from APT's Restaurant Practice
Header

The Questionable Economics of a “Good” Groupon

June 25th, 2011 | Posted by Jonathan Marek in Promotions - (Comments Off)

This article in the New York Times, plus my interview in Fast Company, got me thinking again about Groupon economics.  To be clear, I’m talking here about the Daily Deal type offers, not more sophisticated customer-targeted, location-based, fill-up-empty-seats-right-now types of offers.

Here’s the crux, a restaurateur describing a successful Groupon in which a consumer receives a voucher for $14 worth of food by paying Groupon $7 ($3.50 of which Groupon pays the restaurant) :

“You don’t make money on the deal,” Mr. Massari acknowledged, “but in the end we are even.”

That’s because “people spend more than on the coupon amount,” he said. “They’ve been ordering about double the $14 from us. And people usually bring other customers, who are paying full price.”

Beyond that, among those who are redeeming coupons, “80 percent have come back without a coupon,” he said.

Let’s think through each piece of that, imagining for the moment we sold 1000 Groupons: (more…)

This post is the third in a three part series on ideas that will shape restaurant performance in 2011.

Part Three: Marketing

(more…)

Why Is This Ad in My Train Station?

November 29th, 2010 | Posted by Jonathan Marek in Marketing & Media - (Comments Off)

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!

Chipotle Drops Ad Agency

October 11th, 2010 | Posted by Jonathan Marek in Marketing & Media - (Comments Off)

The most interesting part of this article, in Ad Age, is the comments section.  The ad world sure doesn’t like it when a company drops the agency and brings creative in-house!

Chipotle’s position is interesting to us because it presents an ongoing challenge:  how do you keep the “green” message fresh, and how do you measure your success in doing so?  Promoting a central theme, like sustainable, local, organic ingredients, shouldn’t absolve a brand from measuring the dollar-and-cents success of their marketing activities.

As an aside, the “dress-as-a-burrito” promotion is a great example of getting killed on non-incremental promotions.  Maybe Halloween is the right time to talk about the two scariest words in the industry?!?

Last week’s deal to take Burger King private caught few by surprise, given the intense focus of PE on the restaurant sector and the many struggles of BK.  A few months ago, Mill Road announced a deal to buy Rubio’s.  In late April, another firm (Apollo) came over the top of Thomas H Lee to buyout CKE for about $1 billion including assumed debt.  All this comes on the heels of 2010 acquisitions of On the Border (Golden Gate Capital), Papa Murphy’s (Lee Equity Partners), and Wingstop (Roark Capital Group).

Amid speculation that there are more restaurant buyouts to come, we’ve been thinking about what PE firms need to do to thrive with these new investments.  (more…)

Do we need more of these?

Taco Bell has now launched a petition for the Federal Reserve to issue more $2 bills, accessible through Taco Bell’s Facebook page.  There’s a full-page ad in USA Today, and the write-up on a Wall Street Journal blog is today’s most popular article on WSJ.com.  Of course, this is marketing the 3-item $2 Meal Deal promotion we discussed in a prior post (see Taco Bell $2: A Restaurant Trade Promotion?). 

Here are five things what we love about this marketing tactic: (more…)

I Remember When…

June 4th, 2010 | Posted by Jonathan Marek in Marketing & Media - (Comments Off)

.. newspapers were used to market restaurants and retail stores.  Now, here’s an example where an In-and-Out Burger gift card is being used to sell the LA Times.  Not good, the newspaper business these days.

Leveraging the Local Option

April 16th, 2010 | Posted by Jonathan Marek in Marketing & Media | Restaurant Analytics - (Comments Off)

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 Jonathan Marek in Marketing & Media - (Comments Off)

“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.