Actionable Insights From APT's Retail Practice

Happy New Year from all of us at APT’s Food for Thought. 2011 promises to be an eventful year in the restaurant space and we’ve heard a number of bets, top 10s, and guesses for what the year, and the strengthening economic recovery, will hold.

We’ve synthesized these ideas into a special series, in three parts, that we are launching below. Stay tuned over the next two weeks for more.

Part One: Menus, Value Meals & New Offerings


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!

Starbucks: Will Slowing Down Speed Sales Growth?

October 19th, 2010 | Posted by retailblogadmin in Uncategorized - (Comments Off on Starbucks: Will Slowing Down Speed Sales Growth?)

Starbucks’ evolution from Seattle coffee house to corporate giant has caused hand-wringing in recent years as it has tried to retain its neighborhood coffee-shop feel while simultaneously covering the globe.  When Howard Schultz resumed his role as CEO in January 2008, he initiated changes that were meant to bring the company back to its roots—grinding coffee beans in stores, menu revamps, and even unbranded “local” stores.

Starbucks latest change was announced last week when baristas were asked to focus on making no more than two drinks at a time. Such edicts, while admirable in theory, may ignore the reality of a modern-day Starbucks.  Baristas are already complaining that the new requirements will limit their ability to deal with long lines.  Debates between quality and quantity are not new nor are they limited to Starbucks. Different chains have landed on different sides of the debate – who is right? What do customers actually prefer?


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.

Cracking Breakfast

June 3rd, 2010 | Posted by JMarek in Restaurants - (Comments Off on Cracking Breakfast)

The crew over at Serious Eats did a taste test on fast food breakfast sandwiches, with an unexpected winner.  The interesting thing was why the winner came out on top: a freshly cracked and cooked whole egg.  They even mention the sound of “the magical crack that only a real egg could make”.

It makes us wonder… what’s the economic value of a real egg?  Could this be a differentiator in the increasing crowded breakfast game?  Now that’s a test we’d love to see run.

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.