Archive for the “Opinions” Category

Restaurant Brands Praise Loyalty Programs for Impact upon Earnings

In case you missed it, there was a common theme among publicly held restaurant chains’ July earnings calls: Loyalty Programs. Multiple brand leaders spent a portion of their calls celebrating their loyalty programs, unequivocally stating that the programs are indeed impacting the value of the respective organizations, and that the programs are providing a competitive advantage.

Even Chipotle, a brand that has been a notorious, non-believer in loyalty programs, noted the value in the data they received from their short-term visit challenge promotion, Chiptopia. The promotion resembles the tip of the spear for a longer-term program. Below is a recap of the notable loyalty program mentions. But first, here’s an executive summary of the highlights:

  • Bloomin’ Brands expects a 1% – 2% lift in sales as a result of rolling out its rewards program system wide, per CEO Liz Smith.
  • Dominos on its loyalty program: “All of this outstanding brand momentum helped us grow diluted EPS by 21% over the prior year quarter. Our recently launched loyalty program contributed significantly to our traffic gains,” said CFO Jeff Lawrence
  • Starbucks’ Howard Shultz stated, “Our loyalty program is the cornerstone of our digital flywheel, noting that the program now has over 19 million Starbucks Reward members…”
  • Panera Bread’s president Andrew Madsen said, “Let’s talk about loyalty. Our MyPanera loyalty program now sits at 23 million members that represent nearly 50% of our transactions and the program is growing. In addition, MyPanera users are very loyal with double the visit frequency of our nonmember customers. We believe this is by far the largest loyalty program in the industry and a significant competitive advantage.”
  • Chipotle Mexican Grill is encouraged by the level of data being mined from the Chiptopia loyalty promotion and will use it to further understand the behavior of its most loyal guests before the promotion, during the promotion and post promotion.
Image Source: CNBC Interview with Ron Schaich

Image Source: CNBC Interview with Ron Schaich

Bloomin’ Brands spoke about loyalty in its July 29, 2016 earnings call, praising the early success of its newly introduced Dine Rewards program. Bloomin’ Brands launched Dine Rewards as its first multi-brand loyalty program on July 19, and CEO Liz Smith spoke to the early success of the program, noting, “It has already received high marks for its simplicity and value relative to peer programs. Guests also appreciate the ability to enjoy the benefits across our portfolio of brands.”

Smith continued to say the program has been in test since 2013, proving to be an effective means to drive frequency and increase sales. “When it reaches maturity, we expect Dine Rewards to drive a 1% to 2% lift in sales consistent with what we have received in six test markets,” said Smith. “The program was just launched nationally 2 weeks ago and we now have over 800,000 members enrolled.” […]

We will miss you, Paul Emmett 1952 – 2015

February 18, 2015

Last week the restaurant industry lost a true restaurant visionary: Paul Emmett, CEO of Duffy’s Sports Grill.

Paul was beloved by many for his formidable spirit and business acumen. My colleagues and I knew him as a charismatic pioneer of restaurant loyalty. About four years ago, I had the privilege of interviewing Paul. The experience was eye-opening for me, as a newcomer to the restaurant industry. He answered each of my questions with poise, honesty, and pure genius. I remember wishing that I could bottle up his passion and wisdom.

During the interview, he made a few points about loyalty that have stayed with me ever since. I always try to share these kernels of Emmett-wisdom with each restaurateur I meet:

  1. When I asked him why they developed a loyalty program for Duffy’s he said, “The loyalty program gives us a competitive advantage. It also enables us to create guest segments based on behavior so that we can communicate relevant messages to them with offers that make sense to our cost structure. We know which guests spend a lot and which ones spend a little. Our time and effort spent on each tier are relative to the guests’ spending level. With the competitive advantage comes price flexibility. The loyalty program adds value to our guest experience that gives us the ability to set our prices a bit higher than the competition.”
  2. When I asked him how they measure the program’s success, he said, “We don’t. Loyalty is an integral part of our culture. We don’t look at it every year to determine if it’s a good investment. We know it is.”

Thank you Paul for leaving such an inspiring legacy. As your family wrote, you are a true “Maverick” of the industry. You will be deeply missed in the years to come. May you rest in peace.

To read more about Paul Emmett, click here.

 

[Webinar] New Accounting Rules for Gift Card Growth Channels

If you think you know how to uniformly account for discounted gift card sales or the costs associated with all of your sales channels, think again.

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According to new rules from US GAAP and IFRS, the nature of the discount is changing – some of your expenses could be considered a reduction in revenue. Further, the question of when to take the expense and who funds it (your corporate office? Franchisees?) are of central importance.

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Geofencing vs. iBeacon – What’s the best option for restaurants?

The most important job of the restaurant marketer is to drive traffic to their locations – that means changing guest behavior while they’re on-the-go, in the midst of choosing a restaurant. That’s why geofencing makes so much sense for restaurants.Geofencing

Retailers with many departments within a single location, on the other hand, benefit from iBeacon, since their job is to add to the consumer’s shopping cart while in the store. Retail giant Macy’s, for example, piloted iBeacon technology to offer special department-based rewards.

At some point in the future, savvy restaurant marketers will want to add to guest orders by sending in-store contextual messages, but the technology is not quite there yet. […]