{10 Wins & 1 Hmmm: An unauthorized recount of the 2009 MEG presentations}

(What happened after hours, just happened after hours.)

Last week I attended the National Restaurant Association’s Marketing Executives Group (MEG) conference in Chicago. This is a list of the Top 10 Winners & 1 Hmmm at MEG this year. If you were absent, please contact your MEG friends to catch up on the scoop (as you really missed a big MEG). If you were there, here is a chance to remember the events again. Restaurant Marketing Group (a division of ZenMango) does not endorse any of the speakers (yet) and the Top 10 list is only based on active listening during the minutes I was not dozing. Here are my Top 10 Winners & 1 Hmmm.

#10: HOW MANY DOES IT TAKE FOR A McTURN
Neil Golden took us through the amazing journey of turning McDonald’s around. As I listened I was fascinated by the simplicity of his “going back to the basics” and “customer first” approach. At times, I felt that I could tune-out Neil since the McDonald’s story felt slightly irrelevant as most of us will never get to a budget that has that many ‘0s. What struck me, however, was that it is not easy to change the direction of a brand that big and that established. And he did. Huge accomplishment! Maybe it is the restaurant’s version of The Greatest Story Ever Told.  It also helped me realize why McDonald’s continues to have one of the lowest leaks in the business. (Source: Leaky Bucket® 2009 Study)

#9: EXTENDING YOUR NAME (BUT NAMES CAN BE MISLEADING)
I was really looking forward to Nancy Bailey’s presentation as I thought it would surely need volunteers to drink and sample. Maybe a few shots just before lunch, not a bad new MEG tradition. Instead the presentation turned out to be a learning on brand amplification: how to take a brand and make it crossover to the grocery aisle and beyond. Her presentation on brand extension was simply amazing, especially when I feel that one of the biggest weaknesses of restaurateurs is merchandising. Yes, I learned a lot, but I missed out on the free shots.

#8: BLEND MARKETING AND OPERATIONS
I guess it took an articulate Harvard Professor, with a tad bit of attitude (that is a compliment coming from the MEG group), to realize that it is all about the expectations Marketing sets and Operations fulfilling those expectations. But Professor Frei, two hours and thirty-six minutes before you wowed us, someone left the teaser cards on the tables about Marperations.  And Professor Frei, here is a suggestion for your next presentation. Get a big blender and then… 

#7: POWER OF DELEGATION
Mike of Darden may not be sitting on a hill as big as Neil Golden of McDonald’s, but he is still sitting on a hill with some decent resources. He showed us that once you become big (I mean really big), you must find brand ambassadors who can talk to the brand. His brand ambassadors are real customers who are passionate about the brand. Instead of Mike and team trying to fake-talk to the consumer, they have found the die-hard fans and trusted them to carry on the conversation. My interpretation of Mike’s message: if you cannot do it yourself, find a consultant and delegate. 

#6: BE CREATIVE ABOUT CREATIVITY
Before Joe the plumber, we at MEG have always have had our Randy the plumber.  Randy of G&M Plumbing, a restaurant industry veteran and now a break-thru media messenger, showed us that true creative writing (along with a diet of beer, wine and cocktails in all four meals) makes even blah news read worthy. He impressed me with his creatively focused story telling. Did you know Randy can get his phone calls through to any CEO, as every high functioning officer is still interested in insuring their plumbing still works? Based on Randy’s inspiration we are thinking of changing our company’s name ZenMango Preg Testing. Now I dare you to refuse that call.

#5: RAKES DO SHAKE THINGS UP
George from BlendTec should be called Houdini for his act of blending a rake. His “Will it Blend” campaign started with a $50 marketing budget, an amazing example of a creative way of communicating a benefit and letting the consumer figure out the rest. If you missed the videos, please go to www.willitblend.com. As I watched him rake in the applause, I realized that he was telling us that when the economy is down, you do not have to have a garage sale. Instead, blend in everything you have in the garage to feed the kids. Here is a hint for MEG teams who feel that their current marketing team is not being creative: simply give them a $50 budget and a sharp object. Magic is imminent.

#4: OVERSHARING AND TATTOOS ON THE BUTT
Stacey of California Tortilla was the perfect complement to Mike of Darden. Stacey has very limited resources and her world of “over-sharing” was an excellent example of being irreverent when that is what your brand is. She gave us a sneak peak of her upcoming “Get a tattoo on your butt and get a free burrito” campaign. It was amazing to see the line of potential volunteers who offered to assist her judge the contest. Pick me! Pick me!

#3: MENU ENGINEERNG IS MORE THAN PROFITABILITY
Greg Rapp’s inspired presentation on menu engineering was proven, yet kinda one-dimensional as it focused primarily on profitability. But it got us back bencher’s to think, and we came up with a model we feel menu engineering should also look at: (actual sketch is attached.)
Lane Cardwell and I realized that designing for profitability is great when you have to score a touchdown to get ahead in a game. But in a world where you are playing for a two point conversion followed by an on-side conversion to survive, “what will drive repeat” is also a timely and relevant measure for menu engineering.
 
#2: BE THE CONTENT
George from BlendTec showed us that in traditional medium, content is provided by the content-provider (TV show, news, or radio program). We advertisers are the content interrupter. In the world of social media, the onus is on us to be the content provider and not be an interrupter.  Now that is big. Late night, MEG attendees were trickling back into the hotel singing the song “I want to be the content”.  Thanks George!

#1: IT IS ALL ABOUT THE SIZE OF YOUR HEART
We all know that the only thing marketing budgets and dinosaurs have in common is extinction.  Saturday morning Clint and I walked through the National Restaurant Show after MEG, and trinkets were simply absent. (I am not counting leftovers from 2008, where 8 were scratched off and 9 were written next to it, nor the sole yo-yo we found after an hour of searching). In that world of nothings, the MEG team pulled off an amazing show.  To me it was a clear example that it is not the food or the free booze, it is not just the networking, but it is the heart of MEG that makes us comes back.

THE ONLY HMMM
National Restaurant Association revealed its upcoming promotion to drive more restaurant visits.  As it is a secret (for now), I cannot talk about what it is, but here is what it made me feel as a customer: I realized (based on the ad) that I am still a good person as a lot of people are not eating out. I am not alone. I do not feel guilty anymore, and I don’t have to take my family out to eat. The ad to me simply reconfirmed that it is okay to be at home and not eat out. With all the amazing talent at MEG and other restaurant companies, I cannot help but ask… Why did the National Restaurant Association not reach out to the restaurant marketers? I am sure a panel of MEG-ees, over a few bottles of wine, would have certainly made a traffic driving ad.

{Winning with Wow 1 More™: Move Customers Up the Loyalty Ladder}

RMG believes in identifying information that makes action inevitable.

Identifying the value of a customer and how to move them up the frequency ladder is a guaranteed way to increase a brand’s sales. RMG strongly recommends quarterly measurements of a brand’s customer base and identifying the volume of each usage group and how much each group is worth. That information, along with the tools of Guest Experience Enhancement, enables a brand to embark on a journey to Wow 1 More™ customer, one at a time.

The ROI of this initiative is huge as a brand is using its current store labor to wow its customers. Team members get motivated with a clear goal and customers find more compelling reasons to come back and increase your sales.

{The Process of Marperations™: Operations and Marketing working together}

ZenMango uses the following three rules develop a unified measure of Marperations™:

1. The measure must be a leading indicator and not a trailing indicator. A leading indicator allows a brand to tweak its marketing and operations strategies to influence that same leading indicator.
2. The measure should be simple and communicated all through the organization. It needs a life outside the company’s boardroom.
3. Both Marketing and Operations departments should be encouraged to have their own functional report cards. However, they must clearly understand how their report cards connect to a brand’s overall success. The three Marperations™ measures for a pizza brand could be:

• number of customers
  
• number of dough balls
  
• revenue per dough ball
  

The pizza brand orders dough balls a week in advance. Marketing can make efforts increase demand for the coming week. This will necessitate sending more dough balls to a store, and also necessitate Operations to adjust its service standards in order to better serve the increased number of guests in the coming week.

Marketing and Operations evaluating the performance of a pizza delivery driver:

How Marketing evaluates the pizza driver
Marketing is measured on effectiveness. Marketing wants to measure every experience, one at a time, to make sure that customer’s expectations were made every time.

Effectiveness in pizza delivery is measured by the driver delivering only the pizza ordered by the customer, and then the driver pausing to make sure that all of customer’s needs are met. The driver is a messenger for the brand.

In this case, the driver will be reprimanded for trying to complete seven orders at a time, instead of just focusing on the one order in front of him.

How Operations evaluates the pizza driver
Operations is measured on efficiency. Operations also measures success by rewarding consistency and how well they can conform. Operations is a production mind-set where every occasion has to be the same, every time.

Efficiency in pizza delivery is measured by number of pizzas delivered per trip and number of deliveries per shift. Consistency in pizza delivery is measured by ensuring the driver’s uniform, greeting, and smile are exactly the same as the training manual.

In this case, driver is considered as efficient since he is delivering seven pizzas at a time, but he will be reprimanded for wearing his cap backwards.

{5 Steps to Guest Experience Enhancement™}

Once in a Lifetime Opportunity

Nation's Restaurant News recently reported on a study done by Restaurant Marketing Group (a division of ZenMango). The study reveals three consumer trends that are coming out of the recent “down economy.”

Can I get what I buy cheaper?

I used to spend $8 for a sandwich at your restaurant, but now I realize that with the economy being down, I have the power. So can I get the same sandwich for $7?  How about $6.50?

Can I get more for what I spend?

Fine, you do not want to sell me the sandwich at a lower price. How about giving me something more?  Maybe a free drink and a cookie if I paid you $8? I think that is fair.

Do I have a better option?

Wait a minute. As I was negotiating to get a better deal from you, I realized I may not want a sandwich after all today.  Maybe I should call the pizza guy and see if he can offer something better. Why not call the burrito place and see. Or maybe I should call my husband and see if he can pick up a rotisserie chicken from the grocery store, then I’ll just fix up some vegetables.    

This openness in the consumer’s mind has given all restaurants, big or small, the chance of a lifetime. Now your brand is being considered for occasions that were “closed” to you before.  The window of opportunity is open to your brand as the consumer is willing to give you a try.

Now is your time to seize the opportunity and “wow” the consumer. Give the consumer a reason to come back over and over.  The opportunity to increase your transactions and increase your market share is right in front of you. Seize it with the mindset as described by Vivian (played by Julia Roberts in the movie Pretty Woman), “Baby, I am gonna treat you so nice, you're never gonna wanna let me go.”  For you it translates to, “Oh valuable guest, I am gonna treat you so nice, that at the end of this experience, you will never let me go.”

Live the mantra and seize the opportunity of a lifetime. Now is the time for you to kick some competitive “butt” and steal some market share.

Guest Experience Enhancement™
Five Step Approach, the Restaurant Marketing Group Way

Step 1: Define Your Guest Experience Vision
RMG leads your leadership through a brain storming session in which your current guest experience vision is analyzed. The outcome of this step will be used as the benchmark for the steps that follow.

Step 2: Observe Your Guests
RMG spends time in two to three store locations to observe the guest experience from a customer’s perspective. Your brand’s guest experience vision will be examined to see where the brand stands on each element.

Step 3: Guest Feedback
RMG will interview customers just after they finish their meal for one-on-one interviews to understand the guest experience from the customer’s perspective. The interviews will go through the following discussion areas:

• What are the experience elements
  
• What are the decision points
  
• Revisit decision (what were the main drivers of the revisit decision)
  
• What are the break points – where are they most vulnerable.
  

The one-on-one interviews will identify whether your brand is below, above, or at-par with each element compared to guest expectations.

Step 4: Competitive Observation
Three competitive brands (that consumers consider as sources of business for your brand) will go through the same observation as in step 2.  For each competitive brand, RMG will spend time in each store to understand the guest experience from a customer’s perspective. RMG will identify each guest experience element and see where the brand stands on each one.

Step 5: Guest Experience Enhancement
RMG will present the findings of the guest experience enhancement vision to your leadership team. This brain storming session will develop your brand’s strategy to measure and manage each of the guest experience elements. The guest experience enhancement will connect you with your customers and help you be the best-in class for guest experience in your category.

{The Birth of Online Restaurant Ordering}

Solving for Inefficiency
First there was dine-in.  America left home for a destination meal.

Then a smart operator thought of maximizing asset utilization. “We have an asset that isn’t currently being maximized. We can increase our output, without increasing the dining-room capacity, by allowing the kitchen’s capacity to drive productivity in my restaurant.” 

Take-out was born. This new distribution method allowed restaurants to become relevant for in-home and off-premise occasions, and thus increase sales.

As a natural extension of take-out came the drive-thru; perfectly suited for a rushed occasion where the driver either did not have the time to come into the restaurant or wanted to pick and eat on the go.

Delivery was next in the line of restaurant occasion evolution. Now driving was not even necessary to eat your favorite restaurant’s food. But with all this evolution into new occasions, something was lost.

THE Problem:
In 2000, during my days as the VP of Marketing and Operations at Papa John’s, my team realized that there was a major inefficiency in the restaurant system. We realized that the phone ordering process, the first step in any ordering for the brand, was completely broken.  

I put myself in the position of a customer to understand the break-down in the guest’s experience. I started making numerous phone calls to various restaurants and placed orders for take-out and delivery food. I could very easily mistake any of the pizza delivery brands name to be “Pizza Hut Hold Please,”  “Domino’s Hold Please,” or “Papa John’s Hold Please”, as all pizza places greeted my phone call the same way: “Welcome to Pizza Hut, hold please.”  

After a basic analysis of the phone ordering system I concluded that for any phone order, the consumer felt a total lack of control stemming from the following three inefficiencies:

1. The order takers could put the me on hold any time they want, with or without my consent.  
   
2. During the ordering process, I was always worried about getting dropped from the call in one of the “on-hold” moments. Getting dropped from the call meant I would have to call again and be put back at the end of the line. 
3. Finally, when the order-taker asked what I want to order, I did not have a menu in front of me. It is tough to order when you don’t know what the restaurant offers.

This “observe and learn” process made me realize how tough it was to place a simple order for carryout or delivery. It was a major inefficiency experienced by customers like me in more than 50% of restaurant occasions.
 
The solution:
As the Papa John’s team tried to solve the inefficiency, I realized that the solution must result in giving the control back to the consumer. The solution for this inefficiency came in the form of online ordering. The consumer got the control back and was unrushed as they accessed the menu in a self-paced environment. Every step of the online ordering tool was developed with one vision in mind, “how can the consumer win using this process?” As we started to build the process, we realized that other brands were trying “pseudo-online ordering processes”.  I called it pseudo as these brands were replacing fax-ordering with online ordering, but the orders were not going directly in the point of sale system. Instead the orders had to be manually processed. This meant that even though the consumer got a better interface, there was a high rate of failure in the process. 

THE IMPACT OF ONLINE ORDERING:
All previous channels (dine-in, take-out, drive-thru, and delivery) were born as restaurants were trying to expand into newer occasions. This was the first time a new channel (online ordering) was born into the process for the purpose of solving for customer inefficiencies.

Solving for the inefficiency got expanded to a bigger consumer benefit. As a consumer, I no longer needed to remember or look up the closest store’s phone number before placing an order. Now, wherever I was, I just had to go to the brand’s online ordering site. Like magic, the restaurant finds me and delivers food to me. Restaurants became more convenient to a customer. To me it felt like my personal store followed me as I traveled freely.

Restaurants have been rewarded for solving the inefficiency. The big three in pizza have each raced to close a billion dollars in online business and most fast casual restaurants are introducing online-ordering. What started as a simple solution to a broken phone ordering process has resulted in one of the fastest growing, and most profitable, channels for the restaurant industry.

THOUGHT STARTER FOR YOUR BRAND:
When was the last time you observed and reviewed a guest’s experience with your brand?

When was the last time you observed and reviewed a guest’s experience at your competition? 

What is the big inefficiency your customers are facing day to day?  

How can you be the leader and solve for the inefficiency (and of course, in the process be rewarded handsomely)?

{The 2009 Leaky Bucket}

Restaurant Marketing Group, ZenMango's restaurant focused division, has completed their annual Leaky Bucket study for 2009. This year's study is the largest to date, and includes 160 national and regional restaurant brands for the most comprehensive competitive outlook in the industry.

The Leaky Bucket study is focused on customers who try a brand but state they are unlikely to return to the brand. The higher a brand's Leaky Bucket percentage, the more customers the brand is losing. 

People are abandoning restaurants faster in 2009 than 2008. The restaurant industry is at a crossroads.  People are not returning to restaurants where they have eaten in 2009 the way they did in 2008.

  

The restaurant industry's 2009 Leaky Bucket average is up 7% from one year ago to 36%. This is the highest average percentage recorded in the history of Restaurant Marketing Group's Leaky Bucket annual evaluation. In addition, an average of 36% of those who fall into a brand's Leaky Bucket cite the price/value of the restaurant as a primary reason for not returning to the brand. Price/value as a reason for not returning is up 11% from 2008, the area with the largest increase in the study.

Arjun was quoted in a recent Nation's Restaurant News article to say:

Many casual brands also struggle with value perceptions, especially at lunch, accounting for a 39-percent price-value leak score, Sen said.

“They’re doing what’s ‘price-value-relevant’ for dinner,” he said. “If we want to use the best deal, Applebee’s ‘2 for $20’ deal, it’s still not relevant for lunch. It’s very tough for them to compete with fast food and fast casual, especially the sub sandwich [category]. In three to five years, Subway’s $5 footlong and Quiznos’ $4 Toasty Torpedo will be seen as a defining moment. [Those deals] move traffic away from both fast food and casual dining.”

The takeaway for the restaurant industry is to understand that consumers are searching for something beyond "whatever is closest." The brand which demonstrates the best guest experience will dominate a consumer's choice set.

Check back for individual brand highlights from all categories included in the study. Below is a sneek peek at what the industry as a whole looks like in 2009 compared to 2008. Or, go to our website to download a free Leaky Bucket industry overview report.

Industry Average: Changes vs. One Year Ago
	Leak Size	Food	Menu	Atmosphere	Price/Value	Location	Service	Family Friendly
2009 Industry Average	36%	25%	17%	19%	36%	36%	23%	13%
2008 Industry Average	29%	25%	17%	15%	25%	43%	13%	10%
Change vs. 2008	7%	0%	0%	4%	11%	-7%	10%	3%