Since the start of the pandemic, restaurant marketers have had to shift (and continue to shift) their marketing strategies to not only function, but thrive, in this new normal.
Atlanta-based Huddle House-Perkins has always had it covered. That doesn't mean, however, that the brand didn't have to hustle to catch up with customers' demands for heightened safety measures and more contactless, out-of-restaurant options.
On FastCasual's QSRweb podcast, Huddle House-Perkins CMO Alison Delaney joins our own Brian Giannone, vice president of client development at Epsilon, to explain how this dine-in-centered brand is attracting out-of-restaurant customers. Listen to the podcast to learn more.
(Left to right) Alison Delaney and Brian Giannone. (Photos provided)
Transcript
Shelley:
You are listening to the QSR web podcast.
Hello, and welcome back to today's podcast with me, your host, QSR web and pizza marketplace editor, Shelly Whitehead, happy to have you all in the virtual house today. And one of the reasons for that is that this is such a dynamic period for all restaurants. As far as each brand's marketing and strategic efforts to recover in this pandemic era economy are concerned. Now, many of you have already changed your operating models to feature at least partial takeout and delivery service. In fact, you almost had to, to stay afloat this year. Now, though, many of you are prime to go ahead and push past those initial immediate pandemic service changes and do something more. More longterm to really recover in full. And it's no doubt, you've got a lot of questions and that's a good thing today, since our guests are here to answer some of those issues related to the path forward.
Shelley:
Beginning with Perkins and Huddle House CMO, Alison Delaney, she's here to relay a restaurant marketers story around how her brands pivoted? What they learned? And what her best advice from the past few months is for brands hoping to fuel growth the rest of this year? Also here today is Brian Giannone, vice president of Client Development, Epsilon the leader in outcome based marketing across CRM, digital media, loyalty and email programs. In his past seven plus years at Epsilon, Brian has helped restaurant brands create data-driven strategies to better connect with their guests.
Shelley:
So let's get started right now. First by siding a little data from the start of the pandemic when Yelp reported a 160% increase in interest for grocery stores just between March 8th and March 18th. That was among a slew of other spikes in interest for produce and take out over restaurant services. So since we know that cooking at home is a higher priority now, and demand for dining out in any form is lower than before the pandemic. Alison, can you tell us how Perkins and Huddle House have reworked their marketing strategies to accommodate the new reality?
Alison:
You bet. And thanks for having me today. We of course, pivoted to off-premise, online ordering for pickup or delivery and curbside service as an option. It was our belief that people still didn't want to cook during this time. They were anxious and frazzled due to job insecurity, having to work from and just all sorts of issues with having school aged kids at home. And they were forced into cooking at home as a result of restaurants being closed. And it was also our belief that people still wanted the quality of food they traditionally buy at full service restaurants, but were willing to accept less, in other words, QSR, to stay safe. But if we could offer a seamless experience for guests to enjoy their favorite comfort foods and comfort was a big and still is a big desire at this time and make it feel safe. So then we could salvage a huge portion of our business.
Alison:
So at both brands pre COVID roughly 10% of our sales were already off premise, but most of that was phone in or takeout or in-person ordering for takeout. We were not far down the path of online ordering and third party delivery. And here's the interesting thing, what the pandemic showed us is that we could move very fast if we had to, even if the technology solutions weren't perfect. And we moved faster than ever thought possible. We tripled our off premise sales at both Huddle House and Perkins, and a significant portion of that was through online ordering and third party delivery. Even though we weren't even close to having that system-wide and we sort of now, but we weren't even close to having that system-wide back then. And these initiatives allowed us to survive until dining room started reopening again.
Alison:
And like many other chains, we immediately began selling groceries and I kept a watch on all sorts of press releases and news announcements and I really have to say that I think Huddle House was literally one of the first to do this. We found that our Huddle House concept in particular that sales really took off because in this brand more rural footprint, people literally couldn't find items in their local grocery store. So us offering groceries was seen as a huge service to the local community because they don't have as many retail choices in these smaller towns and cities and our being able to offer these items, we were able to save folks a trip to a larger city and potential greater exposure to COVID during that time.
Shelley:
Wow. That's really interesting. Brian, did you have anything to add to that?
Brian:
Yeah, I think you, from what Alison said, we've seen a lot of the same, a lot of creativity and innovation that's been happening in the industry. And one common response is that everyone has had to pivot in some way, shape or form the way that they've been able to do that has been unique, by merchant, by brand. And from a marketing perspective, we've really seen the gamut as we try to, or they try to communicate the messages to their guests. Some have paused marketing altogether to see how things would shake out over time. Others, as Alison mentioned, they've tweaked their messaging to focus on delivery or new order channels that maybe didn't exist previously, which has been really interesting and fun to partner with clients on. And just try to, how do we creatively get a new message out in the marketplace?
Brian:
And who's the right person to talk to about those things? And others have really increased marketing efforts to focus on customer retention. We've seen some partners that have had more traffic on their website or their app than they ever had before. And so how do we capture that and help restaurant brands bring that guest to the restaurants or communicate with the restaurant in a way that gets them to engage? It's been really interesting to see what the industry has been able to accomplish over the last couple of months.
Shelley:
[inaudible 00:07:14] now from Alison, from those initial strategy shifts. How have these brands proceeded in an environment where many restaurants have opened and then had the close again? Alison have your brands altered, not just how they're communicating with customers now, but also what they're saying and the ways they're saying it?
Alison:
Yeah sure. I'm not sure the challenge is so much for marketing per se. I think there are concept challenges or category challenges as many other people have said, I believe the world is changed for the foreseeable future and maybe forever. And even after a vaccine is found and distributed it'll take a long time for people to go back to their old daily lives. And some never will, some are scarred from losing family members and friends, others must deal with financial ruin, and this might indicate that full-service dining will never return to their old levels. But I think on the other hand, human beings are social creatures, you simply can't do everything virtual. People want to be with each other physically and dining together is fundamental.
Alison:
Now, you can do that at home with your family anytime, but people want to see those outside their own households. And because people are even more frazzled and anxious, I don't think they really want to make cooking at home permanent. And I don't think even fast food, even though there are many great offerings out there from a food quality standpoint, I don't think eating fast food is going to be acceptable to people in the long run. So, I think there's an important place for full service dining and with many full service restaurants closing for good, those that survived will actually gain market share.
Brian:
That's interesting. We've heard from a lot of clients about, you talked about gaining market share in a unique way and how do I do smarter conquesting or where do I lean in and marketing or not? Just they're growing, they're shrinking. And so it's, knowing that folks still want to have that experience, it is really thinking about not only what to say, but how do I say it? What are the right channels to communicate those things so that people can still experience restaurants the way that they have previously. So it's going to be interesting to see how... We've had one partner that's I think the customer journey is permanently fragmented. And so, how do you get past that and move forward and innovate around the new customer? And it's going to be interesting to see how you can use data and other technology platforms as they become available to do that.
Shelley:
Okay. So now we know each restaurant brand responded a little differently to this year's extraordinary challenges with, for instance, many fast food chains staying open, but shifting to drive through only service. So what marketing challenges did Perkins and Huddle House face that you're QSR partners maybe didn't have to deal with? And what advice would you give leaders in other service categories about their path forward, Alison?
Alison:
Yeah. So, obviously the differences are that dining rooms of course, had to close and look, our concepts, most of those concepts were built on a business model of dining. And so we have all pivoted, as they say to an off premise model, but that's not the core of what we do. So I think for our concepts to work in this new world, and look I think also early on, the first couple of months, I think everyone, certainly we did at our company, we thought, "Look, this is going to be over in a couple months and everything's going to go back to normal" and now everybody realizes that it's not. There will be some sense of normalcy, I think, as time goes on, but we don't really know what form that's going to take.
Alison:
But obviously, full service concepts are not quick service. We weren't built on the premise of drive throughs or pickups, we were built on the premise of people socializing. And that's what the service is. It's seeing people face to face. It's sitting down with each other, it's being served by a server or a bartender or something. So I think for our concepts to work in this new world, we have to do two things. We have to ensure the absolute highest standards and highest execution of those standards of cleanliness and sanitation for on premise dining and make sure that we can communicate that to the guest in all of our guest facing messaging for a long, long time to come.
Alison:
And the second thing, I think we have to accept that we have to grow our off-premise business, even though we don't have drive throughs and even though that's not what we were built on. And that means evolving our food so that it travels well, it means implementing technology so that ordering, payment, pick up, is intuitive and easy, which is something that the pizza people have been doing well for 10 years and getting the message out to guests and potential guests that they can enjoy some of the same quality food from our concept, our brands, wherever they might be. So it's kind of playing two ends against the middle.
Alison:
We certainly can't abandon buy in because that's where our concepts are. And when you have a legacy concept, you have to accept the reality of your concept, the reality of your physical buildings, and be able to salvage and then build on that. At the same time, we also have to become more competitive in off-premise because though off-premise might fall back a little bit, it's never going to go back to where it was before. And if we want to thrive, well, survive and even thrive, then we have to get better at really playing both sides, both dining an off-premise.
Brian:
And I think from our point of view on the marketing side, knowing that those challenges are new and some of them haven't been explored to the degree that you would have maybe wanted to in the past. And what's good is better than perfect. And the importance of flexibility, being nimble, iterating quickly in terms of how you communicate a message, which is important. I think, as marketing partners out there, this is something we've spent a lot of time focusing on is, how do we make sure that we can provide an environment where if you do have to pivot or you do have to change, how do we do that?
Brian:
And a lot of our clients have actually leaned into digital marketing a little more during this timeframe. And not just because it's flexible, but because of the adaptability, the message to people where they are, knowing that you can personalize on the fly and change that messaging or update it. So it's been interesting to talk to partners that maybe hadn't been using certain marketing channels previously, just like they hadn't invested in certain technology previously, are now kind of rethinking the way that they communicate those things. Because I think it's extremely important to show the safety and the commitment, but also the new things that you're offering.
Alison:
Yeah and we've seen that too as well in one of our brands Huddle House, we were mostly digital anyway, which might seem counterintuitive to a lot of people because Huddle House is a rural brand and it's a legacy brand and people seeing customers at a Huddle House kind of as a older and less able to or less willing to adopt digital. And that's just a falsehood, as people in your business know, in rural America, people might not have computers or the internet, but they have their mobile phone, that is their computer. And so a lot of times in rural America, they're even more willing to adopt some of this, or at least as willing to adopt some of these new technologies than people in even suburban areas.
Alison:
And so, for Huddle House, we've been down the digital platform for a long time. What we've really seen that's been different is on a Perkins brand. And this is a brand that also is a legacy brand and has an older clientele, but Perkins has relied on TV advertising and that's going to change a lot. TV bought the traditional way and consume the traditional way over, cable or satellite or something. Media consumption has changed dramatically over the past five months. And we don't know where it's all going to shake out, but people that have cut off their cable and have cut off their software, they're never going to bring that back. And advertising companies are evaluating the fallout and will be for many months to come, of the shift from cable and satellite to OTT and streaming. And it's imperative that companies quickly figure out what content their guests are consuming and where they are getting this content and changing the media post appropriately.
Shelley:
Wow. So there appears to be a massive shift and I guess this has been going on for a little while and how consumers actually consume information and entertainment. And you as marketers have to address that.
Alison:
Yeah. That's one of the first conversations we had with our agency at Perkins was, "Look, we went off the air for several months, everybody did, dining rooms are closed, we're not bringing any money into the marketing fund from marketing, for contributions." So allowed us to take a pause and we talked very early on that when we come back, it is not going to be just pick up where we left off, because I certainly had a sense that meal habits were just going to change dramatically. And all the research that's coming out now shows that, that in fact happened. And I'm not saying, of course the traditional consumption of media is completely gone, but it really has changed. And so, I'm sure companies are looking at this but I would just say if yours is not, they need to and you need to push them to do that because, it certainly turned out to be real in our case.
Brian:
Yeah. And what we're hearing from industry partners is, in the sense that there is a ton of data out there, and there's also new data out there and kind of, how do I make sense of it? And trying to use it to make more informed marketing decisions. And we're hearing, how do I know more about my guests? Who's my best guest? Where am I winning share? Where am I losing share? Do I need an offer? How do I answer these key marketing questions? And some of the things that we're talking about is just, not just using that data for learning, but then also pairing it with activation. So that you're seeing all the things that you're learning and understanding in real time. And then, does that actually bring somebody into the restaurant? Does it actually bring someone to order from an off premise channel that maybe they never did before? And so I think, as we look forward, better use of data, more use of the right data and the right tactics, I think are going to be more prevalent as marketing decisions shift from maybe a TV channel to OTT or programmatic or something else.
Alison:
Yeah. Well said. As marketers, that's a common problem that we all have is, we're just drowning in data and it's being able to parcel out the most important and relevant, and what's going to help you the most from all the other stuff out there that's interesting, but not necessarily usable right now.
Brian:
Right. And a lot of our partners and the way that they're evaluating that is, they're asking for better measurement and we can test a lot of things out there. And we find that it's impactful, especially folks like you that are sitting in C level meetings and board meetings and trying to validate or ask for investment to try new things or invest in new ways is, how do we defend these investments again, when you're moving from TV, which is tried and true, the brands have been doing it for years, to something more digital that's a new thing is, how do I prove that this is actually something I should continue to do?
Alison:
To me, it's no different than how it's always been. And I know that companies that specialize in digital advertising have a lot of issues with this. They're measuring service and attribution and impressions and a whole sort of other metrics, but honestly, why did we 40 years ago, go on TV in the first place? Why do we do digital advertising? Because we think it's going to bring in customers. So when you still measure, it doesn't matter whether it's TV advertising, or print advertising or digital, you still measure it the same way, which is three posts that have control the restaurants that have the digital media versus the restaurants that don't have a digital media.
Alison:
And then pre-post. Because you can talk all you want about the specific media metrics and all sorts of things that we can do with geo-targeting and geotracking and attribution. But if it really doesn't lift that group of stores from a comp sales standpoint versus another group of stores that didn't have the benefit of that advertising, then what are we doing? In my mind, and when I'm talking to our board, I would be the first to say, "Well, it didn't work. And so, I can show you all these media metrics, but look, if our comp sales didn't improve, then we need to understand why and move on."
Brian:
I think that's exactly right. I think that the more that you can evaluate those individual decisions in terms of, is this actually bringing more people to the restaurant if I didn't do it otherwise? And if you can answer those questions, I think that's where most marketers want to be and how marketing should be evaluated. And so I think that's, we're hearing more and more of that in the industry, especially like I said before, marketing investments are not infinite. And so the more that you can make sure that you're using those investments for the good, to drive more revenue, to drive more [inaudible 00:23:00] into the restaurant, proving that out is extremely impactful.
Shelley:
Let's take a little longer term view now, which I get a sense of restlessness just across the restaurant industry, we've been here, we've come up with the methods to stay afloat, but we want to innovate again, when does that happen? So what do you think about that, Alison?
Alison:
Yeah. Everybody's been talking about, it's not a new idea, but I think we will have to evolve more quickly. I'm specifically talking about full service restaurants, well actually it doesn't have to full service, certainly fast casual as well, but we're going to have to evolve more quickly to ghost kitchens. And there's a couple of definitions people use. One is locating kitchen facilities and areas solely for the purpose of delivery, maybe for pickup, it's certainly not dine in. This saves on labor, you don't have to bear the responsibilities of keeping a dining, public safe. Plus it allows you to gain market share by going into an underserved area without spending a lot on real estate.
Alison:
The second definition I hear a lot is launching virtual only concepts. So no physical restaurants at all, the brand lives online, it's created for online, it's launched online, it's available for delivery and potentially even pick up from one of those ghost kitchens. I think for established full service chains, it was on the explore list prior to COVID. But now I think it has to be accelerated and added to the to do list. And second, I don't think we can forget the basics of our industry, which is delivering a differentiated food experience at a consistently high level of execution, at a great value. These have always been the strategic pillars of all successful concepts. And though we may have paused our innovation against these pillars during this crisis, it's now time to move past, as you say, staying afloat, towards strengthening those elements that brought us to the party in the first place.
Brian:
The ideas of the new restaurant going forward. And as I mentioned before, the customer journey is new. And it's going to be different and I like to use the word adaptability because we're not sure what the next month what it may look like or the next few months, but I do know that restaurants are going to be there and they're going to find ways to communicate to their customers and bring them into enjoy the things that Alison just mentioned, whether it's in that physical location or whether it's the food being brought to them and the experience being translated in another way. So I think innovation is going to be consistent and constant, and I think it's exciting. And the more that we can do to help bring customers into the restaurant from a marketing point of view to experience that, that's where I think our job as partners can really come forward to say, and help the restaurant [inaudible 00:26:28] from all the investments that they're putting back in.
Alison:
Yeah. And Brian, I think you're absolutely right about the customer journey. That's one of the things that's very fluid right now. And we might have mapped the customer journey and backed it up with measurement techniques down to the nth degree. But I think we're all kind of reexamining that now and having to really do that all over again. What percentage of your customers are entering the funnel from this channel? And what are their needs? And how has that changed? And how have the different segments changed in their waiting across all of the groups of people that the entered the funnel? And so it's certainly going to be interesting, but I think if we think that the customer journey is going to snap back to being the same that we put all this work into mapping before, I think we follow that path at our peril.
Shelley:
Okay. Now, I have a question for you, Allison, as part of the executive team at Perkins and Huddle House, how did you ensure alignment across the executive suite on the priorities you have and the marketing budget in the last few months, and then going forward?
Alison:
Yeah. I think if you're part of the executive leadership team that wasn't tightly aligned before this hit, I would hate to have lived through what would you might've lived through the last five months or so. We were tightly aligned and I think like any good crisis management process, we started out every day from March, whatever it was, March 13th on with the teams meeting with all top executives of both brands. COVID hit when we were only six months into our acquisition and really absorption of the Perkins brand. So we were dealing with that and then COVID hit. So we assigned roles, in store safety, regulations and guidelines, guest facing messaging, assistance to the franchise space, cashflow management. All the things that we had to do in this crisis we literally on day one when we could, actually I think it was probably March 11th or 12th, on day one, when we could kind of see where things are going, we literally all got in a room and just started mapping out everything that we knew we were going to have to face.
Alison:
And then we stayed in constant communication with each other. Even though we were all very quickly after that time working remotely, except for our central personnel who had to be on site. So, eventually we gradually moved to every other day, then once a week. We've always run our business, utilizing the OKR system of objectives and key results. And we, by no means cost our earlier defined OKRs, but we added a big one. And the big one was stabilizing the business, that was first and foremost, that was the priority. We were all aligned with that and we just talked a lot. And that was the purpose of starting the day with the morning meeting where we could all, not only run down things in our specific area, but so that the entire executive team could understand what was going on across the enterprise and be able to provide help and input to the other executives and their functional areas.
Shelley:
Lastly today and taking the larger restaurant marketplace into consideration, what marketing tactics have you found to be most successful for your brands over the past seven months or so? And how would you tell other restaurants CMOs to apply those learnings to their own brands?
Alison:
Yeah. I think I would go back to digital of course. This just accelerated needing to get into a more refined digital marketing plan for one of our brands. We were already there for the other brand and necessity just caused it. But digital of course is attributable, it's ultimately targetable because you can get so close around the restaurant. And one of the things that we've seen during the pandemic as well is not replace of course, recovers equally. So we really used a lot of our sales data to pinpoint exactly what we're going to tackle first and what we think we can actually effect. We have a lot of patients that we know we just can't affect right now because they're in parts of the country that haven't opened up. They might be in tourist areas and being able to use the various digital marketing strategies and tactics has allowed us to really have that pinpoint decision.
Alison:
And I think the other thing from a tactic standpoint that has been really successful is, just changing our tonality. People are scarred, I think as I said before, and we have to present responsible but positive messages. It doesn't have to be sober, humor is good at this point, but we have to make people feel safe again, we have to be genuine in our conversations and we have to acknowledge what everyone is going through even while we're trying to build the business back. So being genuine, really taking a look at our media tactics from top to bottom of where we're going to channel that and look let's face it, our marketing budgets were chopped by, anywhere from a quarter to a third as we look forward for the next eight months or so, just protecting sales.
Alison:
Look, when you had virtually no sales for two months, because you're a dining concept, that's rough, that puts quite a dent in your marketing budget. So we've really had to really start all over again and really focus on those tactics that we can target specific restaurants, we can target specific guest groups and use those messages with the right tonality. And one thing we haven't talked about too much in this podcast that I think is going to really rear its head, is the whole value thing. Honestly, it hasn't been a big issue up to this point, as a lot of people have said because of the stimulus and because of unemployment benefits, but as that begins to peter out, unless employment really picks up again, I think there's a lot of restaurants, individual restaurants that are going to be in bad shape, just because their target group is just not going to be able to afford restaurants.
Alison:
And a lot of restaurants have been raising prices to deal with all of the extra sanitation and safety supplies, certainly all the extra packaging material, because so much of the business has shifted to off premise. So I would say, kind of in summary that, from what's been successful, it's been the digital media tactics that we've been able to target. And that includes not only digital advertising, but email and social media as well. It's been just the sheer fact that we changed the content of our messaging, our tonality, what we say to people, and that we're getting even more value forward, because we know it's coming where people are going to have less and less money in their pockets. And we want to make sure that we still get a share of those visits.
Shelley:
Brian, is there anything you can add to that?
Brian:
I don't know, I think that was very well said and perfectly put, and I think the underlying thing is that even if you've thrown your marketing calendar, your marketing approach away because you've had to rethink everything, it's going to be okay in the sense that you can try new things, you're going to test new things. There might be new channels that you didn't know customers were interested in and understanding that tonality and the value I think is going to be extremely critical as we go forward. And it's going to change in ways that we can't predict. And that's something that we'll have to work together as partners on, on how to take the right approach and being flexible and nimble and adaptable, I think are going to be critical for success as we go forward.
Alison:
Yeah. Just one kind of parting thought that you made me think of is, one of the other things I said at the beginning of the podcast that we really learned is that we can move a lot faster than we ever thought we could. And that's really shown us that when necessity calls for it, that we can really be lightening fast. And so I think one of the things that we probably will take a look at is the whole testing process, because testing takes time.
Alison:
And I think now we'll look at all sorts of things and evaluate it more through the lens of risk and reward. So if something is very, very risky and it could affect sales in a big way, then obviously we'll do our testing. But we used to be just kind of in this testing mode of, we test everything. And I'm not sure that's needed anymore when we kind of look at the risk and reward, if the risk isn't all that great, and the reward has much more upside? Then we want to get there sooner rather than later. And that's one thing that we would have never learned if it hadn't been for this crisis.
Shelley:
You are both getting to be, already are pros at adaptability and flexibility. So you could start your own bootcamp. Alison DeLaney is CMO at Perkins and Huddle House. And Brian Giannone is the vice president of Client Development at Epsilon. We appreciate you both being on the podcast today and wish you great success in the future. As we wrap up this edition of the show, a big thanks to all our listeners and have a great day.