June 26, 2018
Restaurant Leadership Conference
This year, the theme of the Restaurant Leadership Conference was “Disruption” (images from Restaurant Business). Certainly “disruption” is a term that gets batted around by business executives everywhere, so here’s where we felt that the dialogue found its mark.
Understanding “Disruption” in a restaurant context
In 2016, every business wants to be able to claim the mantle of “disruptor.” And how could you blame any of them? The massive success demonstrated by Netflix for movie rentals, Lyft for taxis, Airbnb for hotels, and iPads for computers has cemented “disruption” as a good thing for business.
For restaurants, however, “disruption” may be intimidating. The basics — sitting down, ordering, eating, and socializing — have driven success in the restaurant industry for as long as anyone alive can remember. So, whereas a Silicon Valley technology conference about “disruption” may introduce ideas like flying vehicles, self-driving cars, augmented reality virtual experiences, and wearable biometric devices, the concepts covered at a restaurant conference are much less flashy.
That lack of “flash” is a good thing — restaurants as a whole aren’t looking for “flash.” They’re looking for nuance that revolutionizes the profit and loss equation for selling food and dining to consumers. With that in mind, let’s take a look at some of the key quotes from the week, and what those quotes tell us about where the restaurant industry looks to be headed.
Key takeaways from the restaurant leadership conference:
1) Industry trends reveal that consumers demand more personalized experiences
Technomic specializes in identifying growth trends for restaurants. Here’s the biggest takeaway I saw from their presentation:
Effective differentiation in the restaurant industry comes down to personalizing customers’ experiences.
Here’s why — verbatim, Patrick and Darren identified five critical consumer trends restauranteurs need to address:
- Consumers want to go to restaurants to connect with others
- It’s important to consumers that restaurant brands connect with their values
- Guests want to go to restaurants that “feel small”
- They want immediacy and convenience from restaurants
- Personalization matters more than customization in the restaurant industry
To me, all of those trends scream out, “Consumers want restaurants to feel more personal to them, and their experience to be more personalized overall.” “Connecting with others” means that a restaurant should be a place to build personal relationships. “Connect with values” is about brands having more personal meaning for customers. “Feeling small” is about feeling personal, and not arm’s length. Etcetera, etcetera, etcetera.
Unsurprisingly, the restaurant brands doing the best are the ones that prioritize personalization. For example, fast casual grew 11.5% in the last year, which far exceeded 4.4% growth for quick-service restaurants. The driver of this growth are brands like Blaze Pizza and Pieology, who’ve strived to bring more personalization to the pizza industry.
For brands looking to improve personalization, the product may be a good place to start. However, a personalized product isn’t that scalable. So, I’d propose a different route:
Restaurant brands have to focus on building a proprietary customer database. The only way to personalize experiences is to have better customer data, as that’s what drives personalized marketing. Plus, with better data, you can ensure that you make decisions based on a closed loop — where decisions drive quantifiable, monetary results.
2) In order to stay relevant, brands have to push the envelope on technology
Looking at the speakers here, you knew that the insights coming out of this conversation would be meaningful. All four CEOs helm massively successful businesses. So, what’s their secret sauce?
Well, success in fast casual comes down to balancing food quality with costs of service and labor, and — to the executive — there’s only one way to successfully pull that off:
Unique customer experiences.
Carl Chang has used the food network movement to build his brand around the science (pieology) of good food. Frank stated that the most important “buzzword” in 2016 is delivering a superior experience in the shortest amount of time possible. Russ outlined how consumers of course demand time efficiency, but will actually tolerate longer wait times if technology can deliver a superior experience. Hoyt mentioned that services like Doordash create too much risk, as they remove the sponsoring brand’s control over the experience.
So, how should restaurants consider create unique experiences? Well, here’s what I would say:
Don’t forget about the customer experience outside of the four walls of the business.
Remember, customers spend the majority of time outside of a restaurant. So, implement tactics like feedback programs to ensure customers feel valued even when they’re not on site. The sales benefits are tremendous.
3) Being “people first” and “technology-focused” makes perfect sense
Howard Behar knows how to grow a business — he spearheaded much of the effort that drove Starbucks from a niche brand with twenty some odd stores, to a global powerhouse with thousands of outlets on five continents. At the Restaurant Leadership Conference, he discussed key ways that restaurant businesses can grow their culture.
I thought that the best question Howard received had to do with the tradeoff between people and technology. Howard is famous for being the person who trumpeted the slogan “people first,” so I was curious how he would answer the question, “how do we handle technology in a people first culture?” Howard’s response:
” ‘People first’ and technology are compatible. Technology is never the ends; the ends are people serving human beings. The key is to use technology to create more meaningful human relationships.”
Noticing the trend yet? Customers demand unique experiences, and technology can be helpful in creating that uniqueness. To that end, technology for technology’s sake does not work. That’s why when you’re building a branded app, for example, you have to focus on customer experience, not useless gadgetry.
4) Run your restaurant like a sports franchise
Airbnb’s head of hospitality Chip Conley gave a fascinating presentation about structured leadership. However, my favorite quote was one Chip referenced from famed Chef Michael Mina, who told Chip,
“Run your restaurant like a sports franchise.”
At a high level, Chip explained that each restaurant needs branding, high-quality players, and business-minded executives.
In my opinion, there’s one thing that Chip left out. Moneyball. The most successful sports franchises in the world today use data to make informed decisions. Thanx to Brad Pitt and Michael Lewis, we know that that Oakland A’s were only able to create a winning team by relying on data instead of the eye test. Restaurants should take the same approach.
5) Frequency is all that matters in marketing
In an in-depth conversation about the path to success in 2016, Pete, Bonnie, and Julia made one point very clear — the sole focus for a restaurant’s marketing team has to be increasing frequency.
This brings us back to our analysis of the loyalty race track. With each success at cutting down hurdles, increasing transparency, and instilling more motivation, customers run faster. That’s how to find success.
We had a great time at Restaurant Leadership Conference, and plan to see you all there next year! Want to talk loyalty before then?