Imagine for a minute that you were the CMO of any fast food chain other than McD.  The industry leader has just announced that they are going to start putting calorie labels on all their menus. What do you do now?

Well, first off you start trying to explain to the rest of your senior management why you’re behind the eight ball. And then, you all start working on a plan to catch up. Of course, you never can really catch up because you have lost the opportunity to lead.

By being first, McDonald’s was able to plan. Not only plan the announcement with all the attendant hoopla in the press, but also think about their menu strategy going forward. For example, is it possible they are ready to introduce some new menu items that are better calorie choices that they’ve been quietly testing? It’s not only possible, my guess is it’s probable. And while you’re trying to guess what they’re up to, don’t you think they may have also been looking at ingredient alternatives that will lower the calorie count of some of their current offerings. Being first is huge!

At Barkley, we think it’s critical for our clients to lead—to be first! And, to that end, we are involved in a lot more than their advertising. We work together with our clients to find the next big idea—the next game changer—that will let them be the leader in the minds of their customers and prospects even if they’re not the biggest in their category.

And when it comes to market leadership, we don’t think of it in terms of share. We believe that the definition of a market leader is THE ABILITY TO PUNISH YOUR COMPETITORS!

Let us have the opportunity to show you how we can work with you to be the true “market leader.”

Photo credit: Judy Rybarczyk

In a recently published research study by Technomic, 33% of all breakfast coffee drinkers stated that they were loyal to a particular brand of coffee. The marketing repercussions of this are significant.

If your chain has its own distinctive coffee flavor or uses a branded coffee that consumers find appealing, you can count on one-third of your customers to keep coming back just because they love your coffee.

Add to this fact that speed is the key driver to customer loyalty for both QSR and convenience store chains, and you have the two most important ingredients to a successful daypart. The Service Management Group (SMG), which measures customer loyalty for many of the leading QSR chains, reports that speed is one of the key drivers for customer loyalty—and that it is even more critical at breakfast.

This same Technomic study also reported that 46% of all consumers eat breakfast out occasionally on weekdays. That compares to 39% who reported that behavior in 2009—an 18% increase in just two years.

The question for chain brand stewards is how to best take advantage of these encouraging trends?

Several QSR chains have already begun co-branding on coffee.  They have concluded that it’s easier to ride on the back of an existing brand of coffee than try to build your own loyalists from scratch.  And, you obviously broaden your market when you co-brand by adding those loyalists to the mix of potential users of your brand.

Speed is a much more difficult attribute to achieve. Obviously, you have to have the physical plant and processes to enable quick service to be the rule rather than the exception. But as important, if not more important in achieving speed, is the menu.  The more options you offer for breakfast, the longer the customer will wait for their choice. Keeping breakfast simple is one of the keys to keeping breakfast fast.

Customers are telling us that they are eating breakfast out more often and that there are two keys to getting their business: give them coffee they like and make the whole experience quick.

Photo credit: Seth Sawyers

With McD’s now replacing toys with fruit in their Happy Meals, it might be well for everyone in the category to reexamine their “healthy strategy.”

Although I am sure that there are many more than three reasons to have healthy options on your menu, here are my Top 3:

One—Healthy is a Veto Item. No chain can afford to lose customers because one person in a group of four vetoes the majority’s choice. Steak houses have fish and fish restaurants have beef options. QSR is painted by many critics as an unhealthy option. For this reason, a chain not only needs healthy options, but they need to be promoted enough that they are top of mind with potential naysayers.

Two—Healthy Attracts a Broader Customer Base. Take Millennials for example: Research shows that they are more likely to frequent restaurants with healthy choices. And, children are being taught in school how to eat healthy…not to mention that they are as quick to comment about their parents’ unhealthy food choices as they are about smoking or seat belts.

Three—It’s Profitable! Healthy options tend to be less price sensitive, yielding higher gross profit margins. Where your quarter-pound cheeseburger may have to be within pennies of your competitors, customers looking for a healthy choice will pay a little more.

In a recent Technomic study, QSR chains that had high awareness of healthy choices were cited by consumers as a favorite place to go. They were also viewed as offering better value and better choices for children.

Here’s the one caveat: it appears that for most chains, “healthy” drives a lot of positives EXCEPT FOR sales. While consumers rate healthy choices very high on their list of desires, they don’t spend anything near as much as they indicate they will. That doesn’t mean you don’t need to “make the statement;” it just means you need to count on the basics for making your numbers.

Photo credit: Kevin Marsh

It started with the airlines, and then quickly spread throughout almost every consumer and business-to-business industry. Loyalty programs/frequent buyer programs are one of the primary drugs driving today’s consumers’ buying habits. And I say drug because they are truly addictive.

The latest news from the restaurant industry is that over the last two years, frequent diner programs have increased in popularity by 35%. That’s right! Consumer use of these programs in the last two years has increased from 23% to 31%, according to a new in-depth study by Technomic. Their latest Dinner and Late-Night Consumer Trend Report shows that loyalty programs are becoming more and more popular with those who eat out most often: your most valuable consumer segment.

The challenge for restaurant CMOs is to harness this important customer segment without breaking the bank. The most common way that companies mitigate their exposure is to put limitations on redemption. Some airlines have blackout dates. The movie chains often exclude certain blockbusters when they first come out. And some restaurant chains limit redemptions to certain days, day parts, or menu items. The temptation to put restrictions on redemptions is great.
But, think for a moment about what you’re really doing. You are telling you best, most loyal customers that you are going to thank them for their loyalty…BUT.

I believe that it’s actually preferable to make the goal a little harder to achieve, i.e. require more purchases and/or dollars, and then make your total offering available at redemption. Don’t yield to the temptation to treat your most loyal customers who are getting something “free” as second-class citizens.

I actually like to look at this subject from a broader perspective. Loyalty programs are a form of “deal.” So are coupons, including offerings like Groupon. Every organization needs to look at the “rules” we have in place for dealing with those customers taking advantage of these offerings.

Then, most importantly, we have to make sure that everyone on the front lines who is interfacing with these customers understands their lifetime value, not just their worth on this transaction. You need to do everything you can to insure that these “special” customers are treated in a way that makes them want to come back again and again. Only then will the deal really pay off.

Photo credit: John Hritz

The “J” here refers to Jobs, as in Steve Jobs. If Apple had been a QSR chain, how would it be different from the brands that are out there now?

Well, for starters, there wouldn’t be nearly the testing of new products that we see today. Jobs didn’t really care to hear what the customer wanted. He felt it was his job to figure out what they should want and give it to them.

And, new products wouldn’t take as long to get to market. Actually, Steve Jobs was able to bring some of his new technology to market faster than some QSR chains can get a new product rolled out.

I have no way of knowing this, but my guess is that the Apple QSR chain would have a very different-looking kitchen than most chains have today. In fact, Steve might have had more than one kitchen per unit—say one for dine-in and one for drive-thru.

Since speed is so important to the category, my guess is that he would have been thinking WAY outside the box on how to deliver orders WAY faster than today’s industry average. In fact, he might have started with a speed target and then designed the restaurant to meet that target—instead of the other way around.

My guess is that Apple QSR’s POS system would be a lot different than most of the ones we see out there today. In addition to giving you the basic information you get today, the “Apple POS” system would probably automatically handle forecasting your next day’s product needs based on several factors including today’s business, tomorrow’s weather forecast and previous trends—and THEN place your next food order.

Although we will never know what Steve would have done, hopefully there’s some young entrepreneur out there just waiting to reinvent our business. If and when that happens, he or she will make all our lives more difficult, but more exciting. And, the entire industry will be better for it!

Photo credit: jrsnchzhrs

Watch TV, drive down the highway and see a billboard, or even go on the internet and what you’ll find is McRib. Everywhere! McDonald’s has brought back the sandwich that never quite makes it on the permanent menu for another promotional blast. In fact, much of their TV poses the sandwich with a Dr. Pepper instead of the traditional Coke.

So, the question is:  “When the biggest hamburger player isn’t talking hamburgers, what is the rest of the category doing?”

• Burger King is definitely talking burgers—particularly the $1.99 Toppers.
• Wendy’s is all in with Dave’s Hot ‘N Juicy.
• Sonic is talking about their new Toasters—they’re burgers on bread instead of a bun.
• And Jack in the Box is proud of their Outlaw Burger.

So you would think that this would be an opportunity for McDonald’s major competitors to increase their share of the burger pie. But will they?

Although the data won’t be in for a few months, I am sticking my head out there and predicting that they won’t. And, I have a theory as to why. You see, I don’t think any of these five brands (I am including McD in this) are in the fast food hamburger category anymore. Yes, they are definitely QSR, but that’s a whole lot different than fast food hamburger.

The reason—menu proliferation! The number of non-burger items on the traditional fast food hamburger menu has grown. And not by a little. What once was a single chicken item for veto purposes has morphed into the market leader promoting barbecue. Which may be okay if you’re the market leader, but if you’re not, where are you planting your flag?

If it’s the Q in QSR that everyone is chasing, this larger menu is public enemy #1. A diverse menu is the enemy of speed, not to mention profits.
Two brands that seem to be kicking you know what in terms of sales and profits are faithful to fast food hamburger with limited menus—Pal’s Sudden Service and Five Guys.

Pal’s, a Malcolm Baldrige Award winner, gets their burgers out in 18 seconds—and they only have 9 menu items. As for Five Guys, they’ve got burgers and burgers—and don’t ask for a shake. They don’t have them.

If you’re going to win at burgers, I believe it will take more than promoting them when McDonald’s isn’t. It will take a focus on burgers—on the menu as well as on TV.

Photo credit: Darin McClure

I am driving down an expressway, and my eye is drawn to a Chipotle billboard. It has a picture of a gigantic burrito wrapped in silver foil. I don’t remember what the message was. I can only remember the picture of that giant burrito. It is etched in my brain.

Fast forward to a visit to my local Chipotle with my almost 9-year-old son who can eat like a 19-year-old boy. He orders that very same burrito I saw on the turnpike and we sit down at a table. I watch him struggle to finish it. This very same child who can devour a double cheeseburger at McDonald’s is struggling with this regular-sized Chipotle burrito. In fact, he doesn’t finish it

As I look around the restaurant, I see that a majority of the people eating there are either taking part of their meal home or have got an empty box on their table just in case. In this “new economy” with people either worried about finding a job or losing the one they have, one order can often mean two meals.

We all know that The Cheesecake Factory is known for their generous portion size.  It’s one of many reasons why they have the highest average unit volume in the restaurant industry. Their CEO, David Overton, has gone on record as saying that their customer wants to make sure that they are getting every calorie they’re paying for. My 90-year-old mother loves the Cheesecake Factory. She brags that the “leftover” salad she brings home lasts her for two more meals.

The easiest and most successful marketing is to encourage customers to do what they were going to do anyway. In that spirit, now may be the time to make your “leftover take-home package” the star of your next TV commercial. In today’s environment, what could possibly be better than eating out AND eating at home, all for the price of one meal?

Photo credit: we are dc

Every time I fly Southwest Airlines, which seems to be more often every year, I am increasingly impressed with how well they have managed to train their customers. We show up, we line up, and we board—by number. And, we do it so quickly that Southwest is able to outperform all their competitors in equipment utilization.

They understand that they don’t make any money when the plane is on the ground, and they’ve recruited us, their customers, to help them achieve productivity. Southwest’s messaging to their customers starts on their website when you make the reservation and ends up at the gate with stanchions calling out your group and number.

On my way to the airport, if I drive through McDonald’s for an Egg McMuffin, I see another example of using Point of Purchase to get customers to help achieve productivity. In QSR, and particularly during the breakfast day part, Speed is King!

The last time I drove through a McDonald’s, there were three separate signs at three different points in the drive-thru that helped me help them. I was told where to go. I was told to have my money ready. And, I was told what to do if my order was going to slow up the rest of the line.

All of this, along with having the proper systems and the proper staff, insured that I could get through a relatively long line of cars FASTER than I could at a shorter line at their competitor’s drive-thru.

Marketing departments spend a lot of time and money trying to figure out how to use “signage” as a way to increase sales, either by bringing in new customers or by increasing average ticket. But how much time is spent trying to figure out how to use signage to increase speed, productivity, customer satisfaction—and ultimately profits? It has been proven that educated customers are much more profitable customers!

Figure out how you want your customers to act in an ideal situation to help you operate your business more efficiently. Then, put together a communication package that helps you educate them on your plan. And remember that the same tools you use to sell them can also manage them.

Photo credit: Matt McGee

According to all the surveys and all the polls, Americans are scared about the economy. And, based on the gyrations on Wall Street and the impact on 401(k)s and other retirement savings, they have good reason to be scared. The obvious question for QSR operators is, “What will all this mean for my business?”

With the current state of affairs, I see two potential opportunities for QSR. First, there is the obvious opportunity to communicate price/value. This position has traditionally been one that QSR has put a strong lock on and there’s no reason that it shouldn’t continue to work. However, there is another, maybe not so obvious opportunity, to pick up some more customers.

While QSR continues to go after a relatively young demographic, the over 55 folks are the ones who are getting hit the hardest by the stock market. That’s because they are the ones who are closest in time to having to sell stock positions for their retirement. My father once told me that you don’t make or lose money in the stock market until you sell. Over the long haul, the market will be the market, but the older demos don’t have a long haul.

Now is the time to think about marketing to the older folks—not at the expense of your traditional customers, but in addition to them.

According to recent research from Barkley, SMG and The Boston Consulting Group, older QSR customers are particularly interested in:

• Speedy service, particularly in the drive-thru
• Healthy and good-tasting food options
• Neatness and cleanliness
• Attentive employees who fill orders accurately
• Good value for their money

Of course, most of these are attributes that appeal across generations, so you will always gain by making sure your food and customer service standards hold up.

As people who understand the stock market say, every time somebody sells, somebody else bought. And, while people are losing money, others are making it. The same is true in marketing. While someone is losing share of market, someone else is gaining. Falling stock prices and concern about the economy don’t have to be bad for your business if you look at them as opportunities: opportunities to tell your old customers and your new old customers that they can still afford to eat out.

Photo credit: Evan P. Cordes

With Wall Street’s emphasis on earnings and comp store sales, a key indicator of strategic health can easily get lost in the shuffle. Comp store traffic is a critical measure of how well your brand is competing in the marketplace. Earnings and earnings per share are certainly important; as are comp store sales numbers. But earnings numbers don’t always tell how well your chain is performing in the marketplace and comp store sales are often the result of price increases and/or changes in product mix.

But comp store traffic is a barometer of what is happening to our share of market. And, comp store traffic is the best indicator, in my opinion, or how well a brand is being accepted.

For many brands, the cost of acquiring new customers ranges from expensive to impossible.  Certainly social media has created less expensive avenues for accomplishing this. However, the profitability of a customer continues to increase as their frequency of visit increases.

Since American Airlines introduced their industry’s first frequent flyer program in 1981, loyalty programs—and frequent buyer programs in particular—have spread into virtually every industry and profession. Whether it’s the chain selling you pizza or the retailer trying to get more of your prescription medication business, everyone has gotten into the act. The reason is simple:

GREATER FREQUENCY OF PURCHASE = INCREASED TRAFFIC

The most successful QSR marketers are laser focused on increasing frequency of purchase as the most cost effective way to increase traffic.  Once you’ve exhausted all the day part possibilities—there are no more opportunities once you’re open 24/7—you’ve got to start looking at other solutions.

From the simplest punch card solution that gets me one FREE after I buy 10, to the discount card that is sold by my bookstore, everyone is trying to get into the act.

Right now, I  believe that one of the more creative solutions to increase frequency of purchase is the sweepstakes being offered by California Pizza Kitchen.

At the end of your visit, you are given a sealed envelope that, when opened, reveals a prize that could be anything from a free drink to thousands of dollars. Here’s the catch. The envelope cannot be opened on that visit—you have to come back. And, the envelope cannot be opened by anyone other than a store manager, otherwise it’s voided. So you have to come back for another visit with your sealed envelope and present it to a manager to find out what you’ve won. Curiosity may or may not kill the cat, but it is certainly bringing customers back to CPK.

Houlihan’s also offers similar promotions from time to time, and I’ve seen variations of this promotion type that involve a scratch-off card that must be revealed by a store manager.

Now is the time for QSR CMOs to get laser-focused on increasing frequency of purchase as a way to increase comp store traffic. In my opinion, it’s a lot better solution than constant price cutting.

Photo credit:  Brian Gurrola