BOOSTING RESTAURANT REVENUE WITH SIGNATURE ITEMS

Part Six of Boosting Restaurant Revenue explores how focusing on just a few key signature items can turn the tables quickly for under-performing brands and further propel growth-minded restaurant companies.

In this issue we’ll cover –

1. How signature items are used in turnarounds
2. How signature items are used to create category leaders
3. What’s the difference between a signature item and a menu strategy
4. Why signature items are necessary for owning an industry category
5. What the British pub failures can teach us about menu strategy; and why the American breakfast category may suffer a similar fate
6. Who I think is one of the best turnaround guys in the industry and how he does it
7. My recommendation on the best place to inspire your plate presentations
8. How I boosted one restaurant’s sales and profits by threatening customers with a “curse”
9. What the Pantagonian Toothfish can teach you about marketing
10. Which 11 restaurant industry trends to consider when brainstorming new signature items

All of this and much more in a fully-packed Part Six; let’s begin!

Signature items for turnarounds:

If you study it, you will find that nearly every successful restaurant turnaround had a new menu strategy  as the cornerstone of their brand renaissance.  At the center of a new menu strategy is the “Signature Item”.  A signature item can be leveraged not only for successful turnarounds.  In fact, one could argue that signature items are what created category leaders in virtually every industry segment.

Signature items for category leaders

The strategy of focusing on signature items isn’t just for those restaurant brands seeking a turnaround.  Far from it.  In fact, if you look at the top players in the industry – category by category – you will see that in nearly every case they have something that they are absolutely known for.  Examples?  PF Chang’s = Lettuce Wraps.  Outback = Blooming Onion.  Sure, others offer knock-offs of these items, but the credit for “owning it” goes to them for claiming them, focusing on them, and making a commitment to owning them.  You can of course also look back at older examples such as: McDonald’s becoming the world’s largest foodservice company by focusing on the burger and fries (countless chains do that now but McDonald’s pioneered it as a “signature”).  Burger King focused on “flame broiled” decades ago as competitive positioning against McDonalds and became the #2 burger chain.  KFC owns the chicken bucket.  Chick-fil-A owns the chicken sandwich.  Zaxby’s owns fried chicken fingers (someone else pioneered what Zaxby’s is doing but didn’t leverage it properly; Zaxby’s came along and owned it such that now the originators of that concept look like the copy-cats).  Want more recent?  Kogi BBQ is one of the most recent emerging brands and they hands-down own “Korean BBQ”.  What’s Korean BBQ?  Exactly!  Kogi more or less invented it.  Now they own it and they are reaping the benefits of innovation.  Sometimes the signature item can be so successful it creates a whole new industry category.

Sometimes a Signature Item isn’t an item but rather a signature menu strategy

In some cases, “signature” can go beyond a single item.  For example, Chipotle isn’t necessarily known for a single signature item that defines them but rather an entire menu strategy/philosophy that defines them and has become their signature.  “Food with Integrity”.  Today, you can’t hear someone mention a focus on quality ingredients using sustainable practices and a focus on the source of the food without thinking of Chipotle.  They claimed it.  They own it.  Note:  I use Chipotle as an example frequently because they were the top performing restaurant stock of 2010, are widely known, and are a really clear cut-example; but they are not the only one we see “doing it right”.  Another example of a menu strategy becoming its signature is the 1980’s campaign by Domino’s to deliver in 30 minutes or less – it was bold, they owned it, and they changed the entire pizza delivery industry while becoming a leader in it (notably struggling as of late since they lost their focus on what their menu strategy is actually).

Why is it called “Signature” in the first place?

The notion behind an item being “signature” is that it should be like a person’s actual signature.  It’s unique, defining; it’s expressive; it’s artistic; and it’s “the bottom line”.  A signature also implies a declaration (such as John Hancock’s signing of the Declaration of Independence) and a promise.  When you put your signature on a document you are giving your word, staking your reputation, aligning yourself with a certain philosophy, ideal, or acknowledging an acceptance of terms.  I know you know all of this, but read this again through the lens not of what a signature on a document means but a signature item means to your restaurant brand.  Get it?  It’s a pretty big deal.  So, in that view, do you own a category-killer signature item?  If not, now’s the time to invent it.  If so, get even more credit for it.  As Winston Churchill once said, “If you ever have a point to make, don’t try to be subtle or clever.  Hit the point once, twice, and a third time with a tremendous whack!”

Signature items can deliver on all important metrics

Given that a signature item can be leveraged to take startups from unknowns to category leaders and be used with equal effectiveness to turnaround a large and stalled restaurant system, it is understandably too big of a subject to fully explore in the course of a single article.  The point here isn’t to exhaust the subject or give a step-by-step critical path for implementation.  Rather, the intent here is to help remind you of what you already know and perhaps see it differently so you’re motivated to look really closely at your own signature item/menu strategy.  This is a big topic with immense power and potential for strengthening a restaurant brand, category leadership, revenue growth, profit maximization, employee morale, customer satisfaction, and word of mouth marketing.  Wow!  Anything that can simultaneously impact all of that definitely has to be at the heart of strategic brand leadership.  Right?

Below are a number of other examples, thought-starters, case studies and best practices:

What British Pubs Can Teach Us – After the 2008 recession British pubs were closing up faster than clams chased by a screeching otter. Dozens have closed each and every week since the recession.  It was enough to drive the public to sob over a drink – and they did – but instead of to a pub, they went home.  I don’t mean to at all make light of the devastation and ravaging of the British pub sector.  What happened actually had us all here gasping and sighing and feeling nothing but remorse and empathy for those operators impacted.  A few years after the worst of it though, this can be reviewed as a case study and lessons gleaned that can help both those who remain there in the U.K. and also others around the world.  For what happened was, in some ways, avoidable for thousands of operators.  The lessons learned are applicable to any restaurant system and particularly useful for those operators in mature or declining industry sectors.

1. Too much alike – You can throw a rock in London and hit a pub, but for many the only differentiation was the sign out front or which side of the street it was on.  There was hardly a motivation to cross the road.  They had no signature items or distinguishable points of difference.
2. Failure study/adapt to trends – Beer has been falling behind for years.  Wine and spirits were growing overall consumption volumes and simultaneously cannibalizing the beer category.  Rather than adapt their menus, they stuck with what had worked before not what was going to work in the future.  I couldn’t understand this one – wine and spirits have higher gross margins so why didn’t they hope for this trend even before the consumers opted for it?
3. Commodity – A bottled beer is hard to differentiate. Sure, you can perhaps get your beer colder or try to appeal with a better atmosphere, but short of that the only other way to make it different is with price.  Yuck!  Competing on price is a terrible approach.  Any given day of the week someone else can always beat you on price.  No one can consistently be the lowest priced and still have any margin remaining.  The consumers this approach attracts will simply follow the deal like a swarm of locust follows the new crops.  You can rent this customer but never establish real loyalty.
4. Something else became more convenient – There is a saying “One thing you can never do too much of in business is make it too easy to buy from you”.  Consumers flopped out of their office and onto a pub stool for quite a while, but eventually off-premise marketers and retailers made drinking at home more convenient and relevant.
5. Beer makers homogenized them – As the margins dwindled, profit-starved pubs were easy targets for beer marketers to buy them, in a way.  The pub needed a renovation and marketing support so the beer marketers supplied them with free chairs, tables, taps, promotional materials, window signs and more.  “Here’s something special for you”…and your competitor next door.  The deteriorating unit economics had them go along with it.  They became homogenized.
6. Failure associations – When “pubs” are closing by the thousands it’s time to reinvent who/what you are to be more relevant than a “pub”.  This would have been the perfect time to re-conceptualize the menu strategy to update for new emerging trends and also create an entirely new “category”.  This approach would have gotten huge publicity and driven tremendous unit volume for anyone smart enough to do it.

American Breakfast Joints – What’s the difference between Waffle House and Huddle House?  How about between Denny’s and Perkin’s?  In the breakfast category, Cracker Barrel has a real point of difference.  The others in this category seem to cluster together with how they name their menu items, design their menus, promote themselves and a whole lot more.  This is pretty common in maturing sectors.  There’s a sort of homogenization that occurs as they huddle together to find safety from sagging sales and relevance.  Then, the inevitable happens.  Consolidation.  We saw this before with the popular cafeteria style format that worked up until the 1980’s for companies like Piccadilly and (formerly) Morrison’s.  They grew big, failed to innovate, homogenized themselves so they were indistinguishable from their competitors, the category matured, consolidated, and is now a shadow of itself.  Shoney’s is now trying hard to make a turnaround but it may be too little too late – especially if they don’t do something really bold in terms of innovation and new product development.  They have a slim chance but if they really focused on the right strategy, a single signature item could help transform perceptions of their menu and ultimately their brand.  In many ways the American breakfast category is like the British pub sector.  It will not be business as usual and those who do not adapt quickly to changing consumer dining behaviors and emerging trends will disappear.  The way it is shaping up reminds me of the story of the frog who stayed in the pot until he boiled because he couldn’t tell it was getting hotter little bit by little bit.  If a frog is dropped in scolding water he’d jump right back out.  Similarly, if the CEO’s in this industry segment were to be dropped in to this pot they’d immediately take corrective action.  Since these beleaguered chains are just lumbering about and evolving slower than dining behaviors and marketing approaches are evolving, they don’t see they are about to boil to death in the pot in which they sit.  They need to move a heck of a lot quicker than they are to catch up with where the industry and consumer behaviors are headed.

Ruby Tuesday’s – One of the marketing minds and CEO’s I most admire in this industry is Brad Blum.  He was the turnaround guy for Darden’s Olive Garden.  So successful there he eventually elevated up the ranks to become vice chairman of the chain and heir apparent for the CEO post there.  He left for Burger King’s revolving door CEO post and went in with exactly the right strategy for them – focus on flame broiled and a few core signature items.  The franchisees revolted (as usual).  Eventually he (and my point in all this) arrived at beleaguered Ruby Tuesday. His turnaround strategy was to focus on the inside out as he had done with Olive Garden and attempted with Burger King.  He worked up those popular signature items that one could argue set off a new gold rush for gourmet burger concepts.  His program and approach in the turnarounds of both Olive Garden and the partial resuscitation of Ruby Tuesday’s are both terrific case studies for the strategy of reviving brands by focusing on the inside and working outward (new signature menu items, then interior design, then exterior communication versus new exteriors, then interiors, then menus and training).

Barton G – If you’re looking for inspiration on incredible plate presentation approaches then  Barton G in Miami has to be on your hit-list.  Each dish is plated in the same way art is framed.  The plating and presentation of the food enhances and amplifies the experience of the dish in much the same way the frame is selected for the painting rather than the painting being created to match the frame.  Now what they do there is over the top and not something a large scale chain could match or one-up, but the inspiration is there nonetheless.  You can’t go to Barton G and not want to re-plate each item on your menu so that the garnish and presentation helps tell a story (rather than that dated old approach of a piece of kale or parsley and couple lemons as the garnish).  They bring out a blender for shakes; stuff sparklers in cotton candy; and have plates that are used with only one intended dish.  The tuna for example comes out on an elevated platform and sits atop a bead of wheatgrass and has a little Buddha statue on it.  Again, this isn’t mass market kind of stuff, but it is so “signature” that it makes Barton G one of those must-see places for any foodie (and pulls in revenue rumored to be in excess of $30m for the restaurant and their catering operations – which is HUGE!).

Cayman Curse – When I took over operations for a $4 million Caribbean-themed restaurant, I focused in on the bar.  We generated nearly 30% of revenues from the bar and were running bar costs in the high 20’s (cost as a percentage of sales).  When I studied our purchasing and inventory, I saw that we had stacked up cases and cases of a product that wasn’t moving.  Canadian Club had been running a promotion for their new Canadian Club Citrus and so they were giving bottles of it away with purchases of other faster-moving product.  Our competitors up and down the beach had amassed mountains of this product too.  They started trying to unload it with $2 shots.  Then $1.  Then 50 cents.  No one bought it.  People had never heard of Canadian Club Citrus and they figured that if it was selling for 50 cents it couldn’t be good.  So, I took a different approach.  I invented a drink called the “Cayman Curse” and said we couldn’t tell you what goes in it or you will get the curse of the Cayman’s.  The recipe called for citrus juices which picked up on the citrus notes in Canadian Club Citrus and masked the Whisky taste.  We sold them for $8 and built appeal by putting dry ice in (which makes the drink appear to “smoke”) and supported it with a suggestive selling program.  Results?  This “mystery drink” made from a previously un-moveable liquor became our top seller.  We started trading a bottle of Crown Royal with other restaurants for a case at a time of the product they weren’t moving.  Our cost in mixing the drink was so low that – coupled with the huge volume – it brought our overall bar costs down to 16% of revenue.  That’s half of what it was!  Just one innovative idea and new approach to inventory utilization made a big impact on the bottom line.  You don’t have to have a bar though – similar approaches can be taken with different varieties of fish, for example, and you’re not only reducing costs but also taking pressure off other fish species.

Patagonian Toothfish – Necessity is the mother of invention.  The Chilean aquaculture industry had a wonderfully tasting fish that few foodies knew of or wanted.  The Patagonian Toothfish.  Ever see that on a menu?  Probably not.  Just the name conjures images of a grotesque  (uh, image here is not accurate, but what we were probably all envisioning).  The Chilean Toothfish and Chilean Sea Bass are the exact same fish.  The only difference is marketing.  Sometimes a signature item can be discovered by taking something wonderful and undiscovered and presenting it in a more appealing manner.  Other examples here are Buffalo Chicken Wings and Flank Steak.  Both were once considered undesirable, un-marketable and were incredibly cheap.  When one bar in Buffalo found a use for the chicken wing, he made a killing.  No, unfortunately for him he’s not getting a royalty on every wing sold in the world, but when he first started he was buying them super-cheap and doing incredible volume by coming up with something “new” and signature.  Now chicken wings – once discarded – cost more than breast meat due to the high demand for them.  Likewise, Flank Steak is now outselling Filet Mignon in some high-end eateries.  There are plenty more similar opportunities waiting to be discovered by those foodservice marketers looking for them.  What the Patagonian Toothfish can teach or remind us about marketing is that perception is reality.  If a name or connotation conjures something unappealing or different than what you actually intend it to, it is wise to create a new name (whether that’s a fish species, or a menu item, or a category (like the British “pubs”), or even a brand/company name.

Other Examples -

1. Discretional Chef – A number of restaurant chains give their chef discretion to purchase what’s freshest and make that the focus of the menu.  It’s a signature approach.
2. Joes Stone Crab – With sales exceeding $22m in just six months, Joe’s Stone Crab in Miami takes a delicacy that any competitor can also purchase, and puts their signature on it by selling by classification and size of the stone crab such as their “jumbo” and “selects”.
3. Lava Cake – Fleming’s Steakhouse recommends their signature dessert while they’re taking the entrée order.  Rather than wait too late after guests are full, they explain that their signature Lava Cake takes 45 minutes to prepare and ask “shall I put one in for you with your dinner order so there’s no need to wait?”  Nice upsell!  Works all the time.
4. Chef’s Table & Tastings – Upscale restaurants are finding great success with limited seating chef’s tables and tastings.  The kitchen table at Charlie Trotters in Chicago is sold out many months in advance.
5. In & Out Burger’s Secret Menu Codes – With a cult-following, California-based In & Out Burger is widely known for what’s not widely known – secret codes for ordering menu items not on the menu.  It’s part of their signature.

Trends to Consider – We’re tracking too many global foodservice industry trends to cover here but a few of them that are top of mind as it relates to brainstorming signature items include:

1. Small Plates and Sharing – The days of big plates with overwhelming portions; head-sized desserts that cost more than appetizers; and entrée-only menu programming are out (at least here in the US market – we’re watching how many international markets pursue American restaurant approaches/trends but lag 4-7 years behind what’s hot here so this approach is still working abroad).  What’s working better now is small and sharable.  Rather than gorge on one redundant flavor, they want to have lots of different tastes.
2. Unique Source – Where you get your product will become increasingly important to consumers.  This is really heating up.  Check out the Celebrity Farmer movement: http://aaronallen.com/blog-post/celebrity-farmers/
3. Slow and Local – New debates and pending legislation surround what can really be called “local”.  Consumers want local though.  It’s a hot buzz word and emerging movement.
4. Bold Flavors – As Boomers taste buds fade, it takes more kick to rouse their senses.  Bold flavors are in.  Check out: http://aaronallen.com/blog-post/why-we-seek-bolder-flavors
5. Less Fuss – Consumers want the flavors of the ingredients to shine through, not have their food covered in thick sauces and seasonings.  Simplicity in preparation is more desired than a dish where the chef was overbearing on the food and bent it to serve his will.   Be sure to check out: http://aaronallen.com/blog-post/trends/worlds-best-foie-gras-may-point-the-way-for-rising-culinary-stars
6. Authenticity – Fake and “faux” are out.  Consumers today want “the real thing”.  They want “genuine” and “transparent” and trustworthy authenticity.  Be sure to check out: http://aaronallen.com/blog-post/authenticity/restaurant-marketing-authenticity
7. Old Favorites – We’re seeing a successful resurgence of old classics coming back on to menus such as steak tartar, chicken and waffles, stuffed burgers and more.  Just as with fashion, some popular periods circle back and become hot again.
8. Auctions – Grupon, eBay, Living Social, Home Shopping Network and more have elevated the “auction” and “limited quantity” appeal/craze to a national and international level of awareness and participation.  The “get it while it lasts” marketing approach has been around for a long time but the new popularity is now influencing the restaurant industry.  Rather than sell your brand on a discount with something like Groupon’s notion of an auction, maybe you could try a limited time sell out dish to pre-order?  That’s a new way to get in on the craze.
9. Superfruits and Nutrition – The consumer consciousness regarding what goes in their body has been steadily on the rise.  Many are starting to remember the old adage, “You are what you eat”, and are paying closer attention to the nutritional value of their food.  Some early adopters are taking this further with a “food as medicine” interpretation.  Food packed with nutrition is a trend that can’t be ignored.

10.  Sense of Place – Why would I want to go to Malaysia and eat Buffalo Chicken Wings instead of Malay Chicken Satay?  Or Seattle and eat a steak instead of seafood? Increasingly, consumers want food that gives them a sense of place.

11.  Kitchen to the Bar – Bars that operate more like kitchens – such as chef-driven signature drinks concocted in collaboration with a mixologist – are gaining appeal.  More examples on this to come in the future.

A few more Signature Item tips and benefits

1. Focus – It can’t all be special.  Signature items force the organization to focus on being exceptional on core strengths and messages.
2. Make it Easy – We all have too many demands on us.  By the time dinner guests make it in to the restaurant they have already made hundreds if not thousands of decisions.  Signature items make it easy to decide.  Making it easy for the consumer is appreciated and you’re rewarded with the higher gross margin often engineered into signature items.
3. Reflect Brand – The best signature item you can have is one that reflects your own distinct brand positioning, personality, promise and story (see Restaurant Branding).
4. Use Menu Engineering as Foundation – With the brand platform clearly articulated, the next step is to consider emerging trends and also existing performance through the menu engineering analysis.
5. Outside Help – Sure, it may sound self-serving of a restaurant consultant to say, but it is nevertheless true that hiring outside help is a short-cut to identifying that break-through signature item.  Even the McDonald’s brothers didn’t know what they had until Ray Kroc got involved and saw the potential and opportunities only a fresh eye can spot.

RESTAURANT CONSULTANT

Restaurant Consultant

One of the biggest movements in the food industry that will greatly impact restaurant trends in the future is the rise of powerful food documentaries. The popular and groundbreaking “Food Inc.” made a major impact on millions of American’s and the way we look at food. The consciousness around where our food comes from, how nutrition effects our bodies, and a rapidly increasing concern for what we put in our bodies will undoubtedly change restaurant menus of the future.

The newest movie to come on to the scene, “Forks Over Knives“, was already featured on Oprah; and as we all know, Oprah is the oracle of emerging trends that will go mainstream, and is herself a hit-maker. Forks Over Knives is part of a succession of moving food documentaries that are beginning to have a real impact on consumer dining behavior and consumption. There is no question that the way we look at food will forever be different. Not just because of these powerful food documentaries, but because of the issues they uncover which will be impossible to ignore in the future (such as the global food shortage crisis, future farming and responses such as “Urban Farming“, chronic malnutrition, and the billions of dollars spent on fighting diseases which can best be cured with food rather than medicine.

Food Matters is a highly recommended film. I hope you will watch it with your family tonight and share with all of your co-workers. It will change the way you eat for the better and, as a result, bend the food industry practices in a direction which can best help heal our bodies and world.

The tongue has approximately 10,000 taste buds.  These taste buds are replaced approximately every two weeks.  However, as we grow older, some cells stop producing taste buds.  An average senior may have only half of their taste buds working.  It’s logical therefore to conclude that you would seek flavors that are twice as potent when you have only 5,000 taste buds compared to the 10,000 you had earlier in life.

There is inherent to man to natural desire to maintain the status quo.  Consequently, America’s aging Baby Boomers – of which there are nearly 80 million – are seeking out bolder flavors.  This presents an interesting dilemma for restaurants and foodservice companies that have consumers both seeking saltier foods and simultaneously seeking to lower their sodium intake.

The industry is responding in a variety of ways.  You may have noticed that recently there has been a mass adoption of sea salt over iodized salt.  Average casual dining chains, and even a growing number of fast-food restaurants have tossed out the iodized salt in favor of sea salt, citing the more healthful aspects of sea salt.  This and many other similar moves point to the movement of both consumers and industry toward more healthful foods that don’t sacrifice taste or quality.

There is even a prediction that we will see the rise of a “bold flavor diet”.  The notion is that the more powerful and potent the flavors of food, the less we need to eat of it to feel satiated.  Who knows, this could be the next big thing now that the Atkins Diet and South Beach Diet have started to wane.

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