HOW TO TURN RESTAURANTS AROUND PART 4: "BRAND POSITIONING"

Part 4 of BrandTrip Partners Restaurant Chain Turnaround Series

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Here, we will review historically successful examples of brand positioning by restaurant chains that were once in decline.  However, before we embark on this discussion, it would seem appropriate to define the term "Positioning," assuming not all reading this chapter are marketing scholars or have watched all the episodes of Mad Men where Don Draper drops those incredibly well-distilled ad pitches on clients after getting some sort of magical inspiration during an all-night Scotch and cigarette bender.

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Modern day positioning owes itself to one of the best selling business books of all time called Positioning: The Battle For Your Mind by Jack Trout and Al Ries, published in 1981.  However, the concept was published by Trout as early as 1969 in an article titled Industrial Marketing. In that article, he stated that positioning is a mental device used by consumers to simplify information inputs and store new information in a logical place. He said this is important because the typical consumer is overwhelmed with unwanted advertising, and has the natural tendency to discard all information that does not immediately find a comfortable (and empty) slot in their mind. If that was the case then with only a few local radio stations, just three major television networks, and generally only one local newspaper, it is certainly even truer today.

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A MEATY POSITIONING

How Arby's found the answer in the most primal section of our minds

For years, Arby's scrambled trying to find a strategy to communicate who they were after various management teams expanded the menu with a confusing array of bolt-on categories complicating operations and further confusing consumers. Arby's marketing positioning statements (some call them taglines) like these attempted to explain this unfocused brand with complimentary unfocused messaging:

  • What Are You Eating Today?

  • I'm Thinking Different, I'm Thinking Arby's

  • It's Good Mood Food!

  • Slicing Up Freshness

There are many sarcastic endings that we could write for these positioning statements like "What Are You Eating Today?  Probably Not Arby's," or "Slicing Up Freshness.  Just like Subway, Jimmy Johns, Jersey Mike's, Quiznos, Firehouse Subs, and all the other sandwich places?"  However, we will save you the time and get to the point.  They didn't find a compelling place in the consumers' mind, and whatever menu strategy it was supporting had plummeted them to the lowest value scores in the quick-service category by 2011 as shown below.

In 2014, someone with true vision was able to see the "tree" through the forest.  We say "tree" because that is what you are trying to accomplish when it comes to brand positioning.  You aren't selling a forest, you are selling a type of tree in the forest.  The Arby's forest was filled with many species of trees, if not forests inside of the forest.  Sub sandwiches, roast beef on buns, a Market Fresh sandwich line on sliced bread, sliders, and even gyros.  One might say that they could play the bakery card, but when the majority of the bread comes in frozen the story gets thin and frost-bitten fast. 

What Arby's always did stand for was certainly roast beef.  A home for carnivores.  When all else failed, they could always pull out a promotion on their Beef 'n Cheddar.  It would prop up sales for a time before profits eroded after discounting their signature item.  It was always a short-term decision to buy time until they could find the answer that rarely came.

Fast forward to 2014.  Across the still valuable television screen, ever more valuable Facebook feed, and onto our mobile screens through other various social media and digital feeds came "We Have The Meats!"  Four simple words, one simple message using a bold font with a slight serif on a white background after long shots of the meat and ultimately the sandwich over similar simple white backgrounds.  No bite and smile footage by a group of seemingly happy millennials, no complicated storyline between two people trying to pick each other up, and no talking oven-mitt character/spokesperson.  Just meat with a white background and an unapologetic voiceover celebrating that savory fact.  If you like really flavorful unique cuts of meat, go to Arby's. 

"We Have The Meats" found that comfortable slot in the consumers' mind.  Arby's has been executing this position flawlessly with strong products like Triple Thick Brown Sugar Bacon, 13 Hour Smokehouse Brisket, Smokehouse Pork Belly, and most recently Smoked Italian Porchetta.  The results include 25 consecutive quarters of positive same-store sales and average unit volume growth of 25% over the past four years.

A POSITIONING SHAKEDOWN

A rare move down the positioning ladder drives up revenue double digits

In 2008, Steak 'n Shake had experienced negative same-store sales trends as high as 7.25% annually for the previous three years in every quarter.  However, even more alarming were the transaction losses which were hidden behind the same-store sales reports.  There were quarters where traffic declines exceeded 10% showing drastic loss of overall market share.  Consumers were fleeing the brand en masse.

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For those who have never visited a Steak 'n Shake, it is a unique restaurant model, somewhat in the vein of an old-fashioned diner.  When you enter, there is a host that will seat you or you can sit at a counter for an up-close and personal view of the grill.  Guests are waited on by a server.  The big twist is the classic Steak 'n Shake model also has a drive-thru that immediately positions them in the quick-service consideration set whether they like it or not.  The obvious questions begin to come at a rapid pace at this point.

  • Are they a casual dining restaurant?

  • Are they a quick-service restaurant?

  • Are they something else? How do you communicate that?

  • In each case, is there a position that has enough scale to drive substantial revenue that isn't already being served by another major brand?

The largest contributor to sales comes from their iconic Steakburgers that are made with thin patties from little pucks of ground beef smashed and seared on a grill to order until a slight crispiness is achieved.  Because of the thinness of the finished patty, the burgers are not particularly large like the "Better Burger" competitors emerging at the time such as Five Guys and Smashburger.  Furthermore, they were not what you would expect from a casual dining experience like Chili's, where the patty is generally 1/3 to 1/2 pound on a premium bun.  Steakburgers were much more in-line with the portion size and appearance of a fast-food burger on a simple white bread bun.

Their fries and shakes are their other heroes even though the menu had crept up to several pages over the years.  The shakes have long been considered the quality leader on the menu with a large portion size, hand-made with a mixer, and served in-store in a tall shake glass.

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Drive-thru orders are slow due to the made-to-order format of the brand.  If you are in a hurry, the drive-thru is not for you.  However, if you had some emails to get through, or a novel to work on, the drive-thru is a great place to multitask while you wait for your order.

In summary, the brand was a sit-down full-service diner with a slow drive-thru on the side that had jacked up prices beyond the perceived value of their more fast-food sized items to try and cover up massive transaction losses.

Remember, this was 2008.  Bankruptcies, the housing crash, and massive unemployment made it a generally overall sad time for a large number of Americans, especially in the Mid-West where the bulk of Steak 'n Shake stores were located.  Dining out for a sit-down, full-service experience was getting crossed off the list as a non-essential need, causing casual dining to take a hit in sales and traffic across the category.  In this darkness, came the light for Steak 'n Shake.

Management took aggressive action to reposition the brand as the everyday-affordable casual dining experience by initially launching "4 Meals For Under $4."  It offered almost any American hit hard by the economy an opportunity to have a quality, sit-down, casual dining experience waited on by a server at a price they could afford on a frequent basis.  Steak 'n Shake provided guests dignity to be with their families around a meal again like they enjoyed before The Great Recession negatively impacted their lives.  Though many would consider this a discount strategy, in reality, it was a very strategic permanent move down the positioning ladder to fill an unmet need.

This long-term strategic brand positioning could be reasonably defended.  TGI-Chili-Bees (TGI Fridays, Chili's, and Applebee's) would not/could not survive on a business model that included such low pricing.  The fast-casual burger players that survive on the mystique of 1/3 pound quality burgers, would not abandon their successful position by lowering prices/margins and adding cost to their model with full table service and increased food costs.  This left the everyday-affordable casual dining position open to Steak 'n Shake, as long as the numbers could work in their favor by stealing sales from casual dining, fast casual and fast food categories.

To make the math work, two things had to happen.  First, commodity costs would need to be lower.  Second, transactions would have to increase significantly, because even though the improved commodity costs would be helpful, "4 Meals Under $4" would likely decrease the average check substantially.

The plan worked.  With a baseline offering of "4 Meals Under $4" including versions of their famous Steakburger or chicken fingers and fries starting at $3.99 every day, transactions steadily grew to an amazing 20% increase by the fourth quarter of 2009.  They also attained an equally impressive 10% increase in same-store sales. 

Steak 'n Shake has continued this positive streak to date with 27 quarters of same-store sales and traffic growth.

 
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THE STRENGTH OF THE LEADER IS THEIR WEAKNESS

Del Taco leverages an underdog strategy to steal share from the Goliath in the category Taco Bell

Del Taco had emerged from bankruptcy in the early 90's and employed a "market follower" strategy, happy to ride the coattails of the giant market leader Taco Bell.  Often, whatever Taco Bell sold, Del Taco would follow by selling a similar item for a slightly less within just weeks.  This strategy worked well with their limited budget as they exited bankruptcy, posting sales gains each consecutive year thereafter.  However, by the time 1999 rolled around the magic of that strategy had worn thin.  Del Taco was headed for negative territory with no compelling/differentiating story to tell consumers to steal them away from the 800 pound category gorilla Taco Bell, let alone fast food category leaders such as McDonald's or Burger King.

In 1999, our BrandTrip Partners CEO Tim Hackbardt joined Del Taco to head up their marketing department and work with the management team to get the brand back on the winning track.   Recognizing that the "market follower" strategy had run it's course, his team dove into the brand to discover if any valuable differences existed between these two restaurant concepts headquartered literally just a few miles away from each other in Southern California.  A simple notepad tally quickly revealed a variety of key brand pillars that spoke to the emerging consumer value for fresh ingredients.  Additionally, surprisingly revealed was a solid list of well-performing products already on the menu that did not exist at Taco Bell.  It was enough ammunition to begin to tell a solid story of brand differentiation.

The trick would be how to tell the story.  How to leverage those brand differences to make the message memorable and clearly define why Del Taco was different and better than Taco Bell.  The answer came quickly during the next drive up the 405 freeway.  As he rode past the Taco Bell headquarters, he saw the perfect backdrop to shoot a series of compare and contrast "David vs. Goliath" commercials for a hard-hitting challenger brand campaign.  What better shoot set could he hope for than a monolithic tower of cold corporate glass and steel with the Taco Bell sign mounted atop it.  No post production after effects graphic work required. 

In 1999, Taco Bell did virtually nothing fresh.  Shredded cheese came in a bag, pre-cooked chicken came in a bag, pre-cooked steak came in a bag, dehydrated beans received hot water to make them beans again.  All this was part of the much celebrated "K Minus" program rolled out years before, to decrease kitchen labor costs and improve consistency.  "K Minus" was modern day big-brand food engineering at its finest.  This would be the weakness of the Taco Bell "Goliath" brand that would be attacked over and over again by the much smaller Del Taco "David" brand. Additionally, Del Taco would regularly feature signature menu items that could not be found at Taco Bell. 

Key Del Taco freshness pillars included:

  • Chicken grilled fresh every hour.

  • Slow cooked beans made from scratch for 2.5 hours.

  • Aged 40 pound blocks of cheddar used to freshly shred cheese throughout the day.

  • Salsa made fresh every day.

  • Steak grilled fresh every hour.

To complete the "David vs. Goliath" storyline, the advertising agency developed a Del Taco spokesperson named "Dan From Del Taco."  Dan was the "everyman" character.  A little guy trying his best to compete against the big corporate giant.  The underdog you can't help rooting for.

The results were immediate and changed the perception of the brand.  Without any additional media spend, the creative and messaging alone drove the brand from being a small regional player to advertising awareness levels equal to the national competitors.  Del Taco brand awareness rose an amazing 100%.

Sales improved as well, driven primarily by transactions, but also increased average check as the brand now had grown the credibility to offer more expensive quality-based menu items.  During the time that my team led the brand with this strategy, Del Taco enjoyed breaking all historical sales, transactions, average check, and profit records.  Every month featured positive same-store sales for 44 consecutive months and average unit volumes increased 33% or $330,000 to $1,200,000.

A HARD LOOK IN THE MIRROR

If your brand is stuck in a slow (or fast) death spiral, re-positioning your brand might be a serious consideration.  Here are a few questions you might want to ask yourself as you take a good, long, honest look at the brand in the mirror.

  • Results Today - Does your brand truly have a unique and compelling slot in the mind of the consumer obtaining the results your company desires today?

  • Results Tomorrow - Does your brand truly have a unique and compelling slot in the mind of the consumer that will secure the results your company desires tomorrow?

  • Potential Better Position - If it doesn't, is there a space available that is not claimed by another brand that can drive those desired results, or even better?

  • Level of Change - How much will you need to adjust/change your brand to claim that space?

  • Resources - Do you have the resources, or can you get the resources, that are needed to claim that space in the mind of the consumer?

  • Support - Will your team/company do what it takes to claim this space?

  • Competitive Claim - If you don't claim the space, will a competitor or emerging competitor claim it and how will that impact your business?

  • Non-Claim Results - If you don't claim the space, what will be the short and long term results for your brand?

  • Employee Plan B - If those "Non-Claim Results" were predicted to be negative, is your resume and LInkedIn profile up to date and optimized?

  • Ownership Plan B - If those "Non-Claim Results" were predicted to be negative, have you consulted with a bankruptcy firm in recent months or brokerage advisor to sell your company?

MORE RESTAURANT TURNAROUND RESOURCES

Additional articles in the BrandTrip Partners "How To Turn Restaurants Around" series that you might enjoy can be found below:

HOW TO TURN RESTAURANTS AROUND PART 2: "THROUGHPUT ACCELERATION"

Part 2 of BrandTrip Partners Restaurant Chain Turnaround Series

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In this chapter we will examine strategies to improve throughput.  “Throughput Improvement” simply allows the movement of more transactional behavior in a given amount of time.  The innovation tends to be accomplished through technology enhancements, process improvements, or physical plant alterations.  In their most successful implementations, Throughput Improvement can be as highly impactful as the double-digit exponential leaps found through new revenue channels explored in Chapter 8.  A more typical result drives solid single digit results.

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DRIVING-THRU MORE TRANSACTIONS

One of the secrets behind Starbucks amazing record of sales growth

Everyone is aware of the amazing growth story of Starbucks.  However, just before The Great Recession, they slowed down substantially in the United States with negative sales and transactions in addition to store closures.  Their stock naturally reacted with a huge dive. 

To make matters worse, there was a little company called McDonald’s who overnight opened their McCafe platform in approximately 14,000 locations throughout the United States instantly becoming the largest provider of lattes in the country.  If you look at history with McDonald’s, they do well when they identify a major trend and offer a decent product at a lower price delivered more conveniently.  McCafe was the text book example. 

A critical component of the McCafe platform that stole market share from Starbucks was the drive-thru.  Back then, you were required to wait in that painfully long slow line at most Starbucks locations.  Conversely, at McDonald’s you didn’t even have to get out of your car.

Eventually, Starbucks did make a comeback.  It wasn’t because of the infamous seasonal PSL (Pumpkin Spiced Latte) and it wasn’t because of some other new chocolatey, caramely, creamy coffee concoction, or any other magical beverage unicorn.  It was because of a number of initiatives, but the one that clearly put big money in the bank was the drive-thru.  Why?  Because it drove double digit sales with Throughput Improvement

In 2006, as reported in the Wall Street Journal, Starbucks announced that their locations with a drive-thu did 30% more volume than stores without them.  Fast forward to a 2012 Motely Fool interview with Starbucks CFO Troy Alstead where he shares learnings from the culling of locations in 2008 and the plans to increase their portfolio from 40% of all locations featuring drive-thrus to 60%.  The next year, Starbucks CEO Howard Schultz was quoted in a Nation’s Restaurant News report with these insights:

“Drive-thrus create incremental revenues and profits compared to traditional stores and represent a fast-growing and highly profitable format for Starbucks, comprising just over one-third of our U.S. company-operated stores but contributing nearly 45 percent of our U.S. retail profit,” Schultz said.

With these kinds of numbers, Starbucks could simply use this single tactic to continue to scale substantial positive volume and profits for years to come as long as the real estate sites allowed it.

In recent years, many other chains have announced joining the drive-thru club.  Friendly’s reported that they can generate more than 25% in additional sales when they have a location that includes a drive-thru.  They are simply leveraging the physical plant to serve more guests.

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DISCONNECTING THE PHONE TO ACCELERATE SALES

Domino's relentless focus on any device ordering

There really is no better technology driven Throughput Improvement example than what Domino's has done over the past few years with their “AnyWare” ordering obsession.  They championed the virtually unlimited capacity to take online orders so much that they even produced advertising telling customers not to call them anymore to place orders.  Domino's literally admitted they are bad at taking orders, thus offsetting their labor costs to strictly a production and delivery force in the restaurants.

Additionally, their relentless focus on attaining as close to a zero click transaction as possible is keeping them ahead of their competitors and crushing the independent pizza players.  They are mastering ordering opportunities across everything from the mobile app to message bots delivering the ability to order their products with whatever communication device you may be near.  Ordering pain points have almost vanished for Domino's customers. 

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This Throughput Acceleration technology innovation has produced 22 consecutive quarters of same store sales increases and has raised the value of their stock over 500% in the past 5 years!  It wasn't because of a new pizza, a discounted "2 Fer" deal, or a movie release tie-in.  The primary innovation was Throughput Acceleration through ordering technology supremacy.

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R.I.P. TO WAITING

How Panera eliminated waiting, lines, and competition

How beautiful is the Panera 2.0 dine-in platform?  You walk in, sit down at any table you want, order on your phone, input the table number, send the order, and food magically appears at your table moments later.  No standing in line.  Isn’t that what we all want?  Isn’t this how life should be?  We are shocked that no other significant quick service or fast casual brands have done this yet!

Hello restaurant industry!  It’s almost 2020!  Do this and you achieve nearly 100% order accuracy, 100% happy guests, 100% the correct change, 100% etc.  The technology exists.  What are you waiting for restaurant industry?

Why should I stand in that line at Shake Shack, IN-N-OUT, or any other restaurant line?  There is absolutely no reason for this pain point to exist anymore at any restaurant chain.  Just bring me what I want to where I am, already pre-paid.  This is, of course, not to mention that the same technology at Panera Bread allows for take-out and delivery orders too.  You can also otherwise skip the line and use a kiosk ordering tablet. 

Case in point is a quote from then Blaine Hurst the EVP and Chief Transformation and Growth Officer in a Nation’s Restaurant News interview in 2017.  “One, it is more at [customers’] pace. Some people like to browse; some people want to go faster. In addition, at a busy peak I can get more people through a busy café with the same number of cashiers. Our 2.0 cafés have a disproportionate amount of sales because we’ve freed up capacity at lunch.”

In other words, Blaine was lovin’ his transaction drivn’ and sales climin’  Throughput Improvement platform.  Others were impressed as well as he was named CEO shortly after this program came to fruition across their entire system.

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THE PROCESS HACK

BJ's mobile app redefines casual dining ordering and payment process with streamlined technology

In 2014, BrandTrip Partners CEO Tim Hackbardt was part of the team at BJ’s Restaurants that launched the first casual dining restaurant chain mobile app and online ordering platform allowing you to order your meal for a dine-in occasion.  The cumbersome process of placing your order and paying for it in a sit-down environment can be fraught with a long list of pain points depending on how efficient your staff is during that shift.  The BJ's team focused on those irritations and applied the appropriate pressure to the age-old casual dining ordering and payment wounds.

The new process allowed you to place the order on your phone, show up (all mobile orders automatically get you placed on the preferred seating waitlist by the way), get seated and the food starts coming right out.  More importantly, when you want to leave, press a button on the mobile app and your bill is paid.  Done and done. We used to call it legalized “dine & dash.”

Note:  The fact that the CEO of BJ’s was also a board member at Domino’s should not be lost in this conversation.

No longer did you ask the server for the bill, wait for the server to come back, wait for the server to come back to get the credit card and bill, and wait for the server to finally bring back the credit card and bill for you to sign.  That entire exchange was eliminated, providing a more pleasant check out experience for the guest and faster table turns that resulted in more sales volume and also more tips for the servers at the end of the night.

CEO Greg Trojan explained it well in an interview with Nation's Restaurant News during the rollout in 2014, “It’s really a paradigm shift” for casual dining, he said. “If you take out the front-end time (when people peruse the menu and order their meals) and take out the time spent waiting for a check, our experience becomes more of a 35-minute experience, as opposed to close to an hour.  But you don’t feel rushed.”

Fast forward now to almost 2020 and still no other casual dining chain has introduced that speed or convenience for their dine-in guests in the palm of their hand.

THROUGHPUT THROUGH TIME

Much of restaurant history is littered with successful Throughput Acceleration milestones that took market share away from competitors or launched new categories and brands.  Fast food, fast casual, Domino's 30-minute delivery guarantee, the drive-thru, and online/mobile ordering are just a few examples that have delivered substantial financial rewards for these types of improvements. 

Less well known are the countless programs behind the doors of restaurant chains that have simplified operations shaving seconds, and sometimes minutes, off of cook/preparation times to drive more transactions.  Fast food knows that just a few more cars through the drive-thru can result in significant sales comps.  Casual dining knows that table turns do the same. 

By focusing on the opportunity to achieve more transactional throughput by leveraging technology enhancements, process improvements, or physical plant alterations you too could easily exceed the industry average and set your brand up for many years of success.

MORE RESTAURANT TURNAROUND RESOURCES

Additional articles in the BrandTrip Partners "How To Turn Restaurants Around" series that you might enjoy can be found below: