Q: Why do restaurants offer these high-calorie kinds of entrees at a time when everyone from the White House on down is urging the opposite?

A: Some of the large chains that sell unhealthy foods have a vested interest in keeping America’s eating habits the same. The profit is higher in highly-processed, calorie-laden foods. These foods are easier to transport, have a longer shelf-life, are cheaper than wholesome/natural ingredients, have less waste and spoilage issues to manage through the supply chain, are simpler to handle/cook requiring less skilled labor, are easier to ‘systematize’ and keep standard in a large chain, and they are easy to sell to a certain segment of the population because they are cheap foods that fill bellies.

Q: If it’s to appeal to their most regular customers, what share of business do those customers usually represent?

A: Consumers spend less today, as a percentage of their time and income, than ever before in human history finding food. In the hunter-gatherer days, finding food took most of the day. Today, you can cram more calories in your belly spending just 30-seconds in the drive-thru than you could in a week of the hunter-gatherer days. In some cases, a Big Mac® costs less than a single piece of fruit. Given the option between broccoli at $1.29 per pound versus a $.99 hamburger, many Americans by necessity are forced to eat the hamburger; necessity of time, money and lifestyle. A bucket of fried food will keep the belly full longer than a fresh garden salad. Millions of Americans chase the cheap-calories, and restaurant marketers like those at Denny’s understand this.

Q: Who’s the target audience?

A: Sadly it is those short on time and money. It’s the truck driver who is running fewer routes. It’s the family of five living on $30,000 per year. It’s the obese couple who desperately wants to lose weight, but don’t have the ideal options of time, money, lifestyle or healthy influences and alternatives in their life. It’s the college kid who stays out late partying with his friends and opts for the cheap-calorie end to a binge. The audience isn’t that beautiful model we see in the commercials. It’s the 1/3 of America that is obese. More than 2/3’s of American’s are overweight. Take a look at the listing of the top 400 largest restaurant chains in America and you will spot a lot of similarities in menu offerings and approaches.

Q: Do high-calorie entrees work?

A: Unfortunately, yes, they do. The customer spends less money and gets more calories and the restaurant gets higher margin and less hassle. It works for both of them. It also works for the doctors and medical industry. We spend more than $100 BILLION on healthcare related to food and nutrition issues.

Q: What do these entrees say about the nation’s real eating habits?

A: There is a correlation between the weight of Rome’s citizens and the fall of that empire. The same uptick in our nation’s weight can be correlated to the rise of the East, as in Asia and China. We are among the heaviest in the world, and our global competitiveness is falling at almost the same pace as our waistlines are growing. The White House is right to take this issue on. We need to change how the government subsidizes food. There are 280,000 deaths each year in America due to obesity. There are many resources on our eating habits that you can check out – four of them are:

i. Healthcare industry benefits from misguided food industry: http://www.youtube.com/watch?v=r4DOQ6Xhqss
ii. Obesity rates, short report: http://www.youtube.com/watch?v=P_1u_RVaULE&feature=related
iii. See the trailer on this site: http://www.freshthemovie.com (“Cheap Food is an Illusion”).
iv. Uncovering the Sickness Industry:

Q: San Francisco is considering banning the Happy Meal® toys because they lure kids to eat unhealthy foods. Is that fair?

A: In the coming years we will see a major offensive in proposed legislation to regulate the food industry. The trial lawyers are looking for their next big pay-day. They took on the tobacco industry and made billions. Government is always looking for ways to regulate the restaurant industry (Readers, see also: http://aaronallen.com/blog-post/rants-raves/restaurant-grades). The major fast food chains are going to be natural targets. I believe there are enough trends in motion to one day change how we eat. Ballooning health care costs, reducing global competitiveness, emerging social movements like that portrayed in Food, Inc, and general angst in the population are all contributing to a renewed awareness on the importance of eating better. I think many American’s would like to eat better. We as a restaurant industry need to do better at providing the options and education. We have a responsibility to do so and we are being irresponsible by producing menus based primarily on profits. The industry is waiting for consumers to vote for better food with their wallets. The Denny’s Fried Cheese Melt® is a candidate in this election and millions of American’s will vote for it rather than the opponent, which is healthy food and lifestyle. The stage is being set for a big fight between both sides of the industry’s lobbyists and leaders with the American consumer in the middle.

For publicity campaigns to be effective they must be sustained and ongoing.  In the short-run, publicity stunts can garner quick and substantial exposure which translates to revenues.  These publicity stunts can be created in a way that reflect the brand and propel it forward versus just stunts for the sake of publicity.

“Cause Marketing” (i.e. charity programs) is also a component of a multi-pronged PR campaign.  These programs garner goodwill and yield benefits well beyond just the positive financial impact they can have in the short-term.  PR can reach and impact investor perceptions, landlords, recruiting efforts, retention efforts, vendor relations and even vendor pricing, joint venture partnerships, future acquisitions, and nearly every other way you can imagine to apply positive goodwill.

Another of the many tools in the PR utility kit includes FAM Trips (or familiarization trips).  These are designed for attracting travel journalists and stimulate coverage in transient “feeder markets”. 

Public relations campaigns are about much more than just community or customer relations programs though.  They are about corporate image, corporate reputation and about out-smarting versus out-spending the competition.  Bill Gates once said if he was down to his last dollar he would spend it on PR.  We highly encourage our clients to consider allocating 10% – 20% of the overall marketing budget to the public relations discipline. 

In certain cases, these campaigns take months to begin to show results, but once they gain momentum they become freight trains and the positive traction can last for years. 

Restaurant Consultant Aaron Allen

 A recent study found that 63% of American households have a pet.  There are 74.8m dogs in the USA and their collective spending on pets tops $40b per year.  By comparison, estimates are that only between 10% – 25% of Americans smoke.  The number of dog lovers in the country is going up and the number of smokers is going down.  Surprisingly though, it’s often still tougher to find a place to dine with your pooch than for a smoker to find a place to light-up.

We Americans love to pamper our pets.  As I write this I am in a 1,100 square foot four-star suite that is so pet friendly they allow both of my dogs (a Great Dane and Dachshund) and even bring up pillows and food bowls.  Some new doggie day care services charge as much as $120 per night for a luxury kennel (only my dogs get to stay at that rate, not me too).  Collectively, Americans spend $16.1 billion on pet food.  To help put that number in perspective, consider – all of the restaurants in Florida combined will post just $24 billion this year in revenue.  These numbers paint a picture of the buying power of pets.

There are more than 40,000 “doggie diaries” on Dogster.com and the percentage of dog owners who share their bed is 42%.  Americans love to talk about their pets, spend time with them, and increasingly they are looking for hotels and restaurants that are getting with the pet-friendly movement.  Not a bad community to tap into if you’re looking for solid word-of-mouth promotion.

Given how loyal people are to their pets, wouldn’t it make sense to tap into that strong emotional bond and create not just pet-friendly patio dining but to go further and develop marketing campaigns around this untapped market?

Pet Friendly Ideas for Restaurateurs to Consider:

• Water & Treats – You can tell how dog friendly a restaurant is these days by whether or not they bring a water bowl and treats over with the drink order for the table.  People (and their dogs) love it!  Be sure though to let the owner give the treat to their own dog (it is part of training and bonding as well as correct etiquette on behalf of the restaurant).
• Dog Days – A day guests are invited to bring their dogs for social hour.
• Free name tags – Consider offering to imprint a dog tag with the pets name and owner details on one side and your restaurants logo and phone number on the other.
• Dog Photo Walls – Consider taking pictures of guests who bring their pets and post on a bulletin board or on your Facebook or Twitter accounts.  They love it (plus it helps communicate the message of how your establishment is pet friendly).
• Sanitation – Pets are forbidden inside the restaurant because of strict health codes.  They have even started to crackdown on giving treats.  Starbucks used to offer a doggie treat to drive through customers who had a dog in the car but stopped doing it because of the grouchy heath department.  That said, they are still – at least for the time being – allowed outside on the patio.  Encourage your staff to help the pet and owner feel welcome.  Also remind them though to wash their hands and maintain the same standards of sanitation you encourage in other aspects of food and hygiene.

There are a ton of other ideas on ways to communicate a pet-friendly policy and attract a profitable and untapped market.  Please open up the discussion – looking forward to your comments using the form below!

Restaurant Consultant Aaron Allen

The National Restaurant Association (USA) has reported the average restaurant marketing budget is three percent (3%) of total revenues. Critics argue this point and we’ve seen budgets ranging from zero to six percent (6%).  We believe this depends on the brand, operations performance, market conditions and a host of other variables. Yet, while many can generally agree on a reasonable allocation of overall sales, they pay surprisingly little attention to how the money is allocated beyond just falling into the “marketing budget”. Once you have the allocation, where does it go?

The Digital Marketing Toolkit

We recommend that of the three percent (3%) allocated to the marketing/advertising line-item, forty-percent (40%) of that be dedicated to digital marketing and publicity efforts. Going further still though, the budget, the strategy, timelines, the tactics, the messages, must now all be succinctly distilled and then divided among a number of cutting-edge new digital media categories. This list of vehicles is mind-boggling and it only continues to grow and fragment. You’ve got the Internet and Intranet, search engine optimization and Pay Per Click advertising, digital signage, narrowing-casting and Podcasting, RSS feeds, social media and social networks, Wiki’s, Widgets, Mash-ups, Analytics – the list grows and grows. These are sustainable emerging technologies too – not just fly by night digital jargon.

It’s Natural for it to all Seem Overwhelming

The marketing rules have changed in the digital era and the train is moving like a bullet. Yes, the principles of marketing – the four P’s, brand strategy, etc. – these remain as true today as ever.  They are bedrock and all too often marketers chase the latest fad while forgetting proven principles to restaurant branding.  While maintaining a close connection to the fundamentals of restaurant marketing we should also be reaching out to discover the innovative new approaches that will prove to be game-changers.  It all sounding complicated and overwhelming isn’t a good excuse for ignoring the seismic shift that’s afoot.

The Trend Will Pickup Velocity

Digital marketing is has only started to become recognized as a powerful tool in the restaurant marketers toolkit.  Today it represents a tiny fraction of the overall restaurant marketing budget for chains and independents alike.  Given that more than 30% of restaurant customers will visit the restaurants website before visiting the restaurant itself, getting a solid web presence and supporting it with a strong digital marketing and publicity campaign is more important than ever. 

Restaurant Consultant Aaron Allen

Panera Bread Opens Donation Model Restaurant

During the peak of the recession we all read of many restaurants around the world attempting donation only promotions to draw in customers. This tactic was largely used as a publicity stunt which worked very well. The first reports of this I heard were from Europe and then a spattering of U.S.-based restaurants jumped on the free media bandwagon. When the media interest died down, so too did the notion of customers paying what they want.

Panera has reinvented this publicity tool in a smart way. By going 100% donations as a concept for the pilot – which they hope to expand – they have essentially created an ongoing tax shelter, publicity machine and powerful method of building their catering business.

Far too many restaurants are non-profit not by choice, but by circumstance. The average restaurant in the United States pulls down just 5% profit; which is not a large sum when you consider how capital and labor intensive the business can be. Leave it to a billion-dollar chain to figure out how to euthanize poor performing stores while simultaneously gaining free press and investor confidence.

Many will remember the punishment Starbucks took when they shuttered 600 under-performing units. Wall Street walloped the stock and a bruised Starbucks has yet to regain the former glory and favoritism among investment media. Imagine if instead of closing units though, they had converted select units to a pilot similar to Panera where units are community fund-raisers.

Panera can effectively convert low-performing stores into this new donation concept and instead of units looking like failures, they can look like corporate philanthropy attempts. The units are put in a non-profit classification, the losses are 100% tax deductable, the press flows in graciously (within a week of this story, I counted more than 300 national media press mentions for Panera on this story alone), and to top it all off, the new approach creates an angle to build relationships with powerful community organizations and allies (who later become some of the better catering accounts for the donation-model units).

I actually think this concept is brilliant. Congratulations, Panera. You were the first to figure it out. I am certain other billion-dollar-plus chains will watch closely and a few of them may actually see the greater long term potential of this concept. The off-shoots of this pilot can grow in many favorable and profitable directions. My head is spinning in contemplation of how much further this concept could be taken – both from the standpoint of actually helping communities as well as the standpoint of restaurant marketing strategies for large restaurant chains.

Aaron Allen
Restaurant Consultant

Cheesecake Factory Menu Advertising

January 4th, 2010

Some restaurateurs are innovating new ways to find capital.

If you’ve been to a Cheesecake Factory, you probably noticed that the menus were filled with advertising.  I first noticed this fact myself when running marketing for a luxury resort and placed an ad to promote our spa services.  It was expensive!  Around $9,000 for six (6) months, at the time.  As a chain, Cheesecake Factory – which also happens to have a $10.9m average unit volume – pulls in millions selling ad space in their menus.  Suffice to say, it more than covers the cost of the printing.

With a $10.9m average unit volume, this restaurant chain could more than afford to print their own menus.

Even back in my small home town in north Florida, I found that my favorite oyster bar (hole in the wall) sold space on just about everything they could think to put an ad on.  Their menus and now even their tables have advertising.  You can bet the value of the advertising paid for the furniture and then some.  In fact, the little oyster forks they brought out were plastic Nathan’s Hot Dog forks (not sure how they ended up in this here).

So, the question: Is it a good idea to sell space in your restaurant to raise capital or does it damage the brand?

My opinion is that Cheesecake Factory should run the numbers again and come to the conclusion I did – you can make more money and better reinforce your brand by putting your own ads in the menu, not a local car dealer.  In the case of the quirky oyster bar, I think it adds to the charm.  The decision really is situation-specific.  In general it’s risky.  In some cases, it may actually pay off and furnish your restaurant at a profit.

Aaron D. Allen

It used to be that an upset customer would tell 10 friends over several weeks.  This could then spread past the original 10 friends in an organic fashion over several years until finally the reputation of the restaurant was tarnished enough to warrant improvements or to be ushered out of business.  Today, an upset customer can take a photo, write up a gripe from their mobile phone and Tweet it to thousands or tens of thousands of people instantly.  If compelling enough, these thousands can make a split second decision to forward it to their lists reaching thousands more.

Some big restaurant chains are taking a wait-n-see approach to social media.  They want to make sure it’s not a fad before jumping in.  Have they lost their minds?  Not only is social media the fastest growing segment of the Internet, it is unquestionably a game-changer that has forever altered marketing and communication.  These chains may not want to get involved in a proactive sense, but you can imagine how fast they will have to scramble to figure it out when the “Perez Hilton” of the restaurant industry sends a scathing Tweet and a photo of one of their employees in uniform picking their nose.  What then?

For example, one employee in Australia at a McDonald’s left out one letter.  That small oversight went viral.  Sure, there were cars honking and people laughing passing by the restaurant, but that was small in comparison to the thousands around the world that got a good laugh while drinking their coffee and checking their Twitter feed.

Simply put, Social Media is not an optional endeavor for today’s restaurant company no matter how large or how small.  It’s better to participate in a proactive fashion than see your brand carried away down the mighty river that is Social Media.

There is not a restaurant in America that prides itself on having poor service, atmosphere or food; at least not a successful one. From McDonald’s to famed Charlie Trotter’s in Chicago – they all have good food, good service, good atmosphere and offer a good time. These points go without saying when they are true.

When a restaurant claims these attributes in their slogan it immediately confirms that the restaurant making the claim has so little creative juice and competitive differentiation that they are the restaurant equivalent of a generic paper brown bag. Such a slogan can only be the product of utterly inept brainstorming, marketing acumen and laziness. It immediately confirms market irrelevance.

I’ve traveled the world and have seen some version of this tagline repeated hundreds of times. Typically the restaurants are run-down road-side pubs, a burger joint run by someone that doesn’t really like people so instead of working for someone else they opened a restaurant, or a ubiquitous greasy spoon. Occasionally though, you see a restaurant that has had serious money put behind it and, as if looking after every detail except what makes the restaurant different, the owner thinks of a brainstorm idea of what to put under the name: “I’ve got it! What we sell is good food, good times and good services – let’s use that as our slogan”. Good grief.

Yes, I am a bit exasperated and it is showing. I just cringe when I think of someone putting their investment at risk in such a way.

If you or anyone you know has some variation of “good food, good times, good service” as a slogan, please seek immediate professional help. If you worked with a marketing professional that gave an approving nod to such a slogan, you owe it to yourself and them to put a great deal of distance between you both.

There are 1,000,000 restaurants in the United States all claiming they have good food, good service and good atmosphere. This is just the ticket in to the game though, not a point of differentiation. It’s like a tomato saying it’s better because it grew on a vine. Tell prospective customers something else. Tell them what makes you different.

Children shouldn’t supervise children.  As responsible adults, we all know the consequences.  So, why is it that Interns are now being saddled with the serious responsibilities of managing Social Media/Networking campaigns for multi-million dollar restaurants?

It’s doubtful any successful restaurant chain these days would put an intern at the helm of its public relations and media outreach efforts.  It is also doubtful that an intern would be the first- or last responder to customer complaints or suggestions for a restaurant system with 10,000+ locations around the world.  Finally, who would think that an intern would have more power and authority than the legal department in today’s mega chain?  As far-fetched as these ideas may seem, this is exactly what is happening.

Social Media and Social Networking are phrases that didn’t really exist five years ago.  Today, approximately 20% of all global Internet traffic is in the territory of social networking (namely Twitter and Facebook).  This shift is consumer interest activity has businesses chasing the Social Media ball and launching new “departments” to meet the growing demand.  However, many of these departments are being run by interns.  An example of this can be seen in Pizza Hut’s recently highly-publicized exploit, “Twinterns.”

While I am all for interns seeing real combat and getting up close and personal with the harsh realities of enterprise, I cannot recommend myself or others put them in charge of a company’s image–not for a small company and certainly not for a multi-billion dollar brand like Pizza Hut (@PizzaHut for the Twitter crowd).

Let’s put this into better perspective.  If Facebook were a country, its population would make it the 18th largest nation on Earth.  Can you imagine assigning an intern as Ambassador to the world’s 18th largest country?  Why, then, would you put an intern in charge of your social media efforts?  Sure, you may want to dip your toe in the social media pool; you may have a wait-and-see attitude on whether to commit.  Regardless, would you appoint an intern to represent a nation of 200 million people?

The average “chain” marketing department is greatly regulated by the legal department.  Ads and messages are closely scrutinized.  The (often) grossly overpaid Chief Marketing Officer must pitch and obtain approval for any 30 second spot he may want to run.  Meanwhile, an intern (whose name the Chief Marketing Officer may not even know) is riding the social media wild horse, unsupervised!  Why?  The answer is simple–neither the marketing or legal department fully understand and realize the power, influence, size and scope of social media.  “Let’s put one of those kids in charge who knows about all of that stuff.”  This movement is not a video game, and although interns may know something about the latest X-box game, they are not equipped to handle this level of social marketing.  The stakes are high and the losses can be overwhelming.

Could it be that many top marketers are using the “silly rabbit, tricks are for kids” mentality?  Are they equating social media to some sort of fad or short-lived school yard game?  Certainly, we must be alert and change with the times.  However, social media is more complex than opening a symbolic department and sending out a press release to showcase our latest fashion. Social Media and networking is a very important component of the Internet.  It is perhaps the most important communication evolution mankind has witnessed in centuries. Social Media can be compared to a 10-year old child who is growing up quickly. In our society, we do not let youngsters raise children–we should not let interns command the newest marketing and communication phenomena that has been spawned within the last three years (if not the last 300 years).  The excuse, “But I didn’t know,” will be no defense when breaking the law.  Companies will still be held responsible for the actions of their employees.  There is no ‘get out of jail free’ card issued for a lack of knowledge.

The time is now to address who will be in charge of your Social Media Marketing effort. Ask yourself one last question:  If you wouldn’t put an intern in charge of your PR department, why would you put them in charge of your Social Media Marketing effort? Involve an intern if you like, but never send your Brand Image lamb to slaughter.