Guests

by David Klemt David Klemt No Comments

Extend Your Reach with a Loyalty Program

Extend Your Reach with a Loyalty Program

by David Klemt

McDonald's French fries close up in package

It’s increasingly important to stay top of mind with your guests. Now more than ever, that means finding yourself on their screens.

For likely the one-billionth time, allow me to point out something we should all know by now: We’re all on our phones and tablets all the time.

From texts and emails to app notifications and social scrolling, there’s always a reason to check screens.

So, how can operators invade people’s devices? By collecting guest data via a loyalty program.

Fluctuating Support

Not so long ago, industry experts bristled against the mention of rewards and discounts.

Guests, the thought was, had zero interest in signing up for loyalty programs. People would soon frantically seek out “unsubscribe” links after receiving one too many marketing emails.

However, people are quickly thawing, warming to the idea of loyalty programs. Once thought of as too invasive, now marketing experts believe “too intrusive” doesn’t exist.

After all, businesses need to ensure they’re highly visible. Operators must meet guests where they are. Where are they? Their devices.

Rewarding Loyalty

Your staff aren’t the only people engaging with the incentive economy.

Today, it appears that a guest liking your brand isn’t good enough to ensure their loyalty. They want rewards beyond experience, consistency, and delicious food and beverage.

With so many brands competing for your guests’ dollars, you have to stand out to keep them coming back.

Now, there are still industry experts and operators who will tell you to avoid discounting at all costs. Offering a discount, they argue, starts you down the road of devaluing your brand.

Well, the great news is that when creating your own loyalty program, you can offer whatever you see fit. If you fall into the Never Discount camp, none of your rewards have to be discounts.

Free is Better than a Discount

So, let’s remain in the Never Discount realm. What else will encourage guests to sign up for your loyalty program—and actually engage with it?

We can use the loyalty program launched in July by a global fast-food juggernaut as a great example.

Over the summer, McDonald’s launched MyMcDonald’s Rewards. How successful was the launch? More than 12 million people opted into the program.

In exchange for signing up, agreeing to receive alerts, and handing over their data, guests received a free medium French fry.

McDonald’s selected 66 loyalty program members to receive one million MyMcDonald’s Rewards points. One lucky member also received free French fries for life.

Create Your Program

“But David,” I hear some of you arguing, “isn’t free even worse than a discount?”

The short answer is no. A discount can devalue a brand because guests get used to paying less for select items or entire visits. Over time, they perceive the lower price as the standard price. Soon, they’ll wonder when the next discount is coming. You’ll have to either further discount your food and beverage or work harder to re-engage your guests some other way.

If a rewards program is structured correctly, members will have paid for any free item they earn several times over. Most commonly, guests receive points in exchange for dollars spent. They can then exchange those points for a free menu item. This doesn’t devalue the brand, it incentivizes program members to become loyal, repeat guests.

Operators not quite ready to build their own apps can utilize text messages and emails. Of course, the former is the most intrusive (in a good way). Texts can inform members of promotions and encourage them to visit or place an order online. Emails can let members know their current balance and what incentive their close to earning.

Additionally, be generous. Don’t exclude your guests’ favorite items from the program. Why would a loyalty program member remain loyal if they can’t exchange their points for “the good stuff”?

Structure your program correctly and you’ll increase visits per guest and spends per visit. Couple your guest data collection with a platform like SevenRooms and you’ll truly supercharge your revenue.

Image: Brett Jordan on Unsplash

by David Klemt David Klemt No Comments

Sales Jump Shows Guests Will Pay More

Chipotle Sales Jump Shows Guests Will Pay More

by David Klemt

Close up of calculator buttons

Chipotle’s latest earnings report may show that guests are willing to pay more at their favorite restaurants.

In Q3, the fast-casual giant’s net sales grew by nearly 22 percent. Per reports, same-store sales rose by just over 15 percent.

Is it possible that Chipotle’s earnings—which exceeded Wall Street estimates—indicate that guests will tolerate price hikes?

Rising Costs

No, it’s not a “hot take” to state the obvious: Everything is more expensive.

All operators and managers are aware that costs are rising across the board. Beef, chicken wings, cooking oils… Prices are increasing and the trend is expected to continue.

Not that any of us need a real-world example, but Chef Brian Duffy shared on episode 53 of the Bar Hacks episode that he now has to price a pound of chicken wings at $13.

One reason that Chipotle made the choice to raise prices comes down to rising beef prices. Another is increased freight costs.

As every armchair economist knows, when a business’ costs rise that increase falls on its customers.

The reason is fairly simple: If prices remain the same while costs rise, the situation becomes untenable, the business doesn’t generate enough revenue, and doors close.

So, Chipotle’s decision was simple. The fast-casual chain announced in June that menu prices would increase by about four percent to defray rising costs.

Rising Wages

Chipotle’s June announcement followed one the company made in May.

Six months ago, Chipotle announced the hourly wage for their restaurant workers would increase to $15 by June.

How did the company afford to raise hourly wages, offset ingredient costs, and deal with rising freight rates? The aforementioned menu price hike.

Now, Wall Street didn’t seem to anticipate backlash toward Chipotle for increasing their prices. However, plenty of other people have said—and still say—that customers won’t support restaurants or bars that raise prices.

It appears that a significant percentage of brand-loyal customers will remain loyal and continue to support the businesses they like even through price hikes.

Is This the Way?

I’ll address a crucial detail: Chipotle is a fast-casual brand valued at close to $52 billion.

They’ve got incredible brand recognition and tremendous purchasing power. Reportedly, there are 2,857 Chipotle locations in the United States. In fact, the company announced in February of this year that it planned to open 200 more locations this year.

So, no, there’s not a direct comparison to be made between Chipotle and an independent restaurant or bar.

However, that doesn’t mean there’s no lesson to be learned here.

Chipotle was transparent about the reasons for their price hikes. The Great Resignation has shined a spotlight on wages, and Chipotle addressed that concern.

The pandemic has also unleashed havoc on supply chains. Again, Chipotle was forthcoming about the challenges the company was facing.

Moving forward, it may be wise for restaurant and bar owners to address menu price increases. There does seem to be some level of understanding among the more rational guests out there that if they support increased wages for hospitality workers; understand supply chain challenges; and know costs are up for everything, they’re going to see price hikes.

You very likely need to raise at least some of your prices. When you do so, consider telling your guests why. You may be surprised by the support you receive.

Image: fancycrave1 from Pixabay

by David Klemt David Klemt No Comments

The Next Spirits Billionaire?

The Next Spirits Billionaire?

by David Klemt

Close-up of one hundred dollar bill

A recent deal involving a whiskey brand is set to help welcome another member to the exclusive Celebrity Spirits Billionaire’s Club.

Three-division UFC fighter. Two-division champion. Entrepreneur. Billionaire? Conor McGregor may add another comma to his bank account.

Proximo Spirits and Proper No. Twelve Irish Whiskey will continue their relationship long-term after agreeing to a nine-figure deal.

The terms of the Proper-Proximo agreement are confidential. However, the consensus is that Proper No. Twelve is going to make MMA star Conor McGregor a billionaire.

Money McGregor

One detail that isn’t exactly confidential is the overall value of the Proper-Proximo agreement.

McGregor and his business partners sold their majority stake in the popular Irish whiskey brand. It’s believed the deal is worth up to $600 million, or nearly €500 million.

However, how much of that $600 million is going to McGregor is unknown at this time.

To be clear, McGregor has a ways to go before he becomes a billionaire. Of course, he’s closer than most of us

Per reporting from The Irish Post, Proper No. Twelve is going to make McGregor the first billionaire Irish athlete.

“The terms of the agreement are confidential, however, the most important thing is Conor McGregor will remain a stakeholder of Proper No. Twelve, the brand that will make him a billionaire,” says Karen Kessler, a spokesperson for the former MMA champion.

Rapid Growth

It’s important to remember that Proper No. Twelve is just a few years old. That detail highlights the impressiveness of this deal.

Remember, Proper No. Twelve only launched in 2018. Since then, the brand has shipped over six million bottles. Proper No. Twelve is set to enter additional international markets moving forward.

Mike Keyes, president and CEO of Proximo Spirits, certainly seems to believe Proper No. Twelve isn’t “just another” celebrity spirits brand.

“It is rare to see a celebrity impact a brand the way Conor McGregor has Proper No. Twelve Irish Whiskey, and I have not seen many brands in the spirits industry catapult to this level of success in such a short period of time,” says Keyes. “This agreement is a vote of confidence in the incredible potential of this brand and a testament to the incredible work of Conor, Audie, Ken and the Proper No. Twelve team, as well as the efforts of Proximo and its distributors, who have all made this success possible.”

Celebrity Spirits Billionaire’s Club

Before proceeding, it must be mentioned that McGregor doesn’t consider himself a celebrity. According to him, “I’m not a celebrity. I break people’s faces for money and bounce.”

Regardless, the face-breaker money-maker is among an elite group of celebs with stakes in lucrative spirits brands.

We’re all well aware of George Clooney’s success with Casamigos, the brand he and his business partners sold for $700 million. There’s another $300 million in it for them if the brand hits performance goals over the next several years.

Diddy’s collaboration with Diageo, which includes CÎROC Vodka and DeLeón Tequila, is pumping up the artist and entrepreneur’s net worth. It seems quite likely that when he reaches billionaire status, it will be in no small part to the success of the Diageo brands.

Like McGregor, Ryan Reynolds got involved in spirits brand ownership in 2018. Retaining his ownership stake in Aviation Gin may catapult the actor, entrepreneur and social media slayer to billionaire status.

Jay Z is a wildly successful entrepreneur. In 2019, the empire he built made him a billionaire. Ace of Spades (Armand de Brignac) reportedly made Jay over $300 million midway through June 2019. D’USSE scored him an estimated $100 million. Jay Z launched luxury cannabis brand Monogram, sure to add much more to his net worth.

Why Should You Care?

Operators, their employees, and their friends and families continue to struggle in 2021. Our industry has fought endless battles. America’s operators just began the process of receiving specific relief yesterday.

So, it can be difficult to discuss the net worth of celebrities given what people are going through. The topic can come across as insensitive. That is by no means lost on me.

Were any of the brands in this post reliant solely on celebrity endorsement, I wouldn’t bother including them. The fact is, the success of these brands relies on consumer demand.

Celebrity endorsement only goes so far—if the product sucks, the shine will wear off and consumers will move on. And today’s consumer moves on quickly. There’s always something shinier, always a celebrity name with more gravitas.

Proper No. Twelve, Aviation, Casamigos, DeLeón, CÎROC, D’USSE, and Ace of Spades are past the honeymoon phase of brand adoption. Consumers have spoken, and these are among the brands they want and expect to see on menus. Your menus.

You certainly don’t need to stock these or any other celebrity brands. Just don’t be surprised if guests become frustrated if they can’t get them at your restaurant or bar.

That goes for any brand. Listen to your guests and what they’re asking for from you. Charge your front-of-house team with doing the same and encourage them to report back to you what they’re hearing from guests. One of the easiest ways to inspire repeat visits and refresh your menu is to simply listen.

Image: Photo by Giorgio Trovato on Unsplash

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