Actionable Insights From APT's Retail Practice

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…)

Tweet to Eat

April 16th, 2010 | Posted by JMarek in Marketing & Media - (Comments Off on Tweet to Eat)

“Tweet to Eat” is a neat little campaign from Subway, linking Twitter, TV spots, and celebrity sponsorship.  A cool mix of media that we haven’t seen before, especially in conjunction with the likely PR bump from being a leader here.

We see a lot of companies, mostly retailers, analyzing “online-to-store” activity these days.  Haven’t seen anyone really quantify the social media effect on real life sales yet, but the day is coming.

Is Restaurant “Clock Speed” Increasing?

April 13th, 2010 | Posted by JMarek in Uncategorized - (Comments Off on Is Restaurant “Clock Speed” Increasing?)

Stanford Business School’s Kleiner Perkins Caufield & Byers Professor of Electronic Business and Commerce,and Management Haim Mendelson gave the keynote at the APT Test & Learn Summit yesterday.  Prof Mendelson spoke about Organizational IQ, a way to quantify how organizations handle information in decision making and relationships.  He highlighted three points:

  • Higher Organizational IQ predicts future profitability
  • In faster “clock speed” (rate of change) industries, high Organizational IQ is more important
  • In time of transition when “clock speed” is increasing, high Organizational IQ is yet more important

Which got me thinking:  is the “clock speed” in the restaurant business increasing? (more…)

Flying Blind

April 13th, 2010 | Posted by JMarek in Restaurants - (Comments Off on Flying Blind)

Test & Learn Summit keynote speaker Haim Mendelson had a great quote yesterday from Zynga founder Mark Pincus:

If you’re a visual pilot and you fly in the clouds, your life expectancy is about 180 seconds

A nice metaphor for trying to manage without testing and analytics in a modern business environment!

The Summit is Coming!

April 8th, 2010 | Posted by JMarek in Uncategorized - (Comments Off on The Summit is Coming!)

usersConferenceAPT’s 2010 Test & Learn Summit is coming next week.  34 retail, hospitality, banking, and consumer goods companies will be in San Francisco sharing ideas.  A special welcome to the 6 restaurant companies who will be in attendance.  We’re particularly looking forward to lots of great ideas at the “Food for Thought: Applying Menu Analyzer and Test & Learn for Sites to the Restaurant Business” session.  Here’s a description: (more…)

John Gordon is always worth reading, and his take on Darden vs. Brinker is especially interesting.

Can small bites at small prices succeed?

March 30th, 2010 | Posted by JMarek in Restaurants - (Comments Off on Can small bites at small prices succeed?)

Today’s USA Today has an interesting article that talks about casual dining’s attempt to draw diners in through small plate offerings.  Great idea if it works, but we worry that these restaurants may not focus on the right metrics.  For example, the article quotes the percent of items chosen for the new small plates in a Houlihan’s test market.  It’s great that they are testing, but are they looking at:

  • the incremental guest traffic attributable to the new items?
  • whether some restaurants perform better than others, and why?
  • what else small plates guests are ordering, and what items they are trading away from?
  • whether small plates guests return with greater frequency?
  • whether those returning guests trade up to larger sizes of the same thing?

When news broke this week about the passage of Obama’s health care reform legislation, the news was especially relevant to McDonald’s, Burger King, and every other large-scale restaurant chain in the nation. The new federal law requires restaurant companies with 20 or more sites to disclose calorie information on their food products, as well as information about how many calories one should eat daily for a healthy diet.

The law calls to mind a recent New York Times article about the science behind menu optimization. “There is constant tinkering going on right now with menus and menu pricing,” said Sheryl E. Kimes, a professor of hospitality management at the Cornell School of Hotel Administration. “A lot of creative things are going on because the restaurants are trying to hold on for dear life to make sure they get through this.”

According to the New York Times, restaurants “are hoping that some magic combination of prices, adjectives, fonts, type sizes, ink colors and placement on the page can coax diners into spending a little more money.” Of course, the only true way to determine what works and what doesn’t is to test menu changes in live market conditions. Given that menu labeling is now required by federal law, testing is going to be more important than ever for restaurant companies.

In May 1990, Fortune Magazine asked: “What happens when two extremely large, highly capable, well-financed corporations fight it out for preeminence in a commodity business like coffee?” The answer: a decade-long “often profitless struggle” between Maxwell House and Folgers, driven by huge media blasts, ineffective new products, and round-after-round of price promotions amid waning demand. The Coffee Wars.

Fast forward to the mid-to-late 00’s. McDonalds was rolling out 11,000 McCafes and Starbucks was finishing a decade of rapid expansion (over 5,000 U.S. stores) by re-awakening the instant category with VIA. When McDonald’s launched Premium Roast in 2006, the media brought back the “Coffee Wars” moniker, with Starbucks and McDonald’s as the primary warriors. Starbucks’ earnings and stock price tumbled, before beginning to claw back in 2009. The New Coffee Wars.