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Making Green Make Green

July 29th, 2010 | Posted by JMarek in Restaurants - (1 Comments)

UPDATE: A recent study in the grocery space concluded what many already know: more than one third of consumers polled remain leery of the exact meaning of a product labeled as ‘natural.’ It’s no wonder – as restaurant chains as well as other food retailers have skirted using phrases that imply health claims in favor of buzz words such as “premium” or “wholesome.”

Organic.  Sustainable.  Local.  Fresh.  Healthy.  In the restaurant world, these words mean different things, yet they are still lumped together under a general “green” umbrella.  Many restaurant chains seem to be chasing these ideas wholesale.  For restaurant companies to really differentiate themselves, they need to unpack these “green concepts” and figure out what their customers are truly willing to pay for. The best of intentions can lead to disastrous results, as Frito Lay recently realized. Sales of SunChips plummeted by more than 11% as customers responded negatively to new eco-friendly bags made of a material that was so loud, consumers likened it to a jet engine.

Before discussing further, we should say there are many good reasons restaurant companies may go in this direction:  beliefs, PR, employee morale, etc.  But as we think about measurement and analytics, we are primarily concerned about one dimension:  what’s the impact on consumer sales and loyalty? (more…)

The Emerging Threat: Grocers & C-Stores Expand Prepared Foods

July 28th, 2010 | Posted by retailblogadmin in Restaurants - (Comments Off on The Emerging Threat: Grocers & C-Stores Expand Prepared Foods)

The restaurant industry prides itself on the fact that more American’s eat out today than ever before with the industry boasting a 49% share of the food dollar. This trend hasn’t gone unnoticed by retailers who are expanding offerings to compete head on, according to a recent report.  Supermarkets are leading the race, owning nearly two-thirds of prepared foods purchased at retail, while convenience stores are slowly entering the arena as well.  The Pantry and Quick Chek have recently announced plans to expand their prepared foods offering. How will this trend affect traditional restaurant revenues and profits? Do restaurants face real threats from C-Stores and Grocers?

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Calories Count

July 28th, 2010 | Posted by CCorman in Restaurants - (Comments Off on Calories Count)

Between PR pressures and new legislation, restaurants are looking at a new metric: calorie counts per transaction. The rise of healthy eating means the fall of super-sizing, and fast-food chains have found themselves scrambling to introduce more items (think breakfast) and healthier options (like salads and smoothies). Of course, any change that erodes sales for some restaurants means a competitive advantage for others: a study found that when similar legislation was introduced in New York, revenue increased 3% at Starbucks stores where a Dunkin Donuts was nearby. Before these laws go into effect, restaurants have the opportunity to test out how and where calorie information will affect consumer preference. Those who do will be well-positioned to steal market share – and may stumble on the newest healthy trend in the process.

McDonald’s Smooth(ie) Moves

July 28th, 2010 | Posted by retailblogadmin in Restaurants - (Comments Off on McDonald’s Smooth(ie) Moves)

Buoyed by its success with coffee and intent on adding $125k per store in annual drink sales, McDonalds has pushed into the fruit smoothie market with two new offerings.  Current smoothie purveyors Jamba Juice, Panera, and Starbucks have publicly offered a sanguine view of the entry with hopes that it will grow the $2.5 billion market.  But P.R. statements aside, McDonalds’ history of success is clearly rattling some nerves:  Jamba Juice recently released an advertisement parodying burger chain smoothies by facetiously offering a “Cheeseburger Chill Smoothie”.  Early returns suggest these companies have reason to worry as McDonalds has canceled their nationwide free smoothie trial due to “unprecedented demand”. Panera’s strategy of positioning itself as a premium brand is likely to be mirrored by the other established smoothie players, but more innovative thinking may be required to keep McDonalds from taking a big sip from this market.

Veterans of the industry (or those with a taste for smoothies) may remember the disaster that was WhipperSnapple – customers struggled with the concept of prepared beverages in a can and a few smaller chains suffered through the first attempt at smoothie introduction in the late 1990s. While the growth of Jamba Juice and McDonald’s early successes seem to bode well, smart chains are looking to run intelligent testing of the smoothie concept first. This testing will drive valuable insight into which flavors and smoothie styles customers will positively respond to as well as understand the logistical and operational impacts of introducing new food prep fixtures required to provide smoothies.

A recent article in US Banker cites an Accenture survey detailing how retail banks are extremely concerned right now about customer profitability and customer loyalty.  57% of banks have seen customer profitability drop by over 5% in the past year, and customer loyalty dropped for 59% of banks.

Another article in the Wall Street Journal cites a report by Celent highlighting profitability as a particular issue with checking accounts, which cost $250 to $300 a year to service and are unprofitable half of the time.  On top of this, banks are also worried about the death of free checking in the wake of overdraft regulation.

Banks need a strategy to make up for lost fee revenue due to new regulation and make checking accounts more profitable in general.  This challenge requires a structured approach to design and test new types of checking products, services, and offers to understand what works best and helps improve profitability. (more…)

How to Benefit Most from the Explosion in Relationship Managers

July 26th, 2010 | Posted by Jatin Atre in Uncategorized - (Comments Off on How to Benefit Most from the Explosion in Relationship Managers)

There has been an explosion in hiring relationship managers over the past few years.  An article in US Banker discusses how a big challenge can be actually finding enough relationship managers to hire given the high demand for them.

A central issue that is not as frequently discussed, though, is how to make the best use of these sought after employees. There is a limit to how many customers a relationship manager can effectively target, typically around 300 to 600 customers, and there is a lot of debate about how those customers should be chosen.  This debate is also worth a lot of money; we have found that getting book assignment right can increase the profitability of the program by tens of millions of dollars. (more…)

Like it or not, Here Comes Wal-Mart

July 23rd, 2010 | Posted by retailblogadmin in Uncategorized - (Comments Off on Like it or not, Here Comes Wal-Mart)

Wal-Mart is continuing to expand into financial services, and banks are getting increasingly worried.  A recent CNN article highlights how Wal-Mart is likely to do what it is best at – lowering costs.  In an environment where fee revenue is already under pressure, “Wal-Mart estimates it can take in its still-generous fees while reducing what the average check-cashing customer pays by 25% to 50%.”

Wal-Mart will undoubtedly continue the downward pressure on fees.  However, while the retailing giant is another competitor to worry about, the fee revenue issue is not specific to Wal-Mart and needs to be addressed more generally.  Wal-Mart is not the only financial service provider with lower fees.  ING, for example, doesn’t charge overdraft fees at all and instead only charges interest while accounts are overdrawn.

While many banks are focused on the best strategy to address new regulation, we have seen that very few have thought more broadly about how to preserve and maximize fee revenue.  The bank that wins against Wal-Mart will also beat the competition in general.  This will require the development of a more tailored approach to determine the right fee amount and fee policy for each customer. (more…)

C-Stores & Prepared Foods: Testing What Works

July 16th, 2010 | Posted by Dan Schreff in Retail - (Comments Off on C-Stores & Prepared Foods: Testing What Works)

UPDATE: NPD reports that “nearly two-thirds of prepared foods purchased at retail are from traditional supermarkets.”

Washington D.C. – Accounting for more than 10% of industry profits, convenience store food service offerings have garnered a lot of attention lately. The Pantry and Quick Chek have recently announced plans to expand their prepared foods offering. Through a languishing economic recovery, consumers are looking for quick and convenient meal options at affordable prices without sacrificing quality. Is this a good opportunity for c-stores to increase both revenue and profit?

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C-Stores & Prepared Foods: Testing What Works

July 16th, 2010 | Posted by Dan Schreff in Retail - (Comments Off on C-Stores & Prepared Foods: Testing What Works)

UPDATE: NPD reports that “nearly two-thirds of prepared foods purchased at retail are from traditional supermarkets.”

Washington D.C. – Accounting for more than 10% of industry profits, convenience store food service offerings have garnered a lot of attention lately. The Pantry and Quick Chek have recently announced plans to expand their prepared foods offering. Through a languishing economic recovery, consumers are looking for quick and convenient meal options at affordable prices without sacrificing quality. Is this a good opportunity for c-stores to increase both revenue and profit? (more…)

Testing at Kraft Foods

July 14th, 2010 | Posted by JMarek in Uncategorized - (Comments Off on Testing at Kraft Foods)

Here’s a great commentary on Shopper 360 blog, regarding the In-Market Testing for Growth team over at Kraft Foods.  Kudos to Autumn and the Kraft IMTG Team!