Reclaim Your Angus: CEO Goes on Offense Against McDonald’s

June 13, 2013

100792738-Untitled-1.240x160It’s the advertising equivalent of rubbing a burger in a competitor’s face.

Following McDonald’s decision to do away with its Angus Third Pounders, the CEO of CKE Restaurants, the parent company of Hardee’s and Carl’s Jr., has taken to YouTube to sympathize with disgruntled customers and invite them to visit his restaurants instead.

“I’ve heard that McDonald’s abruptly stopped selling their Angus beef burgers, leaving many of you angry, frustrated and confused,” said Andy Puzder, CKE’s chief. “In fact, it seems you’ve taken to Twitter to express your frustrations.”

Then in a moment made possible only through social media, Puzder shares a couple McDonald’s customer laments.

Puzder quotes user ErickRast86, who says, “My angus deluxe was replaced by a quarter pounder with cheese deluxe, wthell man … not even full #mcdonalds”

Tweeter ‏TheRealAdamGee opines, “.@McDonalds why did you get rid of the angus third pounder? I’m sad, hungry, and want my money back! :(”

Hoping to attract these unhappy customers, Hardee’s and Carl’s Jr. are offering a coupon at ReclaimYourAngus.com for their 100-percent Black Angus Beef Six Dollar Burgers. The burgers are actually $6 in name only and refer to the amount consumers would pay for the same type of sandwich at a casual-dining restaurant.

In response to the ad, McDonald’s declined to speak via interview. In a statement, Danya Proud, a company spokeswoman, said: “We can confirm that McDonald’s is removing the Angus Third-Pounder burgers from our national U.S. menu to make room for new and exciting choices including the new line of Quarter-Pounder flavors. We remain focused on our business and serving our customers and invite them to try the new line of QP (Quarter-Pounder) flavors which include: deluxe, bacon habanero ranch and bacon and cheese.”

The Six Dollar Burgers’ launch in 2002 prompted a wave of fast-food chains, including Burger King and McDonald’s, to follow suit. Gradually though, the chains abandoned these pricier burgers.

“When McDonald’s kind of pulled out of the field for competition for a restaurant-quality burger, we decided it was time to take advantage of that and let people know that the first major fast-food chain to have black Angus burgers still had them,” Puzder said.

McDonald’s decision to do away with the Third Pounder came down to wanting to give consumers more options and a burger that’s less expensive than the Third Pounder, said Darren Tristano, executive vice president at Technomic, a market research firm.

“For most consumers, McDonald’s price point makes McDonald’s relevant,” Tristano said. “When you start to get to that $7- or $8-dollar range, which is what an Angus burger, french fries and a beverage cost, you start to get outside of that.”

The new Quarter Pounders are also less meaty, which might appeal to a female consumer, he hypothesized. Consumers wanting a heftier meal can merely upgrade to a Double Quarter Pounder, which provides another option.

Strained consumer demand because of a payroll tax hike and higher gas prices has also caused restaurants to rethink their menus, which resulted in stripping out some of their higher-price items. McDonald’s decision to do away with its Third Pounder in favor a three new Quarter Pounders is one example of this.

In the face of rising labor costs and the looming implementation of Obamacare, which also is anticipated to raise the company’s costs, CKE is finding other ways to tinker with costs rather than cut the beef.

The company is testing out having people use tablets to order rather than speaking with employees and paying more attention to scheduling. It’s also promoting whatever commodity is most reasonably priced at the moment—in this case, beef.

Although beef prices for items such as steak and pot roasts have risen, prices for one cut used in ground beef, called lean trimmings, have actually fallen from year-ago levels.

“I think it’s probably been a pleasant surprise for the fast-food industry because they came into this year envisioning having to pay higher prices, which is what’s been the trend since the recession,” said Kevin Good, a senior analyst at Cattle Fax, a beef industry research firm.

Because of a severe drought in the U.S. central and southern plains, many farmers chose to slaughter their older cows rather than pay for feed, Good said. This led to an increase in supply and drove down prices. But recent moisture in the northern plains will likely cause an uptick in lean trimmings in the second half of the year, he forecast.

Although Puzder’s ad might seem confrontational in other industries, Technomic’s Tristano insists that poking fun at rivals in ads has been occurring more in the burger biz.

“I think when you’re in the fast-food category, you can’t take yourself too seriously,” he said.

_ By CNBC’s Katie Little.


Loyalty Programmes Drive U.S. Restaurant Visits

May 16, 2013

Smart restaurant operators have always endeavored to take care of their most frequent visitors. That may have taken the form of a server simply knowing her customers’ names and whether they took cream in their coffee. Some restaurant managers kept a Rolodex or card catalog of customers, with notes about favourite tables, anniversaries, kids’ names and other key data points. These are still valid tactics, but they require staff and managers with a keen sense of hospitality and a long memory.

Punch cards put the loyalty programme into customers’ hands. Customers carry a card that gets signed, hole-punched or stickered each time they make a purchase. The customers need to keep coming to get that 10th sandwich for free.

Restaurant loyalty programmes evolved with the digital age, and swipe cards or keychain fobs replaced many punch cards. Today these programmes collect valuable data on consumers’ purchases and behaviours, what they like and when they visit. Online and smartphone-based programmes are even more convenient for consumers and enable more data collection on the part of operators.

Consumer Insights on Loyalty Programmes
Current restaurant loyalty programme participation rates in the United States suggest that opportunities are going untapped, and there are lessons to be gleaned for U.K. operators as well.

Technomic’s recent “Market Intelligence Report: Loyalty Marketing” found that while only about one-third of consumers (36%) say they participate in a restaurant-based loyalty programme, 72% say that if the restaurant they visit most often offered a programme, they would sign up. This indicates that there is opportunity for more restaurants to offer loyalty programmes. It is possible that some of these favourite restaurants do have loyalty programmes already; here, the opportunity exists in building awareness about the programme and its benefits.

The prevalence of restaurant loyalty programmes and consumers’ willingness to participate begs the question of why someone would be reluctant to join. Consumers say they are concerned about privacy, and they demand to know how their personal contact information will be used.

  • Fully 70% of consumers say they would be more inclined to sign up for a rewards programme if they could be guaranteed that the restaurant would not pass along their information.
  • Two-thirds of consumers want to know how restaurants intend to use the personal information provided.
  • Forty-six percent say they are concerned about receiving spam or junk mail after signing up with loyalty programmes.
  • And 39% are concerned that restaurants might share their personal information with others.

Technomic asked consumers specifically which personal information they would be willing to provide to join a loyalty programme. While 60% would share an email address, only 43% would provide a home address and only 30% would provide their phone number.

At the same time they explain what their loyalty programme’s rewards are, restaurants should let customers know what they will do with their information. Such transparency can help build trust, which is a good step toward building an emotional connection.

loyalty_chart_1_450

Base: 1,000 consumers age 18+
Consumers indicated their opinion on a scale of 1-6, where 6=agree completely and 1=disagree completely
Source: Technomic 2012 Market Intelligence Report: Loyalty Marketing

Operators will also want to consider who their customers are—or who they are trying to attract as customers. Our research has found that the more income consumers make, the more likely they are to participate in restaurant loyalty programmes. This may be because higher-income groups want to be recognised for the money they are spending.

However, don’t neglect “aspirational” diners, those who go out to eat at restaurants that are just out of their reach for most occasions but are used for special occasions. These consumers may not be your key demographic, but they add up, and you would miss them if they didn’t come at all. Programme tiers could offer different rewards to different customer groups. Aspirational members may be attracted to a reward that simply makes them feel included, such as an offer to try a new menu item and give their opinion. It would tell them that even though you don’t see them every week, you value them and their input.

Developing Programmes That Lead to Loyalty
Technomic recommends three steps to moving toward emotional connections.

  • Set up a loyalty programme, offering enough of an incentive for customers to provide personal information.
  • Use the data gleaned from those users to provide compelling and relevant rewards.
  • Speak to what is important to them to build real loyalty.

Initial communications should focus on free or discounted food or beverages or other giveaways. As the following exhibit shows, the relationship will probably begin as a materialistic one, dependent on regular coupons and discounts and immediate benefits for signing up. Being invited to sign up by the restaurant’s staff or being welcomed by one’s favourite restaurant are incentives that begin to build the relationship between the consumer and a favourite brand.

loyalty_chart_2_450

Base: 358 consumers age 18+ who participate in restaurant loyalty programmes
Source: Technomic 2012 Market Intelligence Report: Loyalty Marketing

Customers don’t want to have to work hard—or at all, really—for their perks. Even when they are willing to sign up for a loyalty programme, they want restaurants to make it as painless as possible. Seven in 10 consumers (71%) would be more likely to sign up for a programme if perks were “effortless,” 59% don’t want to have to print coupons, and 39% don’t want to have to carry a physical card in order to receive loyalty-club benefits.

loyalty_chart_3_450

Base: 1,000 consumers age 18+
Consumers indicated their opinion on a scale of 1-6, where 6=agree completely and 1=disagree completely
Source: Technomic 2012 Market Intelligence Report: Loyalty Marketing

Compared to other consumers, loyalty club members are more likely to be active social media users. While 53% of all consumers “like” restaurant brands on Facebook at least occasionally, 62% of those who participate in restaurant loyalty programmes do the same. Similarly, 19% of all respondents read and/or write restaurant reviews on sites like Yelp, but 29% of loyalty-club members do so. This speaks to the importance of two-way communication with frequent diners.

To successfully communicate with frequent diners, operators must also speak the correct language and use the correct medium. Fully 78% of consumers who have smartphones and participate in restaurant loyalty programmes use their phones to access information or discounts from the programme. It’s no surprise that younger people use their smartphones more often than older consumers. It’s interesting, though, that a majority of consumers 45 and older also use their smartphones to access their loyalty programme. Savvy loyalty-programme operators will use this information and input from their own members to determine the best means of communication.

loyalty_chart_4_450

Base: 230 consumers age 18+ who have smartphones and belong to restaurant loyalty programmes
Source: Technomic 2012 Market Intelligence Report: Loyalty Marketing

Loyalty Membership Drives Restaurant Visits
The good news for restaurants with rewards programmes is that a majority of consumers who participate in loyalty programmes are likely to decide which restaurant to visit based on whether they are a member of that restaurant’s programme. And, just as higher-income consumers are more likely to join such a programme, they are also more likely to base their decision on where to eat on their membership.

Being in a loyalty programme does appear to put the restaurant in consumers’ consideration set, which helps get them in the door. It’s a good first step toward building those emotional connections.

loyalty_chart_5_450

Base: 358 consumers age 18+ who participate in restaurant loyalty programmes
Source: Technomic 2012 Market Intelligence Report: Loyalty Marketing

Darren Tristano is Senior Managing Director of Technomic Inc., a Chicago-based foodservice consultancy and research firm. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations. For more information, visit http://www.technomic.com.

Examples of Successful U.S. Restaurant Loyalty Programmes

Incorporating Social Media
Dunkin’ Donuts held a competition to award the title of President of Dunkin’ Nation. Members earned points for checking in via FourSquare and Facebook, and then selected the winner from among the top visitors.

dunkin_275

Offering ‘Important’ Rewards
Understanding customers creates the ability to offer rewards that customers find important. For example, la Madeleine’s Card for the Cure speaks to the core values of the chain’s regular clientele, who are mostly women. The loyalty card costs $35 up front, and gives the customer 10% off all purchases for a year. Additionally, 1% of sales goes to Susan G. Komen for the Cure. The card can be renewed annually for $25.

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Making Consumers Part of the ‘In Crowd’
Some successful programmes appeal to consumers’ psychological need to be part of the “inner circle.” The Greene Turtle Mug Club enables the chain’s customers to purchase their own mug at their local Greene Turtle restaurant. The mug is assigned a number and stays on display in the unit until the member comes in and orders a beverage. The company boasts that there is an average of 1,000 members per unit.

greene_turtle_275


Fantasy Football Restaurants

December 12, 2012

© 2012 Sarasota Herald-Tribune. Provided by ProQuest Information and Learning. All Rights Reserved.

Area bars ramping up to tackle fantasy football league business

On fall Sundays, beer, Buffalo wings and draft boards are king — especially if you are a fantasy football fan.

To entice those fantasy players to leave the comfort of their couches and PCs, Southwest Florida restaurants and sports bars are ramping up freebies and other gimmicks, all in an effort to build customer loyalty and boost business before the winter tourist season kicks in fully.

Analysts say fantasy leagues can reap benefits that last long after the first pick of the NFL draft.

“These leagues continue on throughout the year, providing the perfect reason for repetitive business for restaurants with multiple televisions and an atmosphere for the games,” said Darren Tristano, executive vice president with Technomic, a Chicago-based food consulting firm. “There is great opportunity for restaurants to benefit from this.”

Fantasy football is a mostly online game, with supporting mobile apps, in which players create virtual leagues and “draft” actual professional players from NFL teams to form their own franchise.

With a team in place, players go head-to-head with each other every week, collecting points based on how well their drafted players perform in the actual pro games that week. Just like in the NFL, the fantasy team with the most points wins.

In this region, restaurant and bar owners estimate there are thousands of fantasy football participants, who tend to be rabid fans with more discretionary income than typical sports fans. To win their loyalty, venues have begun leveraging the innate advantage they have by offering multiple televisions for viewing multiple games simultaneously — together with NFL-related food and drink specials. The trick is to show as many games as possible, all at once, so fantasy participants can keep track of as many of “their” players simultaneously.

These guys are serious

At Siesta Key Oyster Bar on Oyster Boulevard, customers sit at tables based on the game of their preference each Sunday, said owner Keith Cipielewski. It is so serious that seating charts are coordinated a week in advance, so staff can coordinate which games will play on which of the restaurant and bar’s 15 televisions.

“It keeps us in touch with the locals,” Cipielewski said. “Plus it starts at a time that is traditionally slow for us, around the end of the summer, and brings more people in.”

SKOB, which is known for being a Chicago Bears fan hangout, also invites fantasy football players to a draft party every year.

Cipielewski said participants have received free merchandise, too, such as a punch card that rewards frequent customers with free beer.

Fantasy football benefits restaurants through the loyalty a fan feels to a certain establishment,” said Tristano, the Chicago consultant.

“For fans, there’s a reason to go back there now on a more repetitive basis for games on Monday, Thursday and Sunday,” Tristano said, referring to expanded NFL playing days throughout the season.

Restaurants have a really great opportunity to build on that loyalty through relevant promotions to keep them coming back.”

Gecko’s Grill & Pub, a Sarasota restaurant in the Landings, has done just that to capture repeat business. Fantasy football fans can win prizes such as free grills, deluxe tailgating chairs and club- level Tampa Bay Bucs game tickets every week, general manager Mike Ferrara said.

The restaurant also hosts its own football pool, in which participants have the chance to win free beer for a year by picking the most winners during the course of an NFL season. For the fantasy football draft itself, Gecko’s offered bottomless chips and salsa to all league participants.

“We try to amp it up all the way to Super Bowl Sunday,” Ferrara said. “It seems like everyone is on a fantasy football league these days, so we want to entice them to keep coming back.”

Chains in on action

Local bars and restaurants are not the only ones trying to capitalize on fantasy football.

In 2010, pizza chain Papa John’s hosted a contest on its Facebook page, asking players worldwide why they thought their league was the best.

The contest winner received an all-expenses-paid trip to the 2011 NFL Draft in New York City. This year, adult arcade chain Dave & Buster’s hosted league parties that included a free pro football weekly fantasy football guide and a free CBS network draft kit. Buffalo Wild Wings, likewise, gave away draft kits that contained league championship pennants, draft boards, player stickers and koozies. Sandwich maker Quiznos offered free fantasy draft boards on its Facebook page that leagues could use during at-home draft parties. The chain also included coupons, like 20 percent off catering purchases of $50 or more, and $5 small sub combinations.

A declining fan base?

But it is sports bars that have really gone after fantasy football leagues as a way to boost business.

At FinnDaddy’s, a sports bar on Beneva Road, the fantasy football crowds have thinned this year, but the bar still draws a decent crowd, owner Mark Lapidus said.

“It could be my competition is cheaper or more people are just staying home,” he said. “We still have good locals, though, that come in every week to watch all of their players.”

Each year, Lapidus hosts draft parties for local leagues, where he offers less-expensive prices on beer and food and gives out complimentary draft boards. But with the success of fantasy football has come a flood of competition, making it more difficult for bars and restaurants to keep regulars coming back.

“There are so many kinds of players trying to get in on the big- screen business that it is causing the crowd that’s looking for the games on Sunday to be splintered up through all the alternatives,” said Michael Terry, a professor with the University of Central Florida’s Rosen College of Hospitality.

“It’s not just local sports bars anymore, but the buffalo wing chains and even the newer craft beer bars,” he added. “They are all taking a piece of this pie.”

At the Gecko’s on Clark Road in Sarasota, NFL viewing has fallen victim, somewhat, to demographics. General manager Mark Stewart says more people come in now to watch college football games on Saturdays. His theory is that fewer people in Southwest Florida have a pro team to cheer for.

“The problem is that no one in Sarasota roots for the home team,” he said. “No one is from Florida, so they’re fans of teams in other states. But for college football, people are ready to root for Florida or Florida State.”__