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The Two Scariest Words Heard at Restaurant Leadership

April 22nd, 2010 | Posted by Jonathan Marek in Restaurants | Restaurants | Restaurants

… are “mixing” and “redemption”.  Well, at least from the standpoint of someone focused on increasing profits.  Let’s take them one at a time:

Mixing, as in “our new item is so great it was mixing 5% within two weeks!”  Umm, great, you are selling a lot.  What happened to profits?  To margin rates?  Did you get incremental guests?  What halo did you see in rest of check?  What got cannibalized?  I’m thinking of developing a 10 cent double cheeseburger — boy, that’ll mix well!

Redemption, as in “we got 30% redemption on our Facebook coupon!”  It was distressing to hear folks from major social media platforms brag that “redemption rates on social media are orders of magnitude better than print couponing — 30% instead of 1%”.  Redemption ≠ incremental sales.  McDonald’s could hand a coupon for Free Fries to each customer walking in to the store at lunch.  Redemption would be through the roof, but was it really incremental?

Deep understanding of incrementality is difficult in the restaurant business.  Even consultants, agencies, vendors, and restaurant companies that purport to “prove” incrementality seldom get the analysis right.  So I can understand why marketers turn back to these scary words… but that doesn’t mean mixing and redemption lead to actual profit.

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