Highlights from the third annual FARE (Foodservice at Retail Exchange).
Understanding internal values helped QSR leaders rediscover success
Dunkin’ Donuts didn’t just hop into coffee retail as a reaction to McDonald’s. The doughnut company had always sold significant amounts of coffee. But a connection to its core values helped plant the seeds for rejuvenation, according to a Dunkin’ executive.
With more than 50% of store sales coming from coffee, the chain’s repositioning to “America runs on Dunkin’ ” was both a revelation and a logical migration, said Jon Luther, executive chairman of Dunkin’ Brands, Canton, Mass.
But while seemingly natural, change did not come easy. “You always have to have the support of the people working for you,” Luther said. “You not only have to get their support, but you have to persuade them to believe in you when you’re making all the changes.”
The hardship included interviewing his teams and identifying people who would no longer fit the new directions for both the doughnut chain and its sister company, ice-cream retailer Baskin Robbins.
For John Schaufelberger, senior vice president of global product marketing for Burger King Corp., Miami, the key is crafting a relevant message in a cluttered environment. “Part of our values means having fun to where we may border on controversial,” he said.
Among the many Burger King marketing projects has been the use of the plastic-headed king who has several offbeat adventures in multiple commercials. “It’s better to be talked about than not talked about,” he said. “But we take it seriously when we develop [our message] and speak with the same voice.”
He described the chain as “innovative … with attitude and edge. We need to convince customers to drive past two or three McDonald’s to get to one Burger King.”
As an example of keeping to core values both with product and message, Schaufelberger said the company did experiment with coffee but decided to go with a branded offer, Seattle’s Best, which complemented its capricious persona.
Also expounding on the idea of values, Hala Moddelmog, president of Atlanta-based Arby’s, said her company is undergoing a turnaround, with part of the issue being that the younger set did not grow up with roast beef, the chain’s legacy menu item.
“You have to have a reason to exist, why a customer wants to buy your product,” Moddelmog says. “It’s the why, the how and the what … but to get to the why, that’s not completely obvious. And if you don’t get to the root cause, you’re never going to be as successful as you can be.”
Sid Feltenstein, who led a range of fast-feeders including A&W and Long John Silver’s, advised retailers to never lose sight of local, state and federal government developments.
Specifically, Feltenstein said retailers should follow legislation that would allow organizers to unionize a retail facility by signing up a certain percentage of workers. Though the recession has slowed down talk of this legislation, he believes the discussion will return. “I would encourage each of you to actively engage with local legislators,” he said. “The implications for … all small businesses and service businesses outside of this room are huge.”
Foodservice With a Cause
Looking for a charity to back? Hala Moddelmog, president of Atlanta-based Arby’s, said philanthropic activity can help a company’s bottom line. Here are some tips:
- Be authentic. It’s about being believable. Consumers can see through a charity link that has no logical or organic tie. A simple test: Does it make sense?
- Brand. Find causes that match a brand’s personality, one that helps a company define its image to the public.
- Have a strategy. Many of the smaller decisions will swirl around a larger, focused strategy.
How to Lure Customers to Multiple Day-Parts
Pinpointing opportunities that exist in today’s value-focused landscape led to discussions of daypart strategies, lifestyle trends and what sustainability means at the store level at this year’s FARE.
The blurring of channel lines and traditional eating occasions has created an opportunity to capitalize on day-parts, with the multiple-day-part customer being a more loyal, higherspend ring, according to Michele Schmal, vice president of CREST product management for The NPD Group, Port Washington, N.Y. Schmal was one of three panelists during the opening general session.
“Twenty-five percent of customers visit stores for more than one day-part, but that’s 40% of the business,” she said. “Developing the multi-day-part is also a way to increase frequency, which is the [ultimate] goal.”
Snacking and breakfast are two dayparts receiving a lot of focus, with quick-service restaurants (QSRs) currently promoting new breakfast items, including some with eggs portioned as potential afternoon snacks.
Ways to communicate day-part messages include ads, promotions and “bounce back” marketing strategies, wherein the purchase of a breakfast item will lead to a free lunch item. Schmal referenced a promotion from QSR chain Subway, Milford, Conn., that bought both a breakfast and a lunch option for $5. The promotion suggested that while the customer was there buying breakfast, he or she could also pick up a lunch item to eat later at work.
Keeping up with breakfast and snacking trends is all part of staying relevant, said Ron Paul, president and CEO of Technomic Inc., Chicago. He cited several restaurants that were ranked in the top 100 performers in 1999 but didn’t make the list 10 years later. The ones that fell off the list lost their “lifestyle relevance.” For these chains, “customers perceived a declining meal-occasion opportunity—they believed there was somewhere they could go for a better experience.”
Other indicators of failure were the lack of concept differentiation and inadequate brand reinvestment.
Keeping up with consumer lifestyle and value perceptions also means paying attention to the trends of health and sustainability, according to Michelle Barry, senior vice president of The Hartman Group, Bellevue, Wash. Her research shows people moving away from extreme views of staying healthy: “They don’t want to be hit over the head with it.”
In terms of marketing, Barry said, the messages should be about simplicity, play and being natural. Regarding food ingredients, for instance, she said, “If you can’t pronounce it, don’t eat it.”
Sustainability is also tied to the concept of health for consumers, but not in the way many retailers suspect. She said it’s not about the kind of light bulbs a store uses as much as cleanliness of the store and whether the employees are treated well.
The concept of being “local” also relates to sustainability, with product from local farms and suppliers a plus for consumers. But local, in many cases, is a broad term, defined as much by simplicity and tolerable working conditions as by distance. Barry said “the narrative” behind a brand is important to today’s consumer.
“So think quality, local and fresh,” she advised retailers. “These are key drivers across the board.”
Product Development: Find the Passion
Recalling his quest for the world’s best tiramisu, Marc Waltzer of Premiere Culinary Consulting Group, Greenville, Wis., said he once ate 200 servings over a period of 10 days.
“Entrench yourself,” he said, “and you won’t be a follower—you’ll be a leader.”
Finding the passion to differentiate a taste profile and marry that with profitability and a brand message equals success, said Waltzer, who has consulted on new-product development for many Fortune 500 restaurant chains.
“Don’t look at your sandwich as just another sandwich,” he said. “Don’t make your salad just another salad. Make the best cookie known to mankind.”
As a suggested strategy, Waltzer said companies could tie their new product to a core, branded ingredient, such as butter or chocolate. Pick a key, fundamental ingredient and use the power of the brand, he said. Other tidbits of advice:
- Consider ancillary products. A new-product “home run” means considering a product and how it interacts with the entire mix.
- Selling fresh-baked chocolate-chip cookies can set up a new foodservice product for success, providing customers with the groundwork to consider the store a destination for fresh food.
- Allow a cross-operational team to help build the new product. Having a number of people involved achieves buy-in from those who ultimately have to sell the product.
Create a Foodservice Vision
Kevin Higar’s food talk was a veritable gastronomic trip across the nation’s most progressive eateries, from the sumptuous, always-fresh Carlos Bakery in Hoboken, N.J., to the rooftop vegetable garden at Chicago’s trendy Xoco. Technomic’s senior manager and unofficial epicurean, Higar encouraged attendees to build their own foodservice vision, centered on local, sustainable and memorable. With nearly three-quarters of those responding to a Technomic survey considering themselves socially responsible, it is increasingly important for emerging foodservice operators to deliver on a social message built on high-quality food but elevated by publicly visible values. “Organic will be there,” he said. “But people are more comfortable with … the whole idea of local,” said Higar. Local, however, is not limited to strict local borders, he said. It carries numerous meanings, including:
- Value Add: Cora restaurant chain in Canada offers happy-faced fruit and creatively cut vegetables that are fresh and locally grown.
- Seasonality: An emerging trend is including limited time offers (LTO) based on season. Magnolias in Charleston, S.C., for example, includes a menu item labeled “Fresh, Local and Vegetarian.” What the item is specifically depends on time of year. “In the past, the hook was ‘We’re vegetarian,’ ” though a decade ago vegetarian often meant boring, he said. “Today, it’s all about the flavor profiles.”
- Concept: From colleges promoting “farm to college” to restaurants espousing zero-carbon footprints and biodegradable cutlery, more operators are extolling environment and conservation. So, Higar said, it’s not just about the ingredients. In that vein, he cited restaurants where the meals and teas are made in plain sight of diners, and where lighting, scent and theater are essential assets to the consuming experience.
Be a Master Merchandiser
Space, people, equipment: These are the three fundamental anchors of a robust foodservice program, according to Aramark’s Ann Marie Solomon and Ron Bennett.
Together, Solomon, vice president of merchandising strategy and creative services; and Bennett, merchandising director, outlined several fundamental strategies for building a profitable foodservice program.
- Service Flow: Ninety percent of customers enter a store and head right. Yet even with that knowledge, many retailers don’t exploit it. Place the highest- profit, most popular items on the right; offer food samples on the right. Also, design a plan-o-gram that lets patrons browse and truly see impulse items. Old Navy, for instance, places shopping bags at different points in the store to help support impulse buys and promotions.
- Sequencing: Here’s a frequent mistake at the coffee bar: Put cup and lid together, turn around to get coffee, then turn back for condiments. The lid is the last item needed yet frequently is placed with the first item, the cup. Likewise, consider natural food adjacencies such as strawberries and cream, and offer combination meals.
- Maintenance: With a mindset of fresh and abundant, Solomon talked about different-sized service trays, with bigger, deeper trays for the morning and afternoon rush, and smaller trays for non-peak periods. The key, she said, is that no one wants to buy the last tortilla or sandwich—and lack of stock gives an impression of old, unappetizing food.
- Communication: Use communication— packaging graphics, signs, navigational tools—to underscore your core values. From nutritional guides to ecostewardship, signage and packaging are major differentiators of a total foodservice program. For an original experience, check out Jungle Jim’s of Cincinnati (www.junglejims.com).
- Presentation: Stimulate the palate through alluring presentations, from tiling food to stacking desserts, or delivering inside-out sandwiches that highlight the filling by placing the top bun beneath.