Friends of Branded!
Happy Saturday and I hope you had a great week!
When I left Wall Street to fully embrace an entrepreneurial path, my father told me I’d understand, for the very first time, what business is all about.
I admit being a little surprised that with over 2 decades of work behind me at that time and having worked for some of the largest financial institutions in the world, my dad was giving me the status of a rookie. Seeing the look of confusion on my face, he simply said, “it’s about making payroll.” As Mark Twain said, “the older we get, the smarter our parents become.”
Another mentor and friend told me the attribute I would value the most in people that were part of the first company I launched was loyalty. I’ve always embraced and believed that to be true. Too many people, however, misunderstand the meaning behind this most valued attribute. Loyalty is NOT about agreement, but to the contrary, it's about the ability to disagree and the confidence and trust in the relationship to tell your truth.
I have many “isms,” rules and I’m certainly a big fan of using quotes. However, every now and then, I produce something original and the acronym “PRB” is of my own making. Speed readers of the H^2 may have quickly read that acronym as “PBR” and assumed I’m writing about Pabst Blue Ribbon (aka: the beer often of choice by my younger brother), but no, I didn’t write “PBR,” I wrote “PRB.”
PRB refers to the criticality of a team acting in a Professional manner, that is Respectful of one another and operates in the Best interest of whatever the team is trying to accomplish. A company that brings a group of people together who can operate with the mindset of PRB is one to watch and bet on (or invest in as Branded loves to do). Trust and loyalty are key components in creating a PRB culture (and I’ll drink a PBR to that). 😊
I was thinking a great deal about loyalty this week and specifically how it’s something that everyone wants, but it also requires one to give. For businesses and specifically the relationship between a seller and a customer (client or guest), loyalty has a most meaningful impact on buying and spending decisions. For the hospitality industry, loyalty can be the difference of a transient or one-off guest and a most loyal one and therefore valuable one.
A few searches informed me that the early roots of customer loyalty programs started with “premium marketing” in the late 18thcentury. At this time, American retailers began to give customers copper tokens with purchases that could be later redeemed for products on future purchases.
You then need to leap about 200 years to find the very first airline loyalty program. In 1981, American Airlines introduced its frequent flyer program, and it was a massive hit.
Imitation is of course a heightened form of flattery, and two years later, in February 1983, Holiday Inn launched the first-ever hotel loyalty program. Marriott launched its own loyalty program in November of that same year, but since Holiday Inn discontinued its program in 1986 (albeit only for one year), Marriott gets to lay claim as having the oldest continuously operating program in the hotel space (hey Marriott, what do you think about throwing me a few extra points on my Bonvoy account for this shoutout?).
The 1980s was a clearly big decade for music, hair, and loyalty programs, b/c it was in 1987 that National Rental Car launched the very first rental car loyalty program with its Emerald Club. The program was actually launched on St. Patrick’s Day and I’m sure National’s love of the Green Team was a key driver of that date being selected for the launch (and who doesn’t love the Green Team, IYKYK). 😊
Airlines, Hotels, and Rental Car companies always seem to move faster in the embracement of innovation than Restaurants and the loyalty game was no exception.
Searches for the previous three industries highlighted were easy, but not so for Restaurants. In speaking with operators, the use of an actual fishbowl in the 1990s and the act of collecting business cards, creating mailing lists, and engaging with guests directly, was version 1.0 of the restaurant-loyalty platform. It’s not lost on me that one of the longstanding OGs of the hospitality-tech space not only embraced but has recently returned to that industry-recognized and beloved name. This is a company to watch. Respect the OG! (go get 'em AO).
Consumer purchasing decisions are often made because of their loyalty program. I know people that are willing to take an extra flight (or accept a stop) to ensure they get to fly the airline of their choice. I expect every reader of the H^2 has at least one loyalty program for each of the above categories, but what about restaurants?
I’ve written often about the fragmentation of the restaurant industry relative to the other industries highlighted above, but the value proposition and importance to the restaurant industry of loyal customers is nothing less than critical. Loyalty programs turn regular guests into loyalists and that results in a most significant boost to the bottom-line. Loyal guests are not only cheaper to maintain, but they’re higher spenders. A loyal guest’s check will be 67% higher than a first-time guest (mic drop on that factoid).
No more history lessons today, let’s get after this! Our friends at PYMNTS’ completed a study that found that 51% of those surveyed are using a restaurant loyalty platform, with 49% participating in these programs at quick-service (QSRs) and 34% at full-service restaurants (FSRs). The numbers from this year’s PYMNTS’ survey showed a meaningful (13% YoY) increase over last year’s results. The restaurant community has been working hard to be part of the loyalty game and the pandemic super-charged the embracement of digital platforms that create a heightened relationship and opportunity for personalization between restaurants and their guests (meeting the guests where they’re at...I always love that expression).
This week our friends at Toast delivered a strong and I dare saying surprising Q2 Results. Over the last four quarters, the company has surpassed consensus EPS estimates two times.
While I’m happy, of course, to share the link to one of the articles on Toast’s earnings results (above), that’s NOT the announcement that got me thinking about the importance of the best-of breed loyalty and marketing platforms. As the restaurant industry continues its digital transformation and that very much includes the need to embrace loyalty programs, I was thrilled to see Toast recognize our friends and partners at Spendgo as an integration that provides best-in-breed loyalty solutions and enables quick customizable loyalty program for customers.
Branded leans into the full spectrum of the restaurant industry, but the SMB sector (small and medium sized businesses) is among our sweetest spots and the emerging technology & innovation companies that are now focused on delivering solutions for this segment of the market is yet another sign of the democratization of the hospitality industry that is underway.
I’ve shared hospitality secrets with readers of the H^2 before, so here’s another one – hospitality operators HATE discounts! Don’t get me wrong, they love REWARDS, but the two, are in a fact, very different and have real distinctions.
Rewarding loyal-guests is something operators embrace, but coupon-guests represent a horse of a completely different color. Here’s the worst part of a discount-guest, that guest is likely to be sitting in your restaurant, for the first time, at the very moment as your loyal-guest and wait for it, the coupon-guest is getting a BETTER deal than the loyal-guest. Are you kidding me?!?
A hospitality operator will also be challenged to convert the discount-guest into a loyal-guest b/c the only reason they came to your venue was to get a “deal.”
Promoters of discounting programs and platforms will tell operators that the discount is the cost of lead-generation and part of a guest-acquisition strategy. The pitch will be that the discount was successful at getting the guest in the door and that the operator needs to convert this discount-guest into a loyal-customer.
I’m sorry, not sorry, to say that scenario is the exception and not the norm or typical outcome. The discount-guest is the one that is always looking for the “deal” and if you want him or her to return, you’ll be expected to keep that discounting game going. The moment you stop (or someone offers a better “deal), that guest will be pulling a ‘stranger’ and movin' out!
For any operator that is more open to discounting than I am, I respect that you know your business and guests better than I do. However, and before I let this debate go (and even though I didn’t do well enough in Psychology 101 to reference material from that class), I’ll say that if a guest expects and receives a discount, regardless of the reason, the perceived value of your offering has automatically been reduced.
Okay, we're done with this topic.
There was a lot going on at Branded this week and in the market overall.
I’ve been writing a great deal lately about EATertainment and the importance of operators leveraging the tools that are now readily available to them. The strong and successful capital raise by our friends and partners at GoTab was both in the works and on my mind.
There’s been a great deal written about the precipitous drop and pullback in venture capital funding, so the fact that so many of our portfolio companies have successfully accessed the capital markets is a strong indication that while capital may be scarce, it is still available for technology companies that are addressing the most critical issues and opportunities facing operators.
My colleague Mr. Noah Stern has written this week about the importance of kiosks. The continued success and momentum building with our friends and partners at Bite leads Branded to believe the adoption of best-in-class technology & innovation has a ways to run and that the move to embrace kiosks at the counter is still in its infancy.
We’ll have story coming up soon about one of our favorite hospitality CEOs diving deep into the kiosk debate and while he’s an old (experienced) dog (just as I am), our friend is proving that old dogs can most certainly learn new tricks as he’s now on the embracement of kiosks team!
Finally, it’s with great pride that I share that the Branded team will be heading down to Amelia Island, Florida for the Prosper Forum on August 27th.
Branded is an early-stage investor and we pride ourselves on jumping on several things early. This event is no exception and it’s amazing to see how the Prosper Forum has come together and the transformative leaders that have signed on and are rallying for the event.
The Branded team is not comprised of wall-flowers, and we have a few things planned that we’re excited to share once we’re down at the Forum. As they say, what happens in Amelia Island...well, you get it.
We always take great pride in the company we keep and below are just some of the great companies rallying down to the event.
It takes a village!
Answer also revealed at the end of the newsletter
By: Julia Suchocki, Partner at Branded Hospitality Ventures
A new conundrum has emerged for restaurant owners and operators: the rise of no-shows, bots, and scalpers—those who reserve tables but don't follow through, leaving establishments to contend with lost revenue. Recent data from OpenTable underscores the extent of this issue, with a staggering 20% no-show rate in major cities and 28% of Americans admitting to flaking on reservations annually. Wondering how much this no show fee can cost a restaurant? Read More
MAXIMIZE VALUE, IMPROVE PERFORMANCE
Learn how the Hospitality Industry advisors from CohnReznick can put you at the forefront of advanced financial, operational, and risk management strategies.
In today's rapidly evolving world, the issue of food waste has transcended the simple notion of scarcity and taken on a more complex dimension: that of a logistics problem. While scarcity once dominated discussions around food security, the 21st century has ushered in an era of unprecedented food production. Paradoxically, this abundance has revealed a stark truth – that the challenge lies not solely in the scarcity of food resources, but rather in the intricacies of efficiently distributing, managing, and utilizing this abundance. The global food waste epidemic has unveiled itself as a multifaceted dilemma intertwined with supply chains, storage, transportation, and consumer behavior, highlighting the urgent need for innovative logistical solutions to alleviate this wasteful burden.
Kimberly Smith, Chief Executive Officer at Copia and Board Member at Sunsar Maya joins host Lauren Mitchell to talk about how Copia guarantees that every business that donates surplus food will minimize food waste and maximize the positive impact on communities.
Robert Irvine Foundation
Supports and strengthens the physical and mental well-being of our service members, veterans, first responders, and their families.
FINANCE & DEALS
By: Noah Stern, Associate at Branded Hospitality Ventures
In 2017, Shake Shack opened its kiosk-only ordering for the first time in New York City; It was immediately met by negative reviews. Customers were put off by the cashless ordering, as well as the bizarre lack of human interaction, and flooded the internet with poor reviews. Shake Shack was trying to demonstrate their commitment to technology, a core of their business to this day, it was simply a few years too early. Read More
Restaurant Industry Movers in the Market
—Data as of 8/11/2023
THE BEST RESTAURANT MARKETING TIPS, TRICKS AND TACTICS
By: Rev Ciancio, Head of Revenue Marketing at Branded Strategic Hospitality
Restaurant marketing is hard. There are a lot of moving parts, it's hard to measure and there really isn't a guide or resource available to keep up with and learn the best and most current tactics.
That's why the 2023 DRA Restaurant Marketing Summit was created -- to help support those who do marketing for a restaurant, whether its internal, external or the founder themselves, with the best tips, tricks and tactics.
And while the event may technically have already come and gone, you can still get 100% access to all of the incredible content, now, through October 25.
If you're wondering how to optimize your Google Business Profile, what to do on TikTok, how to create a perfect guest feedback or loyalty program or how to navigate the complex world of restaurant delivery and or 3rd party marketplaces .. you'll find the answers to all of this and more in the on demand version of the 2023 DRA Restaurant Marketing Summit.
If you have other questions about influencer marketing, send me an email and ask! firstname.lastname@example.org
WHAT DOES REV DO?
*I help restaurants to build guest marketing programs.
*I help hospitality tech companies with lead generation and content marketing.
Need help? reach out: email@example.com
IN THE NEWS
Hospitality Tech and F&B Innovation IN THE NEWS:
We love to highlight Food Service & Hospitality news, especially when it’s Partners & Friends making it!
- Cut + Dry: How Southwest Traders Leverages Cut+Dry to Drive Revenue and Business Growth
- Incentivio: Enhancing the Restaurant Experience With Streamlined Front-of-House Operations
- Meez: John Adler on the Value of Customer Feedback
And in other News…please see some of the stories that caught our attention and that we’re paying attention to. This week was loaded with headlines and news!!
- Financial IT:
- QSR: Inspire Brands and the Making of a Restaurant Group Unlike Any Other
- QSR: PDQ Promotes Kep Sweeney to CEO
- Payments Dive: Global Payments adds hybrid payment service for ISVs
- MarketWatch: Campbell Soup to acquire Rao’s parent Sovos Brands in cash deal valued at about $2.7 billion
- Fortune: MrBeast is being sued by the company that makes his burgers for more than $100 million
In 2001 Pizza Hut delivered a pizza to the International Space Station. The pizza was sent aboard a Russian rocket used to supply the ISS. The fast food chain said that it paid the Russian space agency about $1 million for the promotional event.
ASK THE HEADLINE
🔍 Got Questions? We've Got Answers! 🌟
Satisfy your thirst for knowledge? Look no further! It's time to dive into our brand-new segment: "Ask The Headline"! 🎉
📅 We'll be answering YOUR questions every week. And here's the best part: you can choose to stay anonymous or receive a fabulous shout-out when we feature your question!
That’s it for today!
See you next week, (about the) same bat-time, same bat-channel.