Actionable Insights From APT's Retail Practice

Too Little, Too Late: Missing the Boat on Overdraft Regulation

April 29th, 2010 | Posted by Jatin Atre in Financial Services | Uncategorized - (Comments Off on Too Little, Too Late: Missing the Boat on Overdraft Regulation)

Overdraft regulation is a sweeping change that puts a significant part of revenue at risk.  It is therefore shocking that a Moebs survey cited in American Banker found that only 1 in 9 of banks have started preparing for this change.

The majority of banks will find themselves unprepared when regulation changes take effect on July 1st.  Banks need to act immediately to determine how they will respond to this regulation. (more…)

What Happens When You Take a Child’s Toy Away?

April 28th, 2010 | Posted by JMarek in Restaurants - (Comments Off on What Happens When You Take a Child’s Toy Away?)

In the eternal quest to ban absolutely everything, supervisors in unincorporated Santa Clara County (California, of course!) have banned toys in QSR Kids’ Meals.  While this is believed to be the first such law in the country, it surely won’t be the last.

Which makes us wonder about the consequences, other than upsetting my children (whose grandma lives in unincorporated Santa Clara County).

This is a “natural experiment”:  how do transaction counts and item mix change when toys are removed?  Like calorie count posting and trans-fat bans, impacted QSRs ought to understand this now, so they can apply the learnings as more restaurants become impacted down the line.

“Trouble” with TV Ads

April 27th, 2010 | Posted by JMarek in Marketing & Media - (Comments Off on “Trouble” with TV Ads)
Still From "Trouble" Ad

Still From “Trouble” Ad

On the radio on my way into work this morning, they were playing the song “Trouble” by Ray LaMontagne.  Ray is coming to town, and the station was giving away tickets to the first caller who could identify which company has a current TV ad featuring this song.

The amazing part is that 5 callers dialed in who has clearly seen the ad.  Some described the cute dog.  They loved the ad, which has even gone viral online.  The radio station’s demos are perfect for the company’s concept.  But the first 4 callers guessed the wrong company.  3 of the 4 weren’t even in the right industry.

We do a lot of media effectiveness analysis at APT.  Sometimes we see strong lift and high ROI.  Many times we don’t.  When we don’t, we often get pushback from the client that boils down to:  “people loved the ad, so it must have worked”.  Here’s a good object lesson to the contrary.

(BTW, you can find the TV ad here on YouTube.)

SNL: The Girl Scout Cookie Business Model

April 27th, 2010 | Posted by JMarek in Marketing & Media - (Comments Off on SNL: The Girl Scout Cookie Business Model)

Slightly geeky humor about food economics…  we like that.  This did get me thinking – are Girl Scout Cookies the ultimate LTO?

The Battle with Online Banks Heats Up

April 26th, 2010 | Posted by retailblogadmin in Financial Services | Uncategorized - (Comments Off on The Battle with Online Banks Heats Up)

Consumers are primarily looking for three things in their bank – convenience, competitive rates, and low fees.  As discussed in a recent Wall Street Journal article, online banks are winning customers over with their low fees and are making strides in becoming more convenient and offering attractive interest rates.  Traditional banks should be worried.

 The main appeal of online banks has historically been their customer-friendly fee structure.  Most have no monthly fees, pay ATM fees for customers, and have low or no overdraft fees.  As a result, many were enticed to switch to online banks and “could trim hundreds of dollars a year in fees.” (more…)

… are “mixing” and “redemption”.  Well, at least from the standpoint of someone focused on increasing profits.  Let’s take them one at a time:

Mixing, as in “our new item is so great it was mixing 5% within two weeks!”  Umm, great, you are selling a lot.  What happened to profits?  To margin rates?  Did you get incremental guests?  What halo did you see in rest of check?  What got cannibalized?  I’m thinking of developing a 10 cent double cheeseburger — boy, that’ll mix well!

Redemption, as in “we got 30% redemption on our Facebook coupon!”  It was distressing to hear folks from major social media platforms brag that “redemption rates on social media are orders of magnitude better than print couponing — 30% instead of 1%”.  Redemption ≠ incremental sales.  McDonald’s could hand a coupon for Free Fries to each customer walking in to the store at lunch.  Redemption would be through the roof, but was it really incremental?

Deep understanding of incrementality is difficult in the restaurant business.  Even consultants, agencies, vendors, and restaurant companies that purport to “prove” incrementality seldom get the analysis right.  So I can understand why marketers turn back to these scary words… but that doesn’t mean mixing and redemption lead to actual profit.


April 21st, 2010 | Posted by JMarek in Restaurants - (Comments Off on Innovation)

Here are three quotes from a great presentation yesterday given by Einstein Noah Restaurants and Bellwether Group.  The topics were around innovation and testing — near and dear to our hearts!

From Jeff O’Neill, Einstein Noah CEO:

Too often, value is what restaurants do when you don’t have innovation… because you don’t have an effective innovation process

From James O’Reilly, their CCO (second C = Concept):

The problem isn’t having an innovation process, it’s sticking to it

and, on one important reason testing is a key part of that process:

It’s OK to fail.  You just don’t want your customer to see you fail

Interesting stuff!

Tea Time

April 20th, 2010 | Posted by JMarek in Restaurants - (Comments Off on Tea Time)

Ten years ago, a former colleague, then at Stanford Business School, wrote a business plan for a restaurant concept: essentially “the Starbucks of Tea”.  At the time, Starbucks had purchased Tazo.  High end consumer brands like Numi were just emerging.  She never actually followed through building the first store, but I’ve always wondered whether she was onto a great idea.

Fast forward 10 years, there’s been talk at Restaurant Leadership about whether it is time for tea.  Makes us think someone ought to be out there running a test.

A Menu Item or a Concept?

April 20th, 2010 | Posted by JMarek in Restaurants - (Comments Off on A Menu Item or a Concept?)

Blogging from the Restaurant Leadership Conference in Scottsdale:

The breakout session led by Technomics was based on changes in their Top 100 Restaurants list over the past 10 years.  Based on who moved in and out of the list, they drew some more general conclusions.

One chain that fell out of the list was TCBY, prompting the question: Is yogurt a concept or just a menu item?  That is, can I actually get consumers to seek out my restaurant for this product alone, or do I have to do more?  TCBY actually chose to do more, e.g., ice cream, and it hasn’t worked out well.

What struck me is that yogurt is currently booming in San Francisco — but with the new Pinkberry-style offering.  Yogurt is still a viable concept.  What if TCBY had stayed focused on yogurt, but innovated in that space?

Leveraging the Local Option

April 16th, 2010 | Posted by JMarek in Restaurants - (Comments Off on Leveraging the Local Option)

The Test & Learn Summit continued Tuesday, including the Food for Thought session focused on restaurant issues.  One major discussion topic was around the “local option”, periods of time in the marketing calendar when QSRs’ market-level franchisee groups can choose localized promotions and media support.

Local option periods can provide a wealth of insight into which programs work and which don’t, if managed correctly.  (more…)