28] Dan: I don’t think so. I don’t think they have the– well, of course, they don’t have the heritage, Pei Wei, as the example. They don’t have a heritage yet. At the same time they were a little darling brand that’s just plateaued. You don’t really hear much about them as much.

[00:07:43] Adam: Struggling to find itself and figuring out where it’s going, and trying to reorganize. What do you think if we say that consumers have good stories about it? Consumers can already tell a story about the brand and that’s part of what the movie would be. That’s part of what the brand story would be. I think that The Founder is a powerful story because I have such a knowledge of McDonald’s that anything they add to it or plug into it, it’s like– we know that attention is a something that people are fighting over and it’s something that at least 100 million Americans know pretty well and eat at. They have plugged into that. They have co-opted that interest that I have in McDonald’s to some level, awareness of it, which is really hard to do. I don’t know of other brands, most brands don’t have that capability to have that mass shared awareness.

[00:08:45] Dan: I agree and when you look at what they are doing with their coffee offerings now and the whole McCafe, pretty powerful. They didn’t go at Starbucks. They just said, “Look, there is a coffee culture out there, and we are not going compete with Starbucks, we don’t want to. We are not going to sell our $3 cup of coffee up. Obviously that’s not who they are as a pricing strategy, but why can’t we up the quality of our coffee and our coffee offering still make a value play with it.” Now all of a sudden probably pretty powerful penny profit for the franchises in their products, in that core offering from McCafe.

[00:09:26] Adam: Yes. It gets folded into the greater understanding of the brand because they are so masterful at the marketing angle of it and passing that information through and building it up over time. I mean that platform we still think of as new but I think it’s 10 years old.

[00:09:39] Dan: Yes, you are right. I think they’ve been putting a lot of money behind with the whole breakfast thing.

[00:09:44] Adam: Now they are on a value. Now they are actually saying, “Hey. Coffee is four bucks a cup at Starbucks. We are at quarter of that. Come on in.” Which is smart. The question of what would the movie be, what would be the story be, is really about, to me, what was interesting, Dan and I read an article that was on the Ringer about the Ray Kroc movie, and we’ll put a link in the show notes. It’s really about how consumers understand the brand. They know how to use the brand. They know how to move around inside the brand. People have their own customization strategy and their own kind of approach. I was just talking to my father last night, and he was telling me, “Oh yes, I went to McDonald’s at the airport, and I did this, and I always do this. I order these two sandwiches and I mix them up in this way.” Everybody has that thing. So does your brand have that? That’s the question. I’m trying to think of another brand that’s out there that’s in the world- let’s talk about Ruby Tuesdays.

[00:10:44] Daniel: In a QSR category?

[00:10:45] Adam: No. Let’s talk about something like Ruby Tuesdays, that’s again, is in a place where it’s trying to find itself. You couldn’t make a movie about Ruby Tuesdays. I’m sure on the inside they say, “No, no. Here’s what the movie would be.” But it’s not going to be about the garden bar. Will it? I guess time will tell.

[00:11:07] Dan: Well, I think the question you’re posing is when you hear the phrase “Ruby Tuesday”, when you said it, nothing came to mind.

[00:11:17] Adam: I threw it out there to see what reaction I would get.

[00:11:21] Dan: Yes, and the only reason I know about the garden bar is because I’ve read about it.

[00:11:26] Adam: It’s an industry thing, it’s not consumer thing.

[00:11:29] Dan: There’s a brand that is in decline, and I think it’s in decline because it doesn’t know what it is, and hasn’t articulated that to consumers.

[00:11:39] Adam: That’s it, and consumers don’t know how to enter the brand.

[00:11:43] Dan: If I being go back to Denny’s, Grand Slam. That’s a great entry point for me.

[00:11:50] Adam: That’s right. We wrote an article about- I’m trying to remember which article from Food and Restaurant- well, we’ll link to everything we mention here in the show notes- about ‘do people know how to use your brand?’ Buffalo Wild Wings is another example. I don’t think you could make a movie about or tell a story about Buffalo wild wings because now it’s the opposite of Ruby Tuesdays. When I say Buffalo Wild Wings, tell me what’s the occasion that you think of? It’s their tagline.

[00:12:23] Dan: I’m going to watch sports, and eat wings with my-

[00:12:26] Adam: What are you going to drink?

[00:12:27] Dan: -Some of my buddies and I’m going to have a beer.

[00:12:29] Adam: Beer, wings, sports, right? We were laughing yet just yesterday we were doing an audit of that brand for another projects we’re consulting on, and they’ve nailed it down so much, which is normally we preach that. Nail down your occasion, nail down your visit. That they’ve hemmed themselves in in a way that they can’t tell an expanded story. If someone says to me, “Hey, let’s go to Buffalo Wild Wings.” I go, “Well, what game is on?” “If there’s not a game, I’m not going. I’m not interested.” Luckily for them, there’s a lot ESPN has serve to put on a lot of games. But I mean a game that is interesting to a casual fan like me. I’m hardly ever going out just to watch college basketball or something.

[00:13:08] Dan: By the way, what restaurant doesn’t have television on right now? I mean, obviously McDonald’s doesn’t or I could be wrong, and I don’t know if they do or not but-

[00:13:18] Adam: A lot of them do.

[00:13:20] Dan: That’s like the old- remember when Quiznos came out, and they said, “We toast our buns.” Subway just started throwing toasters, and you could meet that competition. Well, same thing, “Hey, come watch sports here.” I can watch sports just about at any restaurant where I would go, and sit down like that.

[00:13:35] Adam: Buffalo Wild Wings too is funny because wings were the late ’80s, early ’90s appetizer du jour, or I guess du decade, and- I don’t know French enough to know decade. They just said, “Okay. That’s going to be our offering. We’re just going to be the masters of that.”, and they were able to grow on that because of the popularity of that entree over that appetizer, that dish, and that flavor profile, kudos to them. It’s still a strong business even though they’ve been in a little bit of decline for the past two quarters. But now, what do you do now they introduced hamburgers, and to me that’s what Dan and I talk about is, what’s the move of desperation, and that’s it. When they say, “Well, now we’re going to expand to this.” Now people are freaking confused. Because you’ve been telling me for 15 years that you are beer, wings, sports, and now what’s this? I don’t want pulled pork from you. I don’t want it.

[00:14:34] Dan: I got another place I can go get that. A really good-

[00:14:37] Adam: A really good one. So you better-

[00:14:39] Dan: That I trust and know.

[00:14:40] Adam: Yes, and it’s not cheap. They’re not delivering out of value. That place, you can get into the triple digits on a bill without even ordering beer there.

[00:14:49] Dan: That does go under the idea, “Let’s expand them menu. Maybe that’ll expand our sales.” In that article you mentioned, that we both read, I love what they tested or piloted. It was fascinating. Wraps, fancy coffee, I heard some burgers, but did any of that make- none of it, none of it.

[00:15:16] Adam: No. The McDLT. You remember that thing? Do you have the stat up about their core menu? I’m scrolling through the article now to find it, which I’m sure people love to listen to.

[00:15:26] Dan: You mean what their sales are?

[00:15:27] Adam: Yes, that core, craveable menu that we were talking about.

[00:15:32] Dan: I think it was a Big Mac, fries and McMuffin.

[00:15:35] Adam: Yes, that’s 40-something percent of sales?

[00:15:37] Dan: That is correct, yes.

[00:15:39] Adam: Oh, good. You got it. And that’s part of the story of that brand. Does the McDLT get included in that the famous ad with Jason Alexander? I don’t think so. You can tell the story without that. You don’t need to go into the failings of the McWrap, and some of the other things that they’ve tried. Because they’ve done a few things really well.

[00:16:02] Dan: Now the McRib, I think they’ve been smart about, because they only have it once a year. For a limited time. They don’t try to make it be successful, 365.

[00:16:15] Adam: Well they play the market. That is actually a product, as I understand it, that’s a product of availability at the price that works for them, of the ingredients for that.

[00:16:25] Dan: Those little fake riblets?

[00:16:27] Adam: Yes. So when they can get that pork product, that’s when they release it. It’s not a calendar timed thing. Although I’m sure they’re disciplined in their planning and know when it’s going to happen, but it’s when the price is right, we buy it, and we issue it as an LTO, and they’re just masters of it because the McRib is part of the story, I think, for a lot of people. They know how to use that occasion and when it comes out, there’s a buzz about it, which is not a fake influence or campaign on Instagram. It is real people saying, “Oh, this thing is back. Oh, I’m going to go get one.” Every third year, I’ll go get one, and get caught up in the madness of it.

[00:17:04] Dan: What a great way, though, to actually pull in traffic, then. You’re not a regular McDonald’s guy, but what pulls you in-

[00:17:13] Adam: It’s another way to get me in.

[00:17:15] Dan: It’s what we talked about, that craveable–

[00:17:18] Adam: They also have the benefit, you said it right off the top of this which surprised me that, “Hey, I grew up with this. It reminds me of my childhood.” Every time you go in there, subconsciously, some sense memory happens for you, so that you have your own individual story. Do you think everybody has a story like that for-

[00:17:37] Dan: For McDonald’s? Or a lot of brands?

[00:17:39] Adam: For McDonald’s, yes. For Denny’s, a large population does. For Mr. Goodcents Subs, a local population probably does. But for Applebee’s? Is that a real thing or a manufactured thing? I don’t have any thoughts about Applebee’s it’s like a blank slate.

[00:17:59] Dan: Again, what is Applebee’s? There’s something coming out here in this conversation, and that is McDonald’s had Ray Kroc, the founder, and the Big Mac, and these really successful things like that. But how many brands have that? You know Denny’s has the Grand Slam-

[00:18:25] Adam: They have things they own.

[00:18:26] Dan: Things they own. Say, Applebee’s, what does Applebee’s own?

[00:18:30] Adam: They got all their operators to buy into the grills that they installed, and they put all this money behind it. I didn’t know what they were before, but I sure didn’t know what they were after. Because I’m not going there for a steak. Because in my mind a steak is going to be 25, 30 dollars, as a consumer. So I was just more confused. I think it made me go to Outback.

[00:19:00] Dan: It reminds you you want a steak.

[00:19:03] Adam: Beef is good. I’m going to the place that does beef, Lonestar. I’m going to the place that will do that there. You’re dead-on. I don’t think Applebee’s has a story to tell or I’m sure they have a story to tell. I don’t know people that can articulate that story. That people know how to use that brand and I think the sales and the traffic are reflecting that because I don’t know where it fits into my life. We did a project last summer for another brand that is kind of turning over, and rebooting itself, and we got to do some research for them. It was a lot of fun and very interesting.
We did some social media listening where we looked at the time and day that the people referred to the brand. We thought, “All right, well, let’s just see if there’s a pattern or anything.” And there was a pattern, and it was very low comments, which was not surprising because its traffic and sales were low and we knew that, but the time and day of week was basically the same pace, there were no spikes. When we compared that just for fun we compared it against Subway, we compared it against Outback and for Subway at noon every single day there’s a spike. If you look at it on a seven-day chart it’s like a heartbeat, right, it keeps the brand going. Lunch time I know how to use it and on the weekends it drops. So five days a week, lunchtime that Subway’s business, intuitively you know it but the social media backs it up.
For this brand it was essentially low and flat throughout because people didn’t know how to use the brand. They don’t know where it fits into their life. They don’t know the story it’s going to tell. So they don’t know do I go there for happy hour? Do I go there for dinner? Do I go there breakfast? Do I go there for lunch? So they just stopped going altogether. Probably if we look at Applebee’s and we haven’t done that and created that chart for them.

[00:20:57] Dan: You’d see something very similar?

[00:20:59] Adam: I think so.

[00:21:00] Dan: Yes.

[00:21:00] Adam: Don’t you think it’d be diminished?

[00:21:01] Dan: I think you’d see that flat pattern for a lot of brands out there. Ruby Tuesday we were talking about a while ago. I bet you if you do it for Cheesecake Factory you’ll see spikes.

[00:21:14] Adam: Yes, what do you think those spikes would be?

[00:21:16] Dan: I think it’s a dinner place. I definitely think– and it’s a celebration place too.

[00:21:23] Adam: Yes, it’s transcended casual-dining into that next — actually it’s not quite, it’s not white tablecloth. It’s not fine dining, but people do, it’s a special occasion place. You go there after something happens.

[00:21:34] Dan: Right. I noticed that it’s not just like a big event too like graduating from high school or anything. It’s even the smaller things that people want to celebrate, maybe a good day at work, more on a little bonus or something.

[00:21:50] Adam: That’s part of what fast-casual has stolen from casual-dining as a category. If that’s my every day in casual dining it’s like that’s, ‘Okay. It’s little bit of a bump and then the pinnacle of casual dining which is Cheesecake Factory probably and some other players, steal the special occasion space, well then if you don’t have a story when do I go there. Applebee’s and Ruby Tuesdays and Chili’s are learning lesson. We don’t know. We don’t know. Please come in. Please eat here.

[00:22:25] Dan: Look at the people in my commercial they’re having a good time.

[00:22:28] Adam: Yes, look how happy they are. They’re toasting and they’re ordering all these add-ons, please won’t you do that? Average check needs to go up.

[00:22:36] Dan: I was saying — what we’re asking you about the brand story and it seems like the thread then we keep referring back to is there’s this famous, famous is probably the wrong word, but this very memorable food item so Grand Slam, Big Mac even Cheesecake for Cheesecake Factory.

[00:22:59] Adam: Something ownable.

[00:23:00] Dan: Doesn’t Cheesecake sound good right? i wouldn’t mind that.

[00:23:03] Adam: It never doesn’t, yes.

[00:23:04] Dan: Right. So if you have a chain today, casual dining or otherwise, find the product that can be a pinnacle for you. Can be something that you can point to consistently and it represents who you are. The type of offering you have and build around that’s because that’s, now you build story around that item.

[00:23:28] Adam: Right, and you can — it’s almost that you could make a list of the– I bet if we looked by stock price or by sales for the non-public brands we could probably say, “You don’t have one, you don’t have one, you don’t have one. A signature dish or a signature. Even Chili’s has shifted cuisines from- it was modern southwestern cuisine now they’re doing more of a Mexican play.

[00:23:55] Dan: Is that right?

[00:23:56] Adam: Yes. It’s more of a Mexican influenced cuisine, more tacos and that kind of thing. How the hell can they switch that? How can that — how can you be the brand and make that change and feel good about that if you really do have the story to tell? You know what I mean?

[00:24:13] Dan: Yes, I agree. I don’t know if this is– it feels right, but you one chain that’s really struggling is PF Chang’s, but they have an item.

[00:24:23] Adam: What’s the item? The lettuce wraps.

[00:24:25] Dan: It’s the lettuce wraps, and they’re good for you, oh, yes, not good for you —

[00:24:32] Adam: They don’t have carbs.

[00:24:35] Dan: The whole idea, but lettuce wraps they is fresh–

[00:24:36] Adam: They are good. I love them, yes.

[00:24:38] Dan: They’re very good. You can get it as an appetizer. You can get it as an entree. A attorney friend of mine asked me to meet for lunch last week and said PF Chang’s, I’m like, “No, okay. I’ve been here in forever and I knew exactly what I was going to get but you could have shot a cannon through this place and they were not six tables.

[00:24:58] Adam: No, the last time I was there too, but what’s the story of that place?

[00:25:02] Dan: That’s a great question they just lost its way. Maybe, it expanded too fast.

[00:25:11] Adam: That brand I feel like has a story they just haven’t told it yet. The way they figured it out how to put a real twist on American Chinese cuisine they did some new things to it. That brand has a story. They could make an interesting story about that.

[00:25:30] Dan: I would venture to guess that the recession didn’t help them at all. As casual dining goes that’s– on that price-wise on that brand of casual dining.

[00:25:41] Adam: Right. Then you’re competing with Cheesecake Factory and there’s no veto there. They have everything you could want. That’s interesting. Yes, I think they could have a story, but I think on top of —

[00:25:53] Daniel: I think I’m going to call them today.

[00:25:56] Adam: I think on top of the recession hurting them. I think they’re spread pretty thin. They have that Hard Rock [Cafe] model where they’re not concentrated anywhere. They have a national footprint, but it’s more like dots on the map.

[00:26:06] Dan: Right, they can’t do a significant TV campaign.

[00:26:11] Adam: They don’t have critical mass anywhere. It becomes this tourist destination for lazy tourists who will you say “Oh, I don’t want to try some local, but I know that place.” That doesn’t last very long. See Planet Hollywood it fails over time people get bored of it. All right, well, this has been an interesting conversation. Thank you for humoring our experiments to see where that conversation would go.

[00:26:35] Dan: I do think we’re going to- we should float this movie idea about the booze inside the Denny’s December.

[00:26:42] Adam: I texted Scorsese already so we’ll see.

[00:26:44] Dan: Oh, perfect. Let’s see what he says.

[00:26:45] Adam: He hasn’t responded yet.

[00:26:47] Daniel: Yes? Send it to Bobby.

[00:26:48] Adam: No, I’m on it. I love it. So if you have thoughts or questions you want to debate us on our movie ideas here please do. I’m adam [at] You can get to Dan at dan [at] or hit us on the Twitter @FandRM. Thanks for listening.
[00:27:08] Daniel: Eat well.

Transcriptions by Go Transcript.

discounting, movie, story, brand, LTO, daypart

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What is Your Brand Movie?

With the premiere of The Founder, the story of the humble beginnings of McDonald’s, Dan and Adam wonder what makes a great brand story. If your customers were asked, would they be able to conjure a tale about your brand? If so, are you sure you’d want to hear it?

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Prefer a transcript? Read along here.

movie, story, brand, restaurant
If your brand was a movie, would you want to watch? Would your customers?

Transcriptions by Go Transcript.