Grabbing take-out or stopping at a restaurant for a quick bite has become the order of the day, particularly among the 74-million-strong on-the-go Millennial generation.
In fact, Millennials made more than 14 billion visits to food-service establishments in the past year, translating to over $95 billion in meals overall, according to NPD Group. More than 70 percent of these visits were to quick-serve restaurants (QSRs).
So it stands to reason that this industry has been on the rise in recent years. This year, more than 230,000 fast-food restaurants opened their doors in the U.S., with approximately half comprised of quick-service franchises, according to Statista. By 2018, those numbers are expected to reach nearly 250,000 and 125,000, respectively. In addition, according to the National Restaurant Association, the quick-serve industry brought in more than $170 billion in sales over the last year.
This sea of new competitors makes keeping a restaurant top-of-mind a challenge for any QSR marketer. To get a better handle on the challenges, opportunities, and appeal of QSRs in today’s age, CMO.com spoke with six leading quick-serve marketers:
- Yanira Castro, head of marketing for Salsarita’s Fresh Cantina
- Diana Hovey, CMO of Corner Bakery Café
- Paul Macaluso, CMO of Moe’s Southwest Grill
- Mark Mears, CMO of Schlotzsky’s Bakery-Café
- Chuck Schwalbe, director of marketing for Erbert & Gerbert’s Sandwich Shop
- Jason Smylie, executive vice president and CMO of Capriotti’s Sandwich Shop
Despite many common threads, each executive offered a unique perspective on the myriad topics discussed. Those included competing in a crowded industry, leveraging new channels and technologies, an out-of-the-box idea that proved successful, and what’s so great about their jobs.
CMO.com: What are the biggest issues that a CMO must deal with in the QSR space?
Corner Bakery’s Hovey (pictured, right): When you ask a CMO what keeps them awake at night, the first answer is always any crisis situation that potentially puts our guests or staff in danger. Fortunately, those incidents have been few and far between in my career. After that, I think one of the biggest issues we face in any segment of the industry is commoditization. Having spent many years in casual dining and watching the sea of sameness that overtook that segment, I pay close attention to making sure Corner Bakery has strong points of differentiation and is continually evolving with the needs and desires of our guests.
Schlotzsky’s Mears (pictured, right): I would sum up the biggest ones in two words—differentiation and relevance. Despite the shakeout that occurred during the recent recession, there are still many more restaurants than there are guests who wish to dine out. Plus, there are several additional home-meal replacement options cropping up every day. As a result, we must create a remarkable brand experience that is unique and differentiated within a “sea of sameness”—one that is also relevant to the needs of fickle guests who are more educated and more discriminating based upon the Food Network culture we live in today.
Capriotti’s Smylie: I find the increasing overlap between technology and marketing the biggest issue for CMOs today.
Salsarita’s Castro: The biggest issue in this space is the speed of which everything moves. Long gone is the 12- to 24-month marketing plans of years ago. You have to have a framework of a plan, but be nimble and flexible enough to shift gears. And you will have to shift gears.
CMO.com: What are the biggest challenges of your job?
Capriotti’s Smylie: The biggest challenge is consistent execution of campaigns across all franchised units.
Moe’s Macaluso (pictured, right): At Moe’s, some of the challenges that I face are that of staffing and developing the marketing team to support such a rapidly growing brand. Also, it is a challenge to steward such growth and remain collaborative with our expanding franchise partner community.
Schlotzsky’s Mears: Given the advent of both digital and social media, coupled with the increased level of control enjoyed by today’s more tech-savvy guests, the ability to reach a mass audience through traditional means has become very challenging—especially on a limited budget where every dollar spent must provide maximum return.
Corner Bakery Hovey: As marketers, we can make the most beautiful TV spots, and we can plan the most exciting media campaigns, but results are completely dependent on a strong partnership with our operators and front line staff.
Salsarita’s Castro: One of the biggest challenges is reminding people that there is no magic marketing fix. There is not one big campaign that is going to make everything perfect. Marketing happens every single day, at every moment, in your restaurant--from team members smiling and greeting guests to the cleanliness of the restroom. Great marketing happens in the moments that you are not “marketing.”
CMO.com: Describe your business philosophy.
Erbert & Gerbert’s Schwalbe (pictured, right): My business philosophy is to hit a single everyday. Stance, direction, control, and knowing the count and the pitch allows you to focus the effort in making clear contact and getting on base. In the business world, and in baseball, the team that gets on base the most usually wins the game. That doesn’t mean you don’t hit a few home runs, doubles, and triples along the way, but if you always swing for the fence, then statistically you strike out more often than score. Scoring runs produces success, the fans (guests) cheer, and the team wins.
Corner Bakery’s Hovey: Everyone is a consumer, and everyone is a marketer. I truly believe the best ideas come from open ears and open minds. I’m very much a “think out loud” person and love to gather people from differing points of view and passions. As Corner Bakery Cafe evolves from a predominantly company-owned brand to a 50/50 franchise/company organization, I’m constantly tapping into our franchise partners’ immense experience inside and outside of the segment and industry.
Moe’s Macaluso: Focus on the customer, build a great team, and constantly challenge yourself to be the best.
Salsarita’s Castro (pictured, right): I am a strong believer that if we take care of our people, they take care of our guests, and everything else will fall into line. It is my team’s job to always think of the guest first. Secondly, I’m a New Yorker at heart, so I’m not very good at mincing words. However, my transparency allows me to get to the heart of the matter quickly. I find that all people appreciate that.
Capriotti’s Smylie: My business philosophy is to not dwell in regret or failure. Mistakes are bound to happen, but it is how you recover and more forward that matters.
CMO.com: Can you talk about some of your marketing efforts that have helped drive the brand?
Corner Bakery’s Hovey: It’s an incredibly exciting time for Corner Bakery Cafe. We are currently on a very aggressive pace for expansion. At the end of this year, we will have more than 180 locations in 19 states and Washington, D.C., with openings in new markets and trade areas occurring almost every week. With almost 400 franchise development commitments, we will more than double our brand footprint in the next few years. This has been made possible by an accelerated franchise development strategy, along with continued company growth.
From a marketing perspective, ... we partner with each of our franchisees individually to develop comprehensive and breakthrough marketing plans that utilize our custom-designed catering vans to help them announce the brand in new markets. We’ve found that getting our food in people’s mouths is the best marketing we have in new markets, and we use community events to make this happen.
Moe’s Macaluso: First, I embarked on a project to revitalize our brand positioning, which unlocked our commitment to Celebrate Originality. That work has really helped to serve as a filter for everything we do as a marketing team, as well as set the foundation for what the future of the brand can look like. Secondly, we have recently identified the right ways to beef up our national ad fund, which has led to the brand’s first national media buy, transitioning Moe’s Southwest Grill from a regional to a truly national brand.
Capriotti’s Smylie (pictured, right): Most recently we have produced the CAPAddicts Rewards mobile app, which is currently in a limited rollout. The app is primarily a mobile-based loyalty program, but features online ordering, social integration, and, in later releases, will expand to mobile payments. It's a great way to engage our already passionate fan-base and drive frequency.
CMO.com: What is an out-of-the-box idea you have had that has been successful?
Capriotti’s Smylie: A few years ago, in partnership with our ad agency and PR team, we held an event where Capriotti's fans were invited to “Marry a Bobbie,” our signature sandwich. Over 200 people lined up at the Little White Wedding Chapel on the Las Vegas Strip in 110-degree summer heat to show their love for our brand. The event was covered by many news outlets driving sales to our restaurants.
Corner Bakery’s Hovey: We’ve employed a “mother-and-baby-duck” approach to street marketing in busy downtown markets. Imagine a 40-foot mobile billboard followed by a parade of three Corner Bakery-branded Segways, each pulling a four-foot billboard showcasing craveable menu items. From double-decker buses (a.k.a. “Crave Cruisers”) wrapped with bigger than life BLT sandwich imagery traveling the streets of Chicago and Washington, D.C., to Corner Bakery teams out on the streets with Ghostbuster-like backpacks of hot coffee or cold lemonade, it’s amazing what you can achieve with a creative and nimble team.
Salsarita’s Castro: When I learned of the PuckerButt Pepper Company, I knew we had to work with them. Located just miles from the Salsarita’s Support Center, the PuckerButt Pepper Company’s chief scientist, Ed Currie, had created the world’s hottest pepper, the Carolina Reaper. In turn, Ed and our chef, Tom LaFauci, created the BurHEATo, the world’s hottest burrito.
CMO.com: With competition both big and small seeming to enter the QSR field all the time, how do you prepare a marketing strategy to compete?
Moe’s Macaluso: I’m a strong believer that no matter who is your competition, you need to be clear on your advantaged playing field. At Moe’s, we dominate in what we refer to as our ”Irreverent Welcome” and ”feeding creativity.” Everything starts with our hearty ”Welcome to Moe’s!” which encourages guests to feel at home and be themselves.
Corner Bakery’s Hovey: I’ve always believed that an awareness of the competition is important, but that it is not where we find our inspiration. As a brand we have to continue to evolve by looking to our guests for insights and outside our segment and industry for inspiration. I believe we must tell the story of our craveable food in a compelling and unexpected way.
Salsarita’s Castro: There is no way to compete with all players. If I spend all my time focusing on the competition, that is time I have lost focusing on the Salsarita’s brand. I keep an eye out and encourage my team to visit other restaurants as much as possible, but I prefer to keep the focus on what we can do better, how we can keep improving our brand.
CMO.com: The growth of mobile has become such an important element to any marketing strategy. What has your company done to take advantage of the ever-changing technology?
Corner Bakery’s Hovey: Our consumer is constantly on the go and on their phones. Last year we introduced a completely new Web site, incorporating a responsive design that delivers a superior user experience, whether on desktop, tablet, or mobile. Catering is a very big part of our business, representing over 20 percent of our revenues, and online ordering has been key to the incredible growth we’ve seen in our catering business.
Schlotzsky’s Mears: We recently launched an exciting, new mobile app-based guest rewards program called Lotz4Me. In only three months, we have obtained over 100,000 members. Reaching Millennials is critically important to the growth of our brand and, given Millennials practically live on their mobile devices, we knew we needed a relevant, compelling way to engage with them on their terms.
Salsarita’s Castro: We have begun to look at everything though mobile eyes first--for example, the new salsaritas.com. We know that people go to a site for two reasons: one, to find a location, and, two, for nutritional data. We are continually working on making the experience of finding those two pieces of data easier and easier on any device.
CMO.com: Let’s talk about social media and its importance in keeping the buzz going about your brand.
Corner Bakery’s Hovey: Our marketing budget is a fraction of our competition’s expenditures. However, social media can help level the field for us. We focus on fueling word-of-mouth conversations about the brand. We use listening tools to monitor online conversations and sentiment, engaging whenever appropriate and as quickly as possible. Online community engagement is critical to building our business, and custom programs are designed as core components of every marketing campaign. In addition, we do weekly Twitter chats with working moms where ideas and inspirational thoughts are shared.
Moe’s Macaluso: Our brand has a rich heritage in pop culture and music, which naturally lends itself to genuine and interesting ways to engage with our guests on social media. Beyond that, one of our key learnings from the past few years is that we must tailor our efforts on each social media platform. What works well on Twitter is something different than what works well for us on Instagram. Our team is extremely focused on cultivating genuine consumer engagement, leveraging the power of authentic brand stories that spread through owned, earned, shared, and paid media connections to create shared value.
Salsarita’s Castro: Crissy Lavery is our social media voice. If you hear from Salsarita’s, it will be from her directly. That’s important to us. It provides a real authentic, emotional connection from the brand to the audience. Secondly, we use a platform that searches the Internet every single day for mentions of our brand and interprets it. All the data is dumped into the platform, and we are able to slice and dice the data in an infinite number of ways. This platform helps us praise our team members when they are doing wonderful things, and it also allows us to zero in on opportunities we may not have even known about. The world is talking about your brand; you just have to be open to listening.
CMO.com: When looking at analytics, how do you use the data and metrics you collect to make choices that will help the company grow?
Erbert & Gerbert’s Schwalbe: We have invested in areas that have increased our directions to meet the needs of the guests—email marketing/loyalty program, social media, Web site programs—having guest interaction to assist in the formulation of our opportunities. Our loyalty program tracks guest purchases and provides us data about our guests, their purchases, and what drives them to E&G. We also have used and will be using our online survey to enhance the information from our loyalty guests.
Corner Bakery’s Hovey: I am an insights-driven person. Whether it’s a quantitative tracker study, transactional CRM data, or qualitative feedback gathered from sitting on a living room floor with Millennials, I believe we must peel back layers to fully understand our business. I also believe that the front-line experience is absolutely the moment of truth for our guests. For example, we spend a lot of time with our operators going through insights from our guest loyalty surveys to identify ways they can impact their business directly. We know that over 90 percent of our guests say that they will recommend Corner Bakery Cafe to others if a manager has interacted with them.
Moe’s Macaluso: Our No. 1 objective is driving same-store sales growth, so we have a weekly check-in on our performance and also include regular industry benchmarking. We also dig deeper into the components of that growth and review it related to the specific marketing tactics of the promotional period. For example, if we are merchandising one of our premium ingredients, like our grass-fed, all-natural steak, we will monitor for increases in average check and mix shifts from chicken to steak. Some of our other measures of effectiveness are our quarterly brand tracker, measuring all the fundamental customer awareness and perception indicators.
Schlotzsky’s Mears: While we employ traditional quantitative measures, such as guest counts, guest check, product/sales mix, etc., the beauty of the Lotz4Me Guest Rewards program lies in our ability to see beyond merely a faceless, nameless transaction—to obtain a better understanding of our guest as a whole—helping us to build a mutually satisfying, personal relationship based on what’s most relevant to their life. Given this data is run through our POS system and then housed in a master database, we can combine data from a member’s personal profile and stated preferences with their actual purchase behavior in our restaurants, as well as those who use their social media influence to refer others into the program.
CMO.com: What intrigued you about entering the QSR world and working at your company?
Capriotti’s Smylie: Prior to being involved with Capriotti’s as a franchisee and later as the franchisor, I was a passionate fan. I ate the food religiously. My partner and I always wanted to get into franchising, and Capriotti’s made sense because the economic model was great and the product was even better.
Moe’s Macaluso: I’ve been in the QSR industry for more than 20 years. It started with Taco Bell, which was owned by PepsiCo at the time. ... I quickly fell in love with the pace and energy of the QSR industry. When I heard about the opportunity with Moe’s, I jumped on it because of the amazing core equities of the brand and its tremendous growth potential. I knew that I would have the opportunity to be part of building something great.
Schlotzsky’s Mears: I love the restaurant industry because it combines my two passions—people and food. [I embraced] the opportunity to help dramatically grow the Schlotzsky’s brand by building on its 43-year QSR sandwich/deli category foundation through the development of an elevated fast casual bakery-café experience—allowing us to become even more relevant to the way guests want to dine today.
Salsarita’s Castro: I have always loved the restaurant industry since my first job working at a local ice cream shop when I was 15. QSR has changed so much from 20 years ago, and that’s what intrigued me. At a QSR, you can use high-quality ingredients and focus on culinary excellence at a price point that is accessible to the everyday consumer. The intriguing part about coming to Salsarita’s was the ability to build something not necessarily new, but with new eyes. I have been given the freedom to try things. They all don’t work, but many of them do, and the learning is incredible and invaluable.
Erbert & Gerbert’s Schwalbe: I started my professional restaurant career at the age of 15—I made onion rings from scratch and au gratin potatos at a supper club in my hometown. Once at college, my interest changed to communications, but my ability to work in the restaurant business never left. After college, I managed a bar and restaurant, and found my need to use my college focus of communication through a radio station. The move was dramatic, but I was always working with restaurants and QSR clients, from radio to agency. The move to QSR was based on the opportunity to work with the largest in the industry—McDonald’s.
Corner Bakery’s Hovey: As a marketer, I believe it’s incredibly important that I can identify with and totally embrace my brand as a consumer. Having spent the majority of my marketing career in casual dining, fast casual was a completely new, yet very attractive segment. Prior to joining the Corner Bakery Cafe team in 2006, I recall visiting one of our local neighborhood cafes in Dallas. I remember being so impressed that everything was prepared fresh to order and customized the way I wanted it. I also noticed that guests and employees not only knew each other by name, but knew about their families and interests. It was clear that this was a neighborhood-gathering place–a regular daily part of their lives.
CMO.com: What is it that you love about your job?
Erbert & Gerbert’s Schwalbe: Every day I have the opportunity to be part of a tremendous group of people, franchisees, and vendors, and drive the marketing of a great brand.
Corner Bakery’s Hovey: For my whole life, one of my greatest joys has always been bringing people together; I love to host gatherings of friends and family over great food. As CMO at Corner Bakery Cafe, my job meets my personal joy.
Moe’s Macaluso: I really love the people. I’m so proud of the high-functioning team that I lead, one built on a strong designed alliance, extremely focused on growing the brand in all the right ways, and delivering great experiences for our guests.
Schlotzsky’s Mears: There are actually many things I love about being a CMO at Schlotzsky’s. However, I would say the opportunity to work in a fast-paced, collegial environment—one that combines intellectual curiosity, people development, innovative strategic thought leadership, high-performing teams, and, of course, food—can best be summed up in one word: growth.
Salsarita’s Castro: There is true passion at the Salsarita’s Support Center. I love that I have the ability to build a brand in the most real and authentic way.
Capriotti’s Smylie: I love that it is something new every day. I love that our company helps support families across the country. But most of all, I love that I get to eat our food all the time.