Tuesday, January 10, 2023

Can Burger King’s Digitization Come Soon Enough


Global restaurant brands are working as hard and fast as they can to digitalize every aspect of there brand.  In the case of a global behemoth Burger King, Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® asks, “How long can you last being second? When the consumer moved deeper into hand held food, hand held marketing, how long will it take Burger King to drive global brand relevance with digital branded messaging?”

The simple fact of the mater is digitization of the Burger King brand is taking to long.   There is no doubt that there will be more digitization, however how relevant will it be?  Overall, the food industry is taking its time to adopt AI and digitize as many different areas as possible. Roughly half of the food industry currently utilizes AI in some way, and while many industry insiders envision a massive digitization product that prompts a full overhaul of the industry, it is better practice to use AI and machine learning to solve specific problems bit by bit. In 2023 will likely see an even bigger digitization push in the food industry with branded messaging leading the way.

We will see every thing from hourly specials, to weekly deals, even branded crisis managers will be utilizing A. So, at Burger King they have elected to focus on digital-only offers for loyal guests versus blanket discounts. It that the right approach?  Maybe more hand held than mass media? Do you think so?

Now, KFC recenlty announced a limited time $5 deal on its chicken pot pies, for instance. According to a spokesperson, this is nearly a dollar cheaper than the traditional price of the item. Meanwhile, Sonic has introduced a new Under $2 Craves menu through March 26 and Popeyes has relaunched its ghost pepper wings and is offering six for $5 for a limited time.

Of course, promos are always big this time of year, as January and February tend to be slower business months for restaurants and as consumers tighten up their spending habits following the holidays.

“The holiday season can be tough on everyone’s wallets, and we’re so excited to bring back ghost pepper wings at an incredible value that can’t be beat,” Popeyes president Sami Siddiqui said in a statement.

This year, however, is likely to be a bit different. There are still promotions aplenty, no doubt, but there is much more focus on digital-only deals, both to encourage people to join loyalty programs and to collect their data. Digital orders tend to generate higher checks and better margins, after all.

Now, consider Popeyes, for example. In addition to the above promotion, the chain is also offering wings for $6 or 12 wings for $12 for delivery orders made through its app or website. Subway is currently running a buy-one-get-one 50% off Footlong promotion via app and web orders, while Burger King is offering a free Whopper, Croissan’wich or original chicken sandwich on guests’ first digital order through its app or website.

Then Wendy’s is currently running an “app-exclusive offer” that includes $3 off of any order $15 or more, as well as $2 off on a breakfast combo ordered in the app. Jack in the Box is promoting two tacos for 99 cents for digital orders only. And Chipotle’s new lineup of Lifestyle Bowls are available exclusively through the chain’s digital channels.

What’s also different this year is the deals are a little less aggressive as operators continue to manage extraordinarily high inflation costs. This trend has been in play throughout the past couple of quarters, as several restaurant executives have touted value propositions over deep discounting to maintain traffic while balancing higher menu prices.

As an example, Wingstop CEO Michael Skipworth recently said, “When we lean into value, we don’t really discount as a brand … so we’re retaining those indulgent occasions, but then presenting the consumer with value, which can be a price point, the cook-to-order element, the craft and in the attention to detail that goes into our ranch that’s made from scratch every day. All of those elements contribute to consumers’ perception of value.”

Olive Garden is also good example here, recently running its Never Ending Pasta Bowl promotion, but priced $3 higher than its most recent run in 2019. The promotion exceeded expectations and drove positive traffic with little media support, according to executives on parent company Darden Restaurants’ Q2 call last month.

Then there is,” Domino’s CEO Russell Weiner said during the company’s Q3 earnings call they are going a different way.  Domino’s has also taken this approach, inching up the price on its carryout offer from $5.99 to $6.99 in an effort to protect operator margins.  Weiner continued, “Our research indicates we can do (this) and still remain a large relative value. That’s our role within this inflationary environment is to be a strong relative value for our customers.

Then this conundrum, Chili’s has reined in its value menu mix as it works to “right size” its promotional offers. The result has been a slight decrease in traffic, but an uptick on profitability, Brinker CEO Kevin Hochman noted during the company’s most recent earnings call.

As operators continue to find creative ways to achieve such profitability without taking too much pricing, we’re likely to see a continued evolution of promotions in the space to kick off the new year and beyond. That includes a sharper focus on digital promotions without heavy discounting. Bloomin’ Brands CEO David Deno recently summed up the benefits of this approach on his company’s Q3 earnings call.

“You're going to see us in a more digital environment talking about the value we offer every day. You won't see a lot of discounting from us,” he said. “We think we've got our menu prices in line, we think we've got some great offers in line. We understand the digital marketing piece, we can flex it up and down, and we're really pleased with the returns that we're seeing.”

For international corporate presentations, regional chain presentations, educational forums, or keynotes contact: Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions.  His extensive experience as a multi-unit restaurant operator, consultant, brand / product positioning expert, and public speaking will leave success clues for all. For more information visit GrocerantGuru.com, FoodserviceSolutions.US or call 1-253-759-7869

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