Brand strategies for growth.2012

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Winning in the New Normal:Restaurant Brand Strategies For Growth

Tim Pulido President & CEO

Agenda

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• 2012 Industry Outlook

• Call to Action: Relevance Differentiation• The Four Step Plan: -Know Your Customers -Know Your Brand -Know Your Competition -Know Who, Why, When, Where, and How Before Building What

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“May We Live in Interesting Times” Confucius

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News Headlines-Unemployment improving but stubbornly high

at 8.3%/Underemployment at 15.2%.

- December 2011 Conference Board Consumer Confidence at 64.5 is improving but still 37 points below 2007

- Disposable income growth is flat (Nov. 2011 -0.1%)

-Housing appears to have bottomed out –Still no real growth in sales or new builds

-US debt credit downgrade + European sovereign debt crisis create perfect storm for equity market volatility.

-Net: Consumers receive mixed signals and remain very cautious about spending

8.3%5.0%

15.2%

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Dec 201164.5

Consumer Confidence – US

Unemployment/Underemployment US

“Are Consumers More Confident or Just Tired of Austerity?” November, 2011

“Retailers Face Reality That Many People Can’t Trade Back Up”October 4, 2011

8 0ut of 10 Consumers Struggling/Getting by

Current Financial Situation

Source: Technomic Consumer Survey (Dec 2011)

2012 Consumer Outlook

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Dec-11 Dec-10 Dec-09 Dec-08

24% 26% 26% 25%

56% 47% 50% 49%

20% 28% 23% 26%

Struggling Getting by Living comfortably + well off

Outlook for 2012 Remains Bleak

Consumer Expectations for the Economy

Source: Technomic Consumer Survey (Dec 2011)


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Dec-11 Dec-10 Dec-09 Dec-08

43% 38% 30%

64%

32% 34%32%

14%

25% 28% 39%21%

Worsen Stay the same Improve

The New Normal - Consumers worried about economy, personal finance, and their job- Practicing re-allocative budgeting: not buying on impulse, making considered trade-offs- 70% plan to spend less by trading down or reducing frequency- Want complete package of quality, experience and value when splurgingImplications:- Discounting to drive traffic will only take you so far. Must provide quality/experience, more than price.- Consumer will punish brands that

fail to deliver given “scarcity” of disposable income

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The "new normal“, coined by the brain trust at the giant bond fund PIMCO, declares that the US economy will be at most 2% growth for foreseeable future. The heart of the problem is job creation. NPR, July 2011


2012 Restaurant Outlook

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2011 inflation: 2.5%2012 inflation: 2.5%(P)= projection (F)= forecast

Nominal RealSegment 2011(P) 2012 (F) 2011(P) 2012 (F)

Limited Service2.5% 3.0% 0.0 0.5%

Full Service2.5% 2.5% 0.0 0.0

Total2.5% 2.8% 0.0 0.3%

Restaurant Performance

Technomic Forecasts Bottom Reached --Real growth returning (barely)

Net: The economic pie is not growing. Limited discretionary income will only go to those brands that

have a meaningful brand and value proposition.

Source: Technomic Jan 2012

2012 Restaurant OutlookReal Foodservice Growth Barely Returns,Still Far Away from “Normal”

Real Growth 2007

3.4%

200713.%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (F)

-10%

-5%

0%

5%

10%

15%

Change V. 2001 Year Over Year Change

20121.1%

• Industry down 12.4 percentage points (real) from 2007

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Over Saturation of Restaurants in U.S. Marketplace (25 Year Trend)

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290K

580KNumber of Restaurants

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Restaurants have doubled unit counts in past 25 years

Far in excess of population growth

Industry is over-saturated: recession and anemic recovery will drive shake out and consolidation


Source: GE Capital 2011 Chain Restaurant Industry Review

2012 Restaurant Outlook• Since 2007 most restaurant business have squeezed the

P&L, cutting food, labor, G&A and slashed new store development

• The recession and financial crisis has led to store closings, lease concessions, bank workouts and restructurings

• Now there is little left on the P&L to cut. Today restaurants must find ways to grow customer traffic and develop new stores to survive.

• Given over capacity, businesses must build and differentiate their brands. The alternative is to close or be consolidated.

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Winning in the New Normal Requires Relevancy and Differentiation• So what does it take to be an outperforming restaurant

company? It is our belief that brands and concepts that are best able to develop, communicate, execute, and then continuously innovate upon their own differentiated value equation are best-positioned to outperform their peers over time…

• Our collective consumer research and industry experience leads us to believe that a successful value equation stems from a solid strategic vision and often touches on some combination of consumer relevance.

Piper Jaffray Industry Note, p. 7 January 4, 2012

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Call to Action

Consumer Relevance Brand Differentiation

2012 Business Challenges

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• The Four Step Plan: -Know Your Customers

-Know Your Brand

-Know Your Competition

-Know Who, Why, When, Where, and How Before Building What

The Four Step Plan

To Insure We:-Gain Meaningful

Customer Insights

-Communicate Your

Brand’s Pt. of Difference

-Translate the Brand into

all tactics

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Get Into Customers Heads and Understand What Makes Them Tick

Step 1: Know Your Customer

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Gain Meaningful Customer Insights• How do customers feel about my brand?• What are their attitudes and use of my concept? • Why do my customers behave the way they do in context of broader

consumer trends? -Be brand / concept specific-Insights come from a rigorous review of research-Look for 2-3 word clarity and insight

Step 1: Know Your Customer

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Example: McDonald’s knew moms disliked their food, hated the sticky white ambiance, and felt they were dragged there by their kids.

Brand Insight: McDonald’s Had Hostage Moms

Know Your Customer

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McDonald’s Responds to Hostage Moms• Wholesome Menu Options

• Fresh Salads• Whole white meat vs. mystery meat• Healthy Kids meals (Apple Dippers/Milk)• Ronald McDonald promotes exercise & fun

• High Impact Store Design• Upgraded Ambiance• Adult place + kid place

• McCafe: Create Mom’s Space in the Store

• A Mom’s place for connection with her friends

Net: Actions are Directed by Customer Insight

Know Your Customer

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Step 2: Know Your Brand

Communicateyour brand’spt. of difference

Why should yourbrand be chosen?

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Brand Building Blocks

• Experience

• Management

• Identity

• Brand Strategy

Aspirational + memorable + trustworthy

Alignment + relevance

Name + logo + color pallet + design

Marketplace + Differentiation

A brand lives in the hearts and minds of its customers and prospective customers. It is how your company is perceived.

Know Your Brand

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Brand Strategy … is the Foundation creates Focus & Clarity • Clearly define who

your customers are, as well as their key wants and needs.

• Ensure concept addresses identified key needs.

• Define concept niche vs. competition

Know Your Brand

Customer Concept

Competition

The Three C’s

Know Your Brand

Example : 7 out of 10 guests are female at Mimi’s Café, a casual dining concept. Women from the Red Hat Lady’s Club to the PTA congregate at Mimi’s as a place to eat fresh food and for female social connection.

Key Needs: -Fresh, light meals -Portion control -Cozy ambiance -Opportunities for indulgence -Place to connect with friends

-Charming, whimsical ambience 22

Insure Concept Fulfills Customer Needs

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Mimi’s Responds to Female Customer Needs: Be Gathering Place that Understands Women

Menu Innovation is focused against target needs• New Fresh & Fit Menu (Lower calorie/fat content)• New Just Enough (Smaller Portion) offerings• New Small Plates (Smaller Portions/Sharing Size)• Expanded Café Salads, Fish Market Menu (fresh/healthier)• New Gourmet François section (French indulgence)• New Petite Treats(smaller portion indulgence)• Expanded wine offerings (alcoholic indulgence)

• • Leverage social media to set brand as the place for connection for affluent, educated female guest target

Remodel package designed for women • New French Sidewalk café remodel design• New Look/New Bar/New Bakery • Fresh cut flowers on every table• It is all about the charm!

Know Your Brand

Marketing media selected to reach target

Know Your Brand

• By understanding your customers and how they perceive and use your brand , you can prioritize tasks, direct innovation, design the concept, and reach your target with greater relevancy

• Net, you will stand out you will be the brand that “gets” their customer 24

Summary

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Define Point of Difference vs. CompetitionStrategic Models: -SWOT Analysis

-Porter Five Forces

-Competitive mapping: Understand your competitive set and determine an opportunistic niche vs. others

• Get your team out into the marketplace• Examine and analyze the competition (menus, store

layouts, pricing, promos, their customers)• Understand how your concept is or can be different

Step 3: Know Your Competition

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Competitive Mapping: Define axis w/ brand insightsExample: For Shakey’s Pizza the key dimensions were

Kid vs. Adult and High vs. Low Quality Perception

Know Your Competition

(Food/Ambience)

FRIENDLY FOCUSED

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Re-position the brand in the marketplace

Know Your Competition

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Example: Reposition Shakey’s as Family Fast Casual vs. QSR/Amusement

Quality experience for adults and fun place for kidsFood first

Entertainment second

Position Brand vs. Competition

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Step 4: Know Who, Why, When, Where, and How Before Building What

It Is All About Integration!

Translate consumer and brand insights into a brand positioning that guides everything you do that touches the customer.

Tactics (How) work togetherto communicate the “Big Idea”of your brand

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In teg ra te d B ra n d W h o le

TH E W H AT

H O WM e n u / L ayo u t / S to re D e s ign / Lo g o / S e rv ice S ys te m / P rice / U n ifo rm

B ra nd P o s it io n ing S ta te m e nt

W H O / W H Y / W H EN / W H ER E

Know Who, Why, When, Where, and How Before Building What

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Who: (Example - Shakey’s Pizza)• Time pressed families, especially with tweeners• Large Hispanic families are the brand’s heavy users• Groups, sports teams, schools, birthday parties• Adults on the go


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Why: (Example – Shakey’s Pizza)• Customers want to carve out a relaxing, fun time w/family & friends• Want to connect with family • Escape cooking/stress• Pizza is for sharing/Kids love pizza• Kids can really be kids in game room• Want good value for their money • Expect to get an emotional return for

their investment of limited discretionary dollars


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When:• Weekday or Weekend

“Indoor Picnic”• Celebrate Family Events • Spontaneous • After school • After the game


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Where: (Example – Shakey’s Pizza)• Away from home, but neighborhood destination• Moms declare “kitchen is closed/Not cooking/cleaning"• Relaxing/not stuffy dine-in experience• Place where kids can be kids

Know Who, Why, When, Where and How Before Building What

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Put It All Together in a Positioning Statement

Integrate Who, When, Where & When

For today’s families who love pizza and want something special for the kids, Shakey’s is the

gathering place where everyone has fun.

We now have a roadmap. Everything must reflect position:• Menu Innovation• Menu Design

• Marketing Medium• Promotional Materials

• Concept Layout and Décor• Service Systems

• Uniforms

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How: All concept tactics reinforce the brand

Positioning Drives “How” Tactics

ConceptElement

Positioning

Logo, Brand colors,Brand icon,ConceptDescriptor,Site Criteria

Menu Layout, Design, Offerings, Pricing

Exterior Store Design, Interior Decor,MaterialsLighting. Seating, Color Palette

Customer Flow,ServiceSystem

Uniforms,Crew Training,Management Selection

Who

Why

When

Where

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What: Shakey’s Pizza Parlor is Family Fast Casual


Revised Brand Logo Fast Casual Menu Layout vs. QSR

Raise Quality with Gourmet Pizzas Fresh Tossed Salads for Mom

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What: Shakey’s Pizza Parlor is Family Fast Casual


Store Design: Nod to past, look to the future Uniforms: Quality, Not Fast Food

Fast Casual Service System Games in back room. Not in your face

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R elevant, Consisten t, and D iffe rentiatedBrand Experience

In teg ra ted B ran d W ho le

T H E W H AT

H O WM e nu / L a yo u t / S to re D es ign / L o go / S e rv ice S ys tem / P r ice / U n ifo rm

B ran d P os itio n in g S ta tem e nt

W H O / W H Y / W H EN / W H ER E

Net: The Built Concept = The Brand

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The Big Take-Aways

Wrap Up

• Focus on customer insights not just consumer trends

• Clearly define your brand point of difference -Versus customer needs and competition

• Define brand positioning so all tactics will communicate the big idea

• The Four Steps:1. Know your customer2. Know your brand3. Know your competition

4. Know who, why, when, where, and how before building what

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Keys to Success:

Wrap Up

• Set your brand apart in a way that is meaningful to the customer

• Make sure everything you do (The How) reinforces and communicates your point of difference

• It’s all about relevancy and differentiation