Actionable Insights From APT's Retail Practice

Author Archives: JMarek

Measuring Back-to-School Promotions

August 8th, 2012 | Posted by JMarek in Retail | Uncategorized - (Comments Off on Measuring Back-to-School Promotions)

George Anderson of Retail Wire recently reported that JC Penney is offering free haircuts as part of its back-to-school campaign. Based on anecdotal evidence, the article says, the promotion appears to be working. But Anderson suggests that the key to the success of this program will be, “how many of those [160,000 haircut appointments] are either new customers to Penney or returning shoppers who increase their spending.

There are many great (i.e. profitable) ideas that are hard to imagine working. And many poor (i.e. unprofitable) ideas that intuitively seem like a lock. Customers are tricky that way. (more…)

Will An Apple a Day Grow Sales?

August 24th, 2011 | Posted by JMarek in Restaurants - (Comments Off on Will An Apple a Day Grow Sales?)

Recently, the Wall Street Journal and the Associated Press ran articles in which I was quoted regarding McDonald’s announcement that apple slices will replace some of the fries in its Happy Meal. McDonald’s move is both innovative and smart.

Here are five thoughts on why this move makes sense: (more…)

When Pundits Get It Right

July 6th, 2011 | Posted by JMarek in Uncategorized - (Comments Off on When Pundits Get It Right)

Amidst all the industry forecasts that change like weather forecasts, sometimes the restaurant industry talking heads really get it right.  They certainly did on Soul Daddy, the reality-TV launched concept that recently closed 2 of its 3 launch locations.  The knock pre-launch was that new restaurant operations are hard, and so launching 3 restaurants in 3 separate cities was a pathway to disaster.  Two months later, the New York and Los Angeles locations are gone. 

“Retail is detail”, as they say.  This shows the value of first tinkering and truly testing to get all the details of operations right pre-expansion and to keep them working on an ongoing basis as restaurants scale.

The Questionable Economics of a “Good” Groupon

June 25th, 2011 | Posted by JMarek in Promotions - (Comments Off on The Questionable Economics of a “Good” Groupon)

This article in the New York Times, plus my interview in Fast Company, got me thinking again about Groupon economics.  To be clear, I’m talking here about the Daily Deal type offers, not more sophisticated customer-targeted, location-based, fill-up-empty-seats-right-now types of offers.

Here’s the crux, a restaurateur describing a successful Groupon in which a consumer receives a voucher for $14 worth of food by paying Groupon $7 ($3.50 of which Groupon pays the restaurant) :

“You don’t make money on the deal,” Mr. Massari acknowledged, “but in the end we are even.”

That’s because “people spend more than on the coupon amount,” he said. “They’ve been ordering about double the $14 from us. And people usually bring other customers, who are paying full price.”

Beyond that, among those who are redeeming coupons, “80 percent have come back without a coupon,” he said.

Let’s think through each piece of that, imagining for the moment we sold 1000 Groupons: (more…)

Do Staff-wide Training Investments Yield More Sales?

March 24th, 2011 | Posted by JMarek in Uncategorized - (Comments Off on Do Staff-wide Training Investments Yield More Sales?)

Earlier this month, Church’s Chicken closed all of its Nashville locations for 18 hours for employees to attend “an intense customer service training boot camp”.  While extreme, the “close and train” theme had occurred before.  In 2008, Starbucks famously closed all 7,100 of its American stores for 3 hours to train staff.  According to a New York Times article on the subject, Starbucks employees learned espresso-culture tips such as “’without aeration, the milk screams and lacks sweetness.’ And: ‘The perfect milk requires surfing the tip of the steam wand until the sound is SSHHHH.’”

While Starbucks has clearly recovered its mojo since 2008 (the stock has doubled since the training day), the question remains:  what is the incremental sales impact of the training programs themselves?  Do these programs overcome a breakeven hurdle given the loss in sales (and potentially customer satisfaction) that results from closing the network and turning away customers for a period of time? (more…)

The Problem with Redemption

December 9th, 2010 | Posted by JMarek in Promotions - (Comments Off on The Problem with Redemption)

In Restaurant SmartBrief’s list of Top Ten articles of 2010, there is an interesting cautionary tale about Groupon.  Well worth reading.  Yet again, the curse of redemption without incrementality strikes.

McDonald’s Evolutionary Testing

December 2nd, 2010 | Posted by JMarek in Restaurants - (Comments Off on McDonald’s Evolutionary Testing)

McDonald’s is testing “Garden Fresh Wraps”, which appear to be the evolution of prior a new product concept they’ve been trying for awhile: a portable, chicken “non-sandwich”.  Of course, as with all QSR product tests, the big issue is incrementality.  Even if I sell a lot of the new product, did I sell less of something else on the existing menu?  It’s a tricky question that requires top-notch testing analytics.

More broadly, we love the idea here — if the first product in the concept doesn’t work in test (we assume), how do you tweak it and quickly retest?  Many QSRs could do this better, rather than just rolling what they’ve got regardless of the test results. As Chicago Tribune reporter Steve Johnson notes – without testing, well known brands run the risk of straying from their core strengths and losing customers.

Restaurants Get Social

December 1st, 2010 | Posted by JMarek in Marketing & Media - (Comments Off on Restaurants Get Social)

Several high profile social media campaigns have made the news in the restaurant world, including Applebee’s Veteran’s Day campaign, Chili’s FourSquare chips & salsa promo, and McDonald’s, Starbucks, and Chipotle on Facebook Deals.

As these offers become more mainstream among major restaurant chains, the way restaurants invest in and measure social media will need to “grow up”, as we argue in this recent post on our media blog.

Why Is This Ad in My Train Station?

November 29th, 2010 | Posted by JMarek in Marketing & Media - (Comments Off on Why Is This Ad in My Train Station?)

McDonald's Ad at Lafayette BART (with apologies for picture quality)

I live in an upper middle-class suburb of San Francisco, where 99% of the population speaks outstanding English.  This train station is on the BART line that commuters take from that suburb into San Francisco or Oakland.  My best guess is that thousands of people pass under this ad each weekday, and maybe a dozen or so per month read Chinese but not English.

So, why is it there?  I really don’t know, but perhaps:

  1. Their media targeting model is producing terrible results
  2. They’ve designed a very poor Chinese-language media heavy-up test
  3. Someone thinks this ad might work for non-Chinese speakers.  After all, I don’t speak Chinese, but I completely understand the price point and product.  Had it been in English, I probably wouldn’t have noticed it.

If it’s the first two (or the third, for that matter), give me a call.  APT can help. 

If it’s #3, color me impressed!

Chipotle Drops Ad Agency

October 11th, 2010 | Posted by JMarek in Marketing & Media - (Comments Off on Chipotle Drops Ad Agency)

The most interesting part of this article, in Ad Age, is the comments section.  The ad world sure doesn’t like it when a company drops the agency and brings creative in-house!

Chipotle’s position is interesting to us because it presents an ongoing challenge:  how do you keep the “green” message fresh, and how do you measure your success in doing so?  Promoting a central theme, like sustainable, local, organic ingredients, shouldn’t absolve a brand from measuring the dollar-and-cents success of their marketing activities.

As an aside, the “dress-as-a-burrito” promotion is a great example of getting killed on non-incremental promotions.  Maybe Halloween is the right time to talk about the two scariest words in the industry?!?