April 17, 2025 • 48 mins
In this thought-provoking episode of Restaurant Masterminds, host Paul Barron and fractional CMO Stacy Kane challenge traditional loyalty programs, revealing why Gen Z's $12 trillion spending power demands a fresh approach. The duo dissects Starbucks' controversial rewards devaluation, explores gamification alternatives, and introduces blockchain solutions like Blackbird that could eliminate costly third-party intermediaries. Their bold prediction? The entire loyalty tech stack may disappear within five years, making this essential viewing for restaurant operators seeking to build genuine customer connections that transcend points systems.
~This episode is sponsored by: Gusto → https://gusto.pxf.io/PBN ~
#1 rated HR platform for payroll, benefits, and more
With Gusto’s easy-to-use platform, you can empower your people and push your business forward. See why over 400,000 businesses choose Gusto.
#RestaurantLoyalty #FoodServiceInnovation #CustomerRetention
Get Your Podcast Now! Are you a hospitality or restaurant industry leader looking to amplify your voice and establish yourself as a thought leader? Look no further than SavorFM, the premier podcast platform designed exclusively for hospitality visionaries like you. Take the next step in your industry leadership journey – visit https://www.savor.fm/
Capital & Advisory: Are you a fast-casual restaurant startup or a technology innovator in the food service industry? Don't miss out on the opportunity to tap into decades of expertise. Reach out to Savor Capital & Advisory now to explore how their seasoned professionals can propel your business forward. Discover if you're eligible to leverage our unparalleled knowledge in food service branding and technology and take your venture to new heights.
Don't wait – amplify your voice or supercharge your startup's growth today with Savor's ecosystem of industry-leading platforms and advisory services. Visit https://www.savor.fm/capital-advisory
Get Your Podcast Now! Are you a hospitality or restaurant industry leader looking to amplify your voice and establish yourself as a thought leader? Look no further than SavorFM, the premier podcast platform designed exclusively for hospitality visionaries like you. Take the next step in your industry leadership journey – visit https://www.savor.fm/
Capital & Advisory: Are you a fast-casual restaurant startup or a technology innovator in the food service industry? Don't miss out on the opportunity to tap into decades of expertise. Reach out to Savor Capital & Advisory now to explore how their seasoned professionals can propel your business forward. Discover if you're eligible to leverage our unparalleled knowledge in food service branding and technology and take your venture to new heights.
Don't wait – amplify your voice or supercharge your startup's growth today with Savor's ecosystem of industry-leading platforms and advisory services. Visit https://www.savor.fm/capital-advisory
~This episode is sponsored by: Gusto → https://gusto.pxf.io/PBN ~
#1 rated HR platform for payroll, benefits, and more
With Gusto’s easy-to-use platform, you can empower your people and push your business forward. See why over 400,000 businesses choose Gusto.
#RestaurantLoyalty #FoodServiceInnovation #CustomerRetention
Get Your Podcast Now! Are you a hospitality or restaurant industry leader looking to amplify your voice and establish yourself as a thought leader? Look no further than SavorFM, the premier podcast platform designed exclusively for hospitality visionaries like you. Take the next step in your industry leadership journey – visit https://www.savor.fm/
Capital & Advisory: Are you a fast-casual restaurant startup or a technology innovator in the food service industry? Don't miss out on the opportunity to tap into decades of expertise. Reach out to Savor Capital & Advisory now to explore how their seasoned professionals can propel your business forward. Discover if you're eligible to leverage our unparalleled knowledge in food service branding and technology and take your venture to new heights.
Don't wait – amplify your voice or supercharge your startup's growth today with Savor's ecosystem of industry-leading platforms and advisory services. Visit https://www.savor.fm/capital-advisory
Get Your Podcast Now! Are you a hospitality or restaurant industry leader looking to amplify your voice and establish yourself as a thought leader? Look no further than SavorFM, the premier podcast platform designed exclusively for hospitality visionaries like you. Take the next step in your industry leadership journey – visit https://www.savor.fm/
Capital & Advisory: Are you a fast-casual restaurant startup or a technology innovator in the food service industry? Don't miss out on the opportunity to tap into decades of expertise. Reach out to Savor Capital & Advisory now to explore how their seasoned professionals can propel your business forward. Discover if you're eligible to leverage our unparalleled knowledge in food service branding and technology and take your venture to new heights.
Don't wait – amplify your voice or supercharge your startup's growth today with Savor's ecosystem of industry-leading platforms and advisory services. Visit https://www.savor.fm/capital-advisory
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
We are back here on the Restaurant Masterminds podcast, and
today it's always going to be a good one because
I've got the amazing smith Stacy Kane joining me today.
Speaker 2 (00:11):
How are you, hello, Paul, I'm great. I'm at my
best friend's house. I'm on a stand up desk, which
you're not used to.
Speaker 1 (00:19):
Hey, that's what I do at my home studio. I
use a stand up desk. It goes up and down.
I love it. I like standing and talking, you know,
just too.
Speaker 2 (00:28):
It seems very much more natural. I also like that
it only makes me look like I have two chins
instead of like tinge.
Speaker 1 (00:36):
Well, hey, listen, you are flying solo with me today.
I had Paul Molinari the last episode solo. He and
I had a good time. Today. We are going to
really discuss the idea of Loyalty two point zero and
there is a lot to break down here, both for
restaurant brands, the tech innovators in the space. And I
know Stacey, you're going to share some more stories out
(00:58):
there on loyalty. He will. Yeah, there you go, Do
I have them? You guys don't want to miss this one.
We'll be right back. My name is Paul Baron as
(01:31):
the early pioneer in fast casual. I've seen the industry
evolve from just a few operators to the most sought
after segment by consumers around the world. Now we're planning
to shape its future. Tap into decades of my expertise
identifying the emerging brands and tech winners in the space.
(01:51):
Saber Capital will be fueling the next generation of fast
casual innovation. All right, we're back here on the Restaurant
Masterminds podcast, and of course joining me is Stacy Cain,
one of our amazing masterminds. You know, we have a
new mastermind that has joined the roster. Have you do
(02:12):
you know about that?
Speaker 2 (02:14):
My one of my best sies. There you go, Robin
Banchette of Norton Creative. I could not be happier.
Speaker 1 (02:23):
She's going to be amazing. He's going to be amazing.
I think we have her on next week and I'm
not sure. I got to look at the schedule, but
I think she's on next week. But the cool thing
is is she's going to you know, you're exactly right.
She's with Norton Creative founder. I think one of the
founders of Norton creative for sure, and they do amazing
job at branding. They're based out of Houston, Texas. She
(02:46):
is now one of our masterminds. She's going to be
joining us on this podcast and also Rock My Restaurant,
which is our marketing and branding podcast. We got to
get you on there a.
Speaker 2 (02:54):
Couple of times before, but yes, yes.
Speaker 1 (02:58):
We're going to do that. Yeah, because no one is
write up your baileywick as. They say, all right, let's
talk about loyalty and get into the first component, which
is the target audience for loyalty. I think a lot
of our restaurant operators that listen to this show and
watch this show, they're constantly commenting on they love the takeaway,
(03:23):
and I want to showcase something real quick just to
give you guys a quick understanding of where this is
coming from. Because the gen Z audience really, if you're
in the restaurant business, this is going to be your
future future customer and it's probably already taking up a
large percentage of your demographic in terms of floor traffic
right now. One thing that gen Z has done here, Stacey,
(03:47):
is they are not very loyalty, loyal to their jobs
and listen to this statement here, loyalty to a particular
company is a scam, and I'm glad gen Z realizes it.
So this is something that I think is being kind
of I don't know if it would would it's getting
(04:09):
within the culture. Is the point is that gen Z
they don't look at loyalty as an attribute any longer,
so they kind of plug and play brands out there.
Are you finding this when in you know, as a
fractional CMO when you're working with brands, obviously loyalty has
like got to be number one on the list. What
are you finding out there in terms of the demos
(04:29):
around gen Z?
Speaker 2 (04:30):
It's very interesting that you say that. I think it
has a lot to do. It's a couple of things.
Do I think that gen Z, you know, from a
workforce perspective, is less loyal? I mean, I think that's
a pretty broad statement that this gen xer says. I mean,
I would consider us the greatest generation, but whatever, the
(04:53):
greatest generation ever exactly.
Speaker 1 (04:58):
We're small, though, man, we we are, but we're mighty.
Speaker 2 (05:02):
We're small, but mighty, I mean.
Speaker 1 (05:04):
Small and mighty.
Speaker 2 (05:05):
We were the last of the latchkey kids, right yeah, yeah,
so we are small, but mighty. So I think that
we're talking about a bunch of different things when it
comes to gen Z as far as being loyal to
a company, you know, like the longevity that we were
told when we were coming up. You get a job,
you stay in it twenty five years or thirty years,
(05:28):
and then you retire thirty five whatever it is forty
my mom like kind of like leftover from my mom's
boomer mantra, which she did right my mom retired at fifty.
Speaker 1 (05:42):
It worked for the one she.
Speaker 2 (05:45):
Retired at fifty one years old after working for Avis
Rennakar for twenty six years. She is the last of
the golden parachutes and pensions. Wow, and you know, I
had two jobs in twenty years and then became a
fractional person. I've had a million jobs in the last
ten years. So it's a completely different mindset. But here's
(06:07):
where the shift is, which I think gen Z okay,
it's not that they're not loyal to a company. It's
that they're going to be loyal to a company that's
loyal to them. And what that means is it all
comes about values. We talk about this with Ruty a lot.
What do you believe in. If you can get a
(06:32):
gen Z workforce and figure out what's important to them
and market your being an employer of choice by those
core values, then the loyalty will come. But if it's
bullshit on the wall. This is a group that requires
(06:54):
transparency right right. It's the mainstay of what they've.
Speaker 1 (07:01):
And that's hard for a lot of brands to do that,
I know, because you're mostly dealing with boomers and or
guys like us gen X. For me, I feel like
I'm much more transparent. But I know a lot of
my friends well, I mean, you know, I I you know,
my people sometimes say I share too much. They're like,
we don't want to know that. But but the point
(07:24):
is is a lot of my friends that are CEOs
of companies in different industries, you know, they're always surprised
at well, have you talked with your team about this?
If I ask them, you know, they're you know, they're
pitching a concept or an issue by me or a challenge,
and I'm like, well, you know, I don't know your
business like your team knows your business. Have you talked
(07:44):
with your team about it? And they're like, oh, I
don't want to share this with my team I'm like, well,
you need to be more transparent about your your wins
and your losses because I think people appreciate that. And
plus it it does something that kind of breaks you
down as a leader to a much more humble position,
which everybody appreciates. And I think it's just you know,
(08:05):
good good practice. Rudy talks about that a lot.
Speaker 2 (08:08):
Yeah, it's all about authenticity. And these this generation, you know,
was it's been constant chaos since they were born, right, Yeah,
so they're they're probably graduate. They graduated in high school
like during the pandemic and all of the other things
that came along in the last like ten, ten to
(08:30):
fifteen years.
Speaker 1 (08:31):
Yeah, I think about twelve to twenty seven. That's the
age group twelve to twenty seven.
Speaker 2 (08:37):
So in that case, they were born during nine you know,
born around the time of nine to eleven, and came
of age during the pandemic, and so they have a
different set of values than Gen X than Gen X does.
Speaker 1 (08:56):
Well, get this, They are going to to spend twelve
trillion in spending power by twenty thirty. Yeah, twelve trillion
in spending power. This is the data coming in from
Nation's Restaurant News right here, and the topic of the
story was interesting. Gen Z's lack brand loyalty presents a
(09:17):
challenge for restaurants twelve trillion by twenty thirty the twelve
to twelve to twenty seven year olds. And if you
look at this right here, this was kind of an
interesting statement. I'll zoom up on this a little bit
for you guys. Gen Z is simply not as loyal
to brands as its predecess The latest signal of its
unfaithfulness comes from Piper Sandler. This was their reading and
(09:40):
taking stock with teens. Surveys show that Chick fil a,
McDonald Chipotle, raising King, Texas Roadhouse are teen's favorite restaurant brands,
but that affinity didn't change from the previous survey conducted
about six months ago, where the top two were Chick
fil A McDonald's, which had fell by four percent so
and Chipotle, and wrote in Texas Roadhouse, we're only up, like,
(10:03):
you know, a mere one percent. So the point being
is they don't stick around on restaurant brands, clearly. So
with that being the case and the issue that you
face right now with restaurant brands who are trying to
grow and you're trying to do it with Right now,
it looks to be your gen Z audience, which is
(10:24):
going to be a massive consumer base for you. Sure,
first of all, when you're working with brands, is this
like a number one topic on what they're focused on
from a marketing standpoint?
Speaker 2 (10:36):
Yeah, I mean the number one question is is how
do we stay relevant? How do how do we compete
in an overly competitive world with constant change, constantly changing practices.
And I think, you know, I'm not going to go
back to brand values, but so I've got to start
(10:57):
with what do you believe in first, and then you
create those products and promotions that appeal to that specific audience.
And it all comes to it all kind of dovetails
into what we're going to talk about about loyalty programs.
Is that they're supposed to, in theory, offer you this
(11:18):
segmentation that allows me to send one message to a
group of gen zs, one message to boomers and talk
to them in the channel that.
Speaker 1 (11:29):
They need to be talked to, more customized message delivery.
Speaker 2 (11:34):
But here's the bottom line and the reality of it.
The reality of it is that that's really frickin hard
to do. It requires large teams and large strategy. No
matter how powerful your platform is, there still needs to
be human capital to power those engines. And so I
(11:59):
think what happens is we all have the best intentions
of hyper targeted market marketing, but in the space that
I play in, in the emerging brand space, I would say,
even to let's say small brands, two hundred and fifty
units are less it's just really hard.
Speaker 1 (12:20):
Yeah. Well, and I think the point you're making, which
is kind of interesting, I want to bring this up
right here because to your exact issue is the ability
to cross target multi demographics is really important. I'll highlight
this story, and this one was interesting because this, to me,
would solve that problem. Now in this particular case, it's
(12:43):
eleven frugal habits of gen Z.
Speaker 2 (12:45):
What are they?
Speaker 1 (12:47):
Well, let's show you. I'll show you a few. But
the point is they're all money saving tactics. Okay, So
who would not want to save money? Every demographic out
there would want to save money. So you could eventually
or essentially target across based on parameters that match up
to a lot of these. So number one was they're
using a lot of browser extensions. I didn't think about
(13:09):
that of partnering with companies that do this. There's several
of those companies out there that have browsers. You can
become a restaurant partner to those browser extensions. So that's
one option. Here was the other one opting for food
loyalty programs over delivery services. So this was interesting, I.
Speaker 2 (13:26):
Guess saying that's just saying a first party instead of
third party.
Speaker 1 (13:32):
Exactly, Yeah, because they're they're trying to save money, so
they're not doing that, you know, living a home, you know.
The typical thing loud budgeting, which I thought was interesting,
And this is where I get into marketing because if
you think about that, deals through influencers, social media, we
understand how to connect there because they think those are
better deals in most cases. And then this thing of
(13:54):
what they call soft saving and then mundane purchases, kind
of the romanticizing. So the point being is if you
were a market if you're a marketer, and you're trying
to come up with themes around this. First of all,
the money saving theme, budgeting theme, the loud budgeting concept,
all of those could be created as a marketing campaign
(14:15):
that would hit the gen Z absolutely, that would hit
a gen X would hit a boomer. You know, everybody's like, Okay,
that's a fun way to save money, you know, based
on if you make it in a way in which
a loyalty component is done. So I thought that was
interesting data in terms of what people are looking for.
Speaker 2 (14:36):
I'm not sure how well they're all being executed, but
something like a subscription program or something that resonates for
me I could get for pay one price could be
considered you know, frugal, unusual way to be Yes, I
think about you know, when we're talking about this, I
think about mindsets. And my daughter is on that cusp
(14:59):
of kind of you know, she's twenty eight, so she's
just maybe the first gen Z, maybe the last millennial. However,
look and we have this constant push pull over thrifting,
which is a big way which is a huge thing
(15:21):
among Gen Z of like from several perspectives, not just
being frugal, but also from being sustainable. And so she
will spend her time, hours and hours and hours thrifting
where I will for an outfit, like tons of the
(15:43):
things at her wedding this past June. We're kind of
in that vein whereas I will where I'm in the
mindset as a gen xer as this sandwich generation of
going time is money, yep. And so for me it's
I would rather go to the store, see what I want,
buy it, and leave and be done. And that, I think,
(16:05):
in a nutshell kind of explains the two different kind
of mindsets that are.
Speaker 1 (16:11):
Going on well. And I think as a restaurant brand,
you've got to be able to deliver both those kind
of components. If you do have something that's gamification, we'll
talk about in a second, but gamification is a good
example of how to maybe integrate to something like what
you're talking about, which is more of a sustainability component.
The other thing that has been the gamification topic that
(16:33):
everybody's talked about for the last few years has been points.
Some were just peer points somewhere you know, you earn
rewards against certain things. The one debacle that happened in
the industry that everybody knows about is this one right here,
and that is Starbucks.
Speaker 2 (16:52):
Now.
Speaker 1 (16:53):
Starbucks back in late twenty two early twenty three revalued
their entire loyal platform. So the psychology behind this was
changing the rewards program, which now at that point stirred
up ridiculous amounts of bad will, and mainly what it
(17:13):
meant was is that you had a lot less you know,
right here, I'll focus The main focus of there are
was that starting February this was in twenty three, it
would cost twice the number of program reward points or
stars to get a free copy coffee. So it was
basically you deflated the Starbucks reward system in half. You know,
(17:37):
it'd be like saying, hey, your dollar today, which I
feel like is probably the case anyway, but your dollar
today is now worth fifty cents, and that really did
not create any kind of loyalty long term. Do you
think that's the reason we continue to see the sales
driving down? Oh?
Speaker 2 (17:56):
I think there's a lot of things going on at Starbucks,
and hopefully they can turn it around, because you know,
even though I have a coffee brand, we you know,
a rising tide lifts all ships. So I think that
that definitely had consume Starbucks guests kind of lose confidence
(18:19):
and lose stressed. It's kind of like you're pulling You're
pulling the rug out from under me. I feel like
I'm getting ripped off. Even though at some point restaurants
had to realize that points programs cost.
Speaker 1 (18:34):
Them money money, yeah, cool, yeah, but did it cost
them the amount of money that they lost in foot
traffic and declining sales and long term brand impact because
if you lose, for instance, me, a good what I
would say is a good Starbucks customer until twenty twenty three,
(18:57):
you know, and at that point when I realized this
was just a bad move, I didn't really use loyalty
points that much, but I just thought it was just
it was just cheap, I thought. And I thought, well,
this is used to be the value not the value brand.
This used to be the experiential brand. And I felt
like that was just the last straw for me. That
was why I left Star Starbucks. I've never been back since.
(19:19):
I haven't been to a Starbucks unless I'm in an airport,
you know, going somewhere and it's the only coffee company there.
But if Duncan is there, I'd go to Duncan, you know.
So wow, okay, yeah, yeah, I mean I'm that I'm
that upset at them, you know, in the sense, and
so me and I would say, I would spend thousands
of dollars a year. Here's the here's the unusual thing. Yeah,
(19:42):
my kids don't know Starbucks really and they're a gen z.
Speaker 2 (19:48):
They're not cake pop driven no.
Speaker 1 (19:51):
So so once you damage one demographic, especially one that
has children that can move them in to your brand ecosystem,
you've lost possibly generations of opportunity there. That to me
is what restaurant brands miss is they lose the forest
(20:13):
for the trees and they're worried about that immediate little
tick on the line, Oh, the loyalty causes this much
and we should cut it. You know, some idiot ceo
that runs these restaurant brands instead of looking at this
in a long term effort. If you don't, if you
can't afford the loyalty program, don't do it. They would
appreciate that much more than doing a loyalty program and
(20:35):
then cheaping out on it.
Speaker 2 (20:37):
So that's the well, it comes down to transparency. So
in your in your theory, if Starbucks would have just said, like,
this is costing too much, it's affecting.
Speaker 1 (20:49):
The quality of the they should have eliminated it.
Speaker 2 (20:52):
Eliminated it.
Speaker 1 (20:53):
Yeah, they should have had a wind down period. Everybody
use your points, but maybe even acceleer. We'll give you
double points to use them. Okay, wind it down and
eliminate the entire program and go back to the values
that they used to have, because you remember, Starbucks did
not have a loyalty program when they were growing under
(21:14):
star Charles Schultz. That was a new entry that only
happened really in the last fifteen years.
Speaker 2 (21:22):
So Geen Howard Schultz, because Charles Schultz.
Speaker 1 (21:26):
Is the ill sorry Howard, Yes, yeah, Howard Schultz. And
but that's my point is that when he was running
the brand, when they kind of came off of d
El Jorno or whatever that brand was that he bought
out from under Pete's, when they were growing that restaurant brand,
there was no loyalty program. They were building it, and
(21:46):
that's what puts Starbucks on the map. I think they've
missed that, and I understand Nichol is trying to go
back to that, but it just seems like, and I
would say restaurant brands, if you can't afford the loyalty
and you should you should really look at this, you know,
from an economic standpoint, and if you do it in
(22:08):
such a way. These would be my two tips to brands.
And I you know, obviously here at Saber, we invest
in companies, and we're constantly consulting with restaurants CEOs, but
I tell them say, hey, listen, first of all, two
things unloyalty. You can't afford it, don't do it. And
if you are going to do it, you've got to
make it worth the while. Don't cheap it out to
(22:30):
where it looks like you are cheap. And because that
sends a message as well, probably a bigger message to
the customers than even not having having a loyalty program.
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(24:20):
you there. If you can deliver something else, like, hey,
let's do instead of loyalty, let's do gamification programs throughout
the year. You know, where you earn whatever.
Speaker 2 (24:32):
It might be. You know, yeah, something that we do
frequently as a lever in several of my brands. So
making it more fun, making it way more interactive, making
it something different from earn spend spend X, get X.
(24:54):
I think that we're missing a big point though, Paul. Yeah,
I want to separate true brand affinity from loyalty programs
from okay, and I think brands need to really figure
(25:14):
out what are they doing besides having a platform that
makes something somebody loyal. Yeah, So it's about the entire
experience beyond just the points, no matter what generation you're in,
the fact that I order from this sandwich place and
(25:37):
they write my name with a smiley face on it,
and it just makes my day when that bag comes
Like that helps with brand affinity. Good service when I
go into a restaurant helps with true loyalty, Like.
Speaker 1 (25:54):
Those to the cornerstone of hospitality that I believe kind
of delivers a loyal customer. It's the same thing with
you know, certain restaurants and brands that I frequent are
often just because they do it right, you know, because
the minute someone does it wrong, it doesn't matter how
loyal you are. If you've messed up an order or
(26:16):
an experience. People remember that, and that is a problem.
I think that just lives in the industry.
Speaker 2 (26:22):
Well, I think that maybe if we looked at loyalty
programs as a as a tool for more of a
tool for brand affinity for example. And you're going to
talk about personalization in a second, every almost every loyalty
platform out there figures out what your birthday is. You
(26:44):
have to, you know, it's part of the onboarding and
the sign up of any loyalty platform. If the cash
cheer at a QSR knows it's your birthday and wishes
you a happy birthday when you come in, that's cementing
the loyalty beyond just whatever they're going to give you,
right beyond just giving you that free drink, but the
(27:07):
acknowledgment and making you feel.
Speaker 1 (27:09):
Oh, it's your birthday, Hey, welcome in man, exactly, and that.
Speaker 2 (27:16):
That encourages true loyalty as opposed to, oh, you've got
a free beyond your app.
Speaker 1 (27:22):
Yeah, that's exactly. Yeah, And I think that's your you're
den with that coaching brands. That is so when you're
talking to CEOs. Out of all the CEOs you talked
to as a fractional CMO, how many would you say,
get that. You know, they look at loyalty as not
(27:43):
a means to an end, but just a tool in
the bag to improve the overall experience. How many people
get the difference?
Speaker 2 (27:54):
I would say it's fifty to fifty.
Speaker 1 (27:56):
Really fifty wow. And I would say that I would
say less faith in the industry.
Speaker 2 (28:03):
That I would say that brands are demanding more from
their platforms. A lot of that has to do with
tech stack. So a lot of that isn't even on
the loyalty provider. It's how it's integrated into the POS
and so all the data may be there, but the
(28:26):
sixteen year old cashier may not be able.
Speaker 1 (28:29):
To No, can't execute all it. Yeah, correct, Well, and
that's the you know, to me, that's a cop out.
You know, if you're a brand CEO, if you're leaning
so much on your operational tech that you can't deliver
because this is not one of those critical tech pieces.
It's different if it was a point of sales system
(28:49):
that you need to operate your business. You know, I'm
talking about this is an accouterment that is added to
the overall experience model. And I think if you rely
so much on your tech to do the job for you,
especially in the hospitality business. We're not that automated now
enough to where anything knows. I mean Gmail can barely
(29:09):
filter spam much less you know, much less a brand
figure out you know, these intricacies around personalization, which to
me is the holy grail. I just have yet to
see it happen at a high performance level. Have you
seen anybody do that? Uh? Who has done it? Who?
(29:32):
Just give me one brand that has delivered personalized you know,
because it's like this article right here, I'll bring it
up here. This is to me, this is a BS
you know, to me, this is BS right here. Future
of a restaurant loyally starts with personalization. Who it may
start with it? But who does it?
Speaker 2 (29:52):
Who's doing it? Right now? Like super well? Yeah, yeah,
at the top of my head, I'm not prepared to
answer it.
Speaker 1 (30:00):
See they're that right, there is the answer.
Speaker 2 (30:02):
Okay, I'm sure, I'm sure there's somebody in our.
Speaker 1 (30:05):
One in a hundred or one in a thousand.
Speaker 2 (30:08):
Small brands. A small brands aren't doing it. Small brands
are definitely not doing it. Emerging brands are definitely not
doing it. Super well.
Speaker 1 (30:15):
Okay, so is that an attainable goal because based on
the tech that you know is out there, you you
reverse review these tech companies all the time. I've talked
to many of these loyalty companies most of the time
when I talk to them because we invest in you know,
startup tech, and a lot of times when I talk
to these you know the blue sky pitch is really wow,
(30:38):
this is going to change you know, the industry. But
when you dig down in you realize that it's a
bunch of you know what. So to me, this is
this is a fake goal in the industry is personalization.
It's impossible to achieve.
Speaker 2 (30:56):
Here's the thing, Paul, here's the thing. I always look
to retail first, like, have has retail really phoned in? No?
And no, because I'm still getting congratulations on your baby.
Speaker 1 (31:15):
Yeah. No, they haven't honed in the best of the
best brands have, even the good fast fashion brands, who
I would say are a little bit more savvy in
connecting with you know, customers. It all boils down to
just basic automation tools that are already out there. There's
nothing special about this personalized mantra that they're spitting around
(31:38):
the industry. I'm just in I'm one of those guys.
Maybe I'm just getting too old or something where I
just don't believe that this is this is possible. I'm
just skeptical about this crap, you know. Is It's just
doesn't in my opinion, does not work. And if I
could go to one restaurant and see this in action,
I have yet to see it today and not named
(32:00):
one brand. I've been in, thousands of fast casual brands,
hundreds of fine dining operations. No, doesn't exist.
Speaker 2 (32:09):
I would say, we're all kind of working on it
with our loyalty programs. I mean, no, the segmentation of
you know, the basics like lapsed users who haven't been
in in various times. There's a lot of AI driven
tools within the loyalty programs where they can predict people
(32:32):
who are going to lapse, that sort of thing. But
have I gotten a I drink a London fog almost
every day?
Speaker 1 (32:43):
What is the London fog?
Speaker 2 (32:45):
What is that? Oh? It's delicious? It is that steamed
oat milk when I get it from a competition, a
competitor to Ziggy's, because Ziggi's is not available in Baltimore.
Speaker 1 (32:59):
Okay, all right, because you are a coffee brand, CMO,
you know I am.
Speaker 2 (33:04):
I mean, if you watch this podcast, I've been drinking
it but with a shot of vanilla and I get
an extra shot. Now anybody, Have I gotten any sort
of communication from them that said probably not when to
London or.
Speaker 1 (33:21):
For sure or My point is is this I'm trying
to make a point here is that nobody is delivering
on personalization. So my point is maybe you could just
figure out another model to create the loyalty. And that
is through because I do think that this one will
work is gamification. Nobody cares you know that you had
(33:42):
a London not me personally, but nobody cares you had
a London fog today. But they might have something that
would gamify it, that would make you feel a little
closer to the brand.
Speaker 2 (33:54):
Do you remember, like in twenty sixteen and seventeen when
Starbucks did their like they had this amazing game like Sprints.
It was kind of like, oh, I remember that they
were term promos and like ye, even though I wasn't
(34:16):
drinking coffee, I was like thrilled to like I challenged myself.
And we do do some of that in my brands.
We that are have a particular loyalty program that I
won't plug that I used to I personally was very
(34:37):
loyal to this loyalty company, and they allow us to
do visit challenges. So visit a certain time in short
periods of time, visit five times in two weeks and
you get X. And then what we've been able to
(34:58):
do a couple of times is leo over some like
audacious prize like free burritos for life or free coffy
for your whole family, or so we've done some gamification
within the platforms that we have. But I do believe
that the more fun you make it and the more
(35:20):
relevant to what's going on. So I've done several visit
challenges like during the Olympics. Yeah, like when you know,
earn gold, bronze or silver and that can resonate and
do pretty well.
Speaker 1 (35:36):
Yeah. And I think that's the point, you know, when
you think about everything that's happening right now. And I'll
show you guys some examples of you know, what might
end up working overall. What I will tell you is
this is another good example of what's, in my opinion
is what is not working. And I'll share open table,
(35:58):
all right, an open table in a while. Yeah, well,
this is my point is and I'm going to share
a personal story I had with open table. And first
of all, open tables system of users sign up is broken,
So open Table, if you're listening to this, this is
(36:19):
not a scathing review, but it's one that everybody needs
to understand. So they do a lot of points rewards,
right and they give you, you know, their little blog
of here's eight examples of restaurant loyalty. First of all,
I've been using open table for you know, probably since
it began, and I make reservations religiously on the use
(36:42):
of open table. The amount of points I had were astronomical.
Speaker 2 (36:47):
How many? How many do you have?
Speaker 1 (36:50):
It was they were trying to give me. I don't
even remember, but I could have eaten multi free meals
for maybe a year, you know, at restaurants. I had
that many. Okay, because you remember, I go out you know,
with clients, you know, fancy.
Speaker 2 (37:07):
I don't know if everybody knows that in the podcast for.
Speaker 1 (37:10):
Okay fancy, I wouldn't say I'm fancy. My point is,
I never used the points ever, never, not one time
have I ever used an open table points on a
reservation First of all, I think it would be tacky
because most of the places you're going to to use
an open table reservation. I just think that would be
tacky as you have friends or guests or family or
(37:32):
clients and you're using rewards points. I'm sorry, no, I
wouldn't do that, but not saying that everybody would. I'm
not a snob. I'm not saying that. I'm just saying
it just doesn't.
Speaker 2 (37:43):
It doesn't.
Speaker 1 (37:45):
It doesn't mix well. But here's the problem with open table.
When you sign up, I had an old email address
that was so old I didn't even have access to
the server anymore. That's how old it is. Over a
decade old. Okay, for whatever reason, open table logged me
out of all my accounts. I had to re sign
(38:07):
in and it does a password reset. Guess where it
sends it to an email not get to you go
to open tables community and support. You can't update it
through customer service, so there's no update. So what did
open table do? I had to sign up under a
(38:28):
brand new email account and I all of those points now,
granted I could care less about them, but it showed
a lineage of the restaurants that I had been to
over fifteen years. That to me was more important because
it had all my ratings, you know, because I rate,
(38:49):
I rate people in those restaurants. So this is my
point is even that which is coming from a very
very well known company, even they can't get it. So
I hate to say, guys, I just feel like loyalty
is a scam. It's a scam. I think we've got
to go beyond loyalty into something that is not a scam.
(39:12):
The only one out there that I've seen that might
end up going into this is Blackbird, and Blackbird's probably
the only one in my opinion, that might end up
doing it.
Speaker 2 (39:23):
Right. Okay, let's educate me on Blackbird. All right.
Speaker 1 (39:30):
So Blackbird is a platform that's using crypto blockchain, using
blockchain and they're doing a win win for both the
businesses and the consumers. But the idea is pretty straightforward.
What they're doing is they use tech and gamification to
be able to offer this. And this is coming from
(39:50):
the guy Ben eleventh Thal. He also guess what he
founded was the app Rezi, which is a competitor. It's
open table. So the the long standing issues right here
long cutting out the middleman, and creating a direct connection
to the consumer and the restaurant. That to me is
(40:10):
the issue.
Speaker 2 (40:12):
Okay, so that what does that look like in real life?
Speaker 1 (40:16):
What that looks like is you would not need you
would not need an open table, You would not need
all these tech products that are in between you and
your customer to deliver a loyalty mechanism. And that might
be gamification, you know, whether it's whether they're getting ready
to launch. So this is brand new, brand new, Uh,
(40:39):
this is one that I'm watching. They're building, and there's
a couple others out there that are building. The point
I'm getting at is that that this industry is so
broken that now the next generation technology I think will
take over will circumvent this issue. I don't think we'll
see loyalty companies in the restaurant industry within the next
five years. The loyalty stack tech stack will either completely
(41:01):
change or it will disappear.
Speaker 2 (41:02):
I don't know five years. I think five years yearsssive.
But I think what's happened. I mean we're already kind
of seeing it right Like you just saw Patronics get acquired. Yeah,
you know, who would have thunk that that would have
happened last year because they were kind of this legacy
loyalty program exactly.
Speaker 1 (41:19):
Yeah.
Speaker 2 (41:19):
Yeah, that's also branched out into other things. So they
do order and delivery, they have a little bit with payment,
they do you know, they act a little bit as
an aggregator I think for a third party. So the
question becomes like, since they their bread and butter was loyalty,
(41:42):
well they still do all of these other pieces or
are they just going to go the way of the DODO.
Speaker 1 (41:48):
I think that is well, I don't know if they will,
but you know, you look at the issue that they're
Blackbird's trying, and there'll be other companies like Blackbird that
will figure this out. But it's primarily the cost because
most of it right now I was reading in the
article says there's somewhere between three and five percent of
(42:11):
a restaurant's top line revenue that's leaking out into these
third parties, and this through these loyalty systems. And that
three to five percent of a margin that is already
super thin and slim. Okay, so you look at that,
you should not cost you three and a half percent
for a restaurant just to collect a payment from you
(42:36):
in a loyalty model that is built through a mechanism
like you know what Toast is doing with you know
and Stripe. You know these companies which are now scrambling
to deal with what could be a next generation opportunity
around payment, especially if stable coins and all this crypto
(42:57):
stuff gets it's through this administration and we see it implemented,
which is why MasterCard and Visa all those guys are
scrambling right now to figure this out. As soon as
they pass the stable cooin act, I think that will
change things pretty quickly. But that, to me is going
to be huge because if a restaurant can deliver a
loyalty mechanism and take a payment without a third party,
(43:22):
it's a game changer. It's a it's a new innovation
area that we have yet to begin to see. So
there you go. Wow, all you guys setting out there, including.
Speaker 2 (43:34):
We've had predictions. Today we call out platforms. Today we
found out that you spend millions of dollars at restaurants,
not millions all those points. This was a very informative
massive today.
Speaker 1 (43:51):
Here's this is this is how bad it's getting in
the industry that there has to be a website to
tell you how to use your well lay rewards. All right, guys,
this is how you do it.
Speaker 2 (44:05):
It's complicated. They're complicated a lot of the time.
Speaker 1 (44:10):
I'll enjoyed what you earn double protein.
Speaker 2 (44:15):
I mean, I would say that obviously Chipotle is doing
something right there, because well, this.
Speaker 1 (44:21):
Is a Chipotle. It's my point is this is the
third party.
Speaker 2 (44:24):
No, that's what I'm saying. Yeah, I mean, even though
a fan, there's to me, the fact that a fan
created that page says that Chipotle has major affinity and
so they have true loyalty. Do they do they?
Speaker 1 (44:42):
I mean, that's my question is you know when you
have when you as a brand. Now, I love to
see user generated content because I think it only magnifies
a brand's awareness, but when it dismantles you in a
sense of saying, they can't explain this to you well enough,
so we're gonna you know me, as a fan, I'm
(45:03):
going to do it for you, you know kind of thing.
So I look at it and I think of it.
If I was Chipoli, I would consider that, you know.
Speaker 2 (45:11):
I wouldn't. I don't think I think I would be.
I think I would have mixed feelings about it. To me,
it's kind of like.
Speaker 1 (45:19):
The very minimum. I would do the same thing. Oh sure,
I would make sure that my my uh my website
answered all those questions.
Speaker 2 (45:28):
But I think the other thing might be there's this
when you really love a brand, you want to feel
like you're in on it right, that you're part of
the conversation. Yeah, for sure, are you getting away luggage
and drive art the beauty place? I feel like I'm
in audi part of the game team all the time.
Speaker 1 (45:50):
But see that's a different to me. That's different. It's like,
you know, there's certain kinds of luxury items that I
would feel affinity that way, or or certain kinds of
things that I frequent much more often or not as often,
but I feel very connected to. But restaurants are not
one of them, you know, Now I do when I
go to a high end restaurant and they know my name,
(46:14):
it's not because of some loyalty system. It's because of
some guy that I've seen there for ten years. And
that to me is hospitality. But I don't know that
it can be replicated with technology, at least not yet. Now.
Maybe AI will change that. I am hopeful that that
might be interesting enough to where it could, but I
haven't seen it yet. We'll see.
Speaker 2 (46:36):
I mean, by then you and I could just be
eating soft foods.
Speaker 1 (46:40):
Gross. I'm not gonna I'm not going out that way.
I'm not going out that way. Stacy, I'm not going
out that way.
Speaker 2 (46:52):
I think I'm just I'm not far off.
Speaker 1 (46:56):
Oh my god, this is crazy. What a crazy show
we have today. We have given you, guys so much,
I think so much. Download This is why you should
subscribe to the show. If you are not subscribed right now,
put a little button like this, Yes, kick the little
button down below. And I also like the video because
(47:16):
that also helps put it out there in the algorithm
on YouTube. And did you know that if you put
a star over on iTunes or on Apple Podcasts, it
also accelerates the podcast. And if you like it or
follow it over on Spotify, it also accelerates the podcast
the audio side. So if you are listening to us
while you're driving or maybe working in a shift right now,
(47:39):
kudos to you guys, as you're doing it right as
a restaurant operator. So that's what this podcast is all about,
is to help you, guys get past all the bullshit
that's out there, and that's what I'm just saying. Get
past all this BS and listen to people who have
(47:59):
lived it and have bled it for years, like you know, Stacy.
Speaker 2 (48:05):
And oh freaking Gory today.
Speaker 1 (48:07):
All right, anyway, kudos to all you guys for listening in.
We love it, and of course Stacey, it was great
seeing you again.
Speaker 2 (48:15):
It is a pleasure.
Speaker 1 (48:16):
Paul, you bet, thanks for listening in right here on
the Restaurant Masterminds podcast
We are back here on the Restaurant Masterminds podcast, and
today it's always going to be a good one because
I've got the amazing smith Stacy Kane joining me today.
Speaker 2 (00:11):
How are you, hello, Paul, I'm great. I'm at my
best friend's house. I'm on a stand up desk, which
you're not used to.
Speaker 1 (00:19):
Hey, that's what I do at my home studio. I
use a stand up desk. It goes up and down.
I love it. I like standing and talking, you know,
just too.
Speaker 2 (00:28):
It seems very much more natural. I also like that
it only makes me look like I have two chins
instead of like tinge.
Speaker 1 (00:36):
Well, hey, listen, you are flying solo with me today.
I had Paul Molinari the last episode solo. He and
I had a good time. Today. We are going to
really discuss the idea of Loyalty two point zero and
there is a lot to break down here, both for
restaurant brands, the tech innovators in the space. And I
know Stacey, you're going to share some more stories out
(00:58):
there on loyalty. He will. Yeah, there you go, Do
I have them? You guys don't want to miss this one.
We'll be right back. My name is Paul Baron as
(01:31):
the early pioneer in fast casual. I've seen the industry
evolve from just a few operators to the most sought
after segment by consumers around the world. Now we're planning
to shape its future. Tap into decades of my expertise
identifying the emerging brands and tech winners in the space.
(01:51):
Saber Capital will be fueling the next generation of fast
casual innovation. All right, we're back here on the Restaurant
Masterminds podcast, and of course joining me is Stacy Cain,
one of our amazing masterminds. You know, we have a
new mastermind that has joined the roster. Have you do
(02:12):
you know about that?
Speaker 2 (02:14):
My one of my best sies. There you go, Robin
Banchette of Norton Creative. I could not be happier.
Speaker 1 (02:23):
She's going to be amazing. He's going to be amazing.
I think we have her on next week and I'm
not sure. I got to look at the schedule, but
I think she's on next week. But the cool thing
is is she's going to you know, you're exactly right.
She's with Norton Creative founder. I think one of the
founders of Norton creative for sure, and they do amazing
job at branding. They're based out of Houston, Texas. She
(02:46):
is now one of our masterminds. She's going to be
joining us on this podcast and also Rock My Restaurant,
which is our marketing and branding podcast. We got to
get you on there a.
Speaker 2 (02:54):
Couple of times before, but yes, yes.
Speaker 1 (02:58):
We're going to do that. Yeah, because no one is
write up your baileywick as. They say, all right, let's
talk about loyalty and get into the first component, which
is the target audience for loyalty. I think a lot
of our restaurant operators that listen to this show and
watch this show, they're constantly commenting on they love the takeaway,
(03:23):
and I want to showcase something real quick just to
give you guys a quick understanding of where this is
coming from. Because the gen Z audience really, if you're
in the restaurant business, this is going to be your
future future customer and it's probably already taking up a
large percentage of your demographic in terms of floor traffic
right now. One thing that gen Z has done here, Stacey,
(03:47):
is they are not very loyalty, loyal to their jobs
and listen to this statement here, loyalty to a particular
company is a scam, and I'm glad gen Z realizes it.
So this is something that I think is being kind
of I don't know if it would would it's getting
(04:09):
within the culture. Is the point is that gen Z
they don't look at loyalty as an attribute any longer,
so they kind of plug and play brands out there.
Are you finding this when in you know, as a
fractional CMO when you're working with brands, obviously loyalty has
like got to be number one on the list. What
are you finding out there in terms of the demos
(04:29):
around gen Z?
Speaker 2 (04:30):
It's very interesting that you say that. I think it
has a lot to do. It's a couple of things.
Do I think that gen Z, you know, from a
workforce perspective, is less loyal? I mean, I think that's
a pretty broad statement that this gen xer says. I mean,
I would consider us the greatest generation, but whatever, the
(04:53):
greatest generation ever exactly.
Speaker 1 (04:58):
We're small, though, man, we we are, but we're mighty.
Speaker 2 (05:02):
We're small, but mighty, I mean.
Speaker 1 (05:04):
Small and mighty.
Speaker 2 (05:05):
We were the last of the latchkey kids, right yeah, yeah,
so we are small, but mighty. So I think that
we're talking about a bunch of different things when it
comes to gen Z as far as being loyal to
a company, you know, like the longevity that we were
told when we were coming up. You get a job,
you stay in it twenty five years or thirty years,
(05:28):
and then you retire thirty five whatever it is forty
my mom like kind of like leftover from my mom's
boomer mantra, which she did right my mom retired at fifty.
Speaker 1 (05:42):
It worked for the one she.
Speaker 2 (05:45):
Retired at fifty one years old after working for Avis
Rennakar for twenty six years. She is the last of
the golden parachutes and pensions. Wow, and you know, I
had two jobs in twenty years and then became a
fractional person. I've had a million jobs in the last
ten years. So it's a completely different mindset. But here's
(06:07):
where the shift is, which I think gen Z okay,
it's not that they're not loyal to a company. It's
that they're going to be loyal to a company that's
loyal to them. And what that means is it all
comes about values. We talk about this with Ruty a lot.
What do you believe in. If you can get a
(06:32):
gen Z workforce and figure out what's important to them
and market your being an employer of choice by those
core values, then the loyalty will come. But if it's
bullshit on the wall. This is a group that requires
(06:54):
transparency right right. It's the mainstay of what they've.
Speaker 1 (07:01):
And that's hard for a lot of brands to do that,
I know, because you're mostly dealing with boomers and or
guys like us gen X. For me, I feel like
I'm much more transparent. But I know a lot of
my friends well, I mean, you know, I I you know,
my people sometimes say I share too much. They're like,
we don't want to know that. But but the point
(07:24):
is is a lot of my friends that are CEOs
of companies in different industries, you know, they're always surprised
at well, have you talked with your team about this?
If I ask them, you know, they're you know, they're
pitching a concept or an issue by me or a challenge,
and I'm like, well, you know, I don't know your
business like your team knows your business. Have you talked
(07:44):
with your team about it? And they're like, oh, I
don't want to share this with my team I'm like, well,
you need to be more transparent about your your wins
and your losses because I think people appreciate that. And
plus it it does something that kind of breaks you
down as a leader to a much more humble position,
which everybody appreciates. And I think it's just you know,
(08:05):
good good practice. Rudy talks about that a lot.
Speaker 2 (08:08):
Yeah, it's all about authenticity. And these this generation, you know,
was it's been constant chaos since they were born, right, Yeah,
so they're they're probably graduate. They graduated in high school
like during the pandemic and all of the other things
that came along in the last like ten, ten to
(08:30):
fifteen years.
Speaker 1 (08:31):
Yeah, I think about twelve to twenty seven. That's the
age group twelve to twenty seven.
Speaker 2 (08:37):
So in that case, they were born during nine you know,
born around the time of nine to eleven, and came
of age during the pandemic, and so they have a
different set of values than Gen X than Gen X does.
Speaker 1 (08:56):
Well, get this, They are going to to spend twelve
trillion in spending power by twenty thirty. Yeah, twelve trillion
in spending power. This is the data coming in from
Nation's Restaurant News right here, and the topic of the
story was interesting. Gen Z's lack brand loyalty presents a
(09:17):
challenge for restaurants twelve trillion by twenty thirty the twelve
to twelve to twenty seven year olds. And if you
look at this right here, this was kind of an
interesting statement. I'll zoom up on this a little bit
for you guys. Gen Z is simply not as loyal
to brands as its predecess The latest signal of its
unfaithfulness comes from Piper Sandler. This was their reading and
(09:40):
taking stock with teens. Surveys show that Chick fil a,
McDonald Chipotle, raising King, Texas Roadhouse are teen's favorite restaurant brands,
but that affinity didn't change from the previous survey conducted
about six months ago, where the top two were Chick
fil A McDonald's, which had fell by four percent so
and Chipotle, and wrote in Texas Roadhouse, we're only up, like,
(10:03):
you know, a mere one percent. So the point being
is they don't stick around on restaurant brands, clearly. So
with that being the case and the issue that you
face right now with restaurant brands who are trying to
grow and you're trying to do it with Right now,
it looks to be your gen Z audience, which is
(10:24):
going to be a massive consumer base for you. Sure,
first of all, when you're working with brands, is this
like a number one topic on what they're focused on
from a marketing standpoint?
Speaker 2 (10:36):
Yeah, I mean the number one question is is how
do we stay relevant? How do how do we compete
in an overly competitive world with constant change, constantly changing practices.
And I think, you know, I'm not going to go
back to brand values, but so I've got to start
(10:57):
with what do you believe in first, and then you
create those products and promotions that appeal to that specific audience.
And it all comes to it all kind of dovetails
into what we're going to talk about about loyalty programs.
Is that they're supposed to, in theory, offer you this
(11:18):
segmentation that allows me to send one message to a
group of gen zs, one message to boomers and talk
to them in the channel that.
Speaker 1 (11:29):
They need to be talked to, more customized message delivery.
Speaker 2 (11:34):
But here's the bottom line and the reality of it.
The reality of it is that that's really frickin hard
to do. It requires large teams and large strategy. No
matter how powerful your platform is, there still needs to
be human capital to power those engines. And so I
(11:59):
think what happens is we all have the best intentions
of hyper targeted market marketing, but in the space that
I play in, in the emerging brand space, I would say,
even to let's say small brands, two hundred and fifty
units are less it's just really hard.
Speaker 1 (12:20):
Yeah. Well, and I think the point you're making, which
is kind of interesting, I want to bring this up
right here because to your exact issue is the ability
to cross target multi demographics is really important. I'll highlight
this story, and this one was interesting because this, to me,
would solve that problem. Now in this particular case, it's
(12:43):
eleven frugal habits of gen Z.
Speaker 2 (12:45):
What are they?
Speaker 1 (12:47):
Well, let's show you. I'll show you a few. But
the point is they're all money saving tactics. Okay, So
who would not want to save money? Every demographic out
there would want to save money. So you could eventually
or essentially target across based on parameters that match up
to a lot of these. So number one was they're
using a lot of browser extensions. I didn't think about
(13:09):
that of partnering with companies that do this. There's several
of those companies out there that have browsers. You can
become a restaurant partner to those browser extensions. So that's
one option. Here was the other one opting for food
loyalty programs over delivery services. So this was interesting, I.
Speaker 2 (13:26):
Guess saying that's just saying a first party instead of
third party.
Speaker 1 (13:32):
Exactly, Yeah, because they're they're trying to save money, so
they're not doing that, you know, living a home, you know.
The typical thing loud budgeting, which I thought was interesting,
And this is where I get into marketing because if
you think about that, deals through influencers, social media, we
understand how to connect there because they think those are
better deals in most cases. And then this thing of
(13:54):
what they call soft saving and then mundane purchases, kind
of the romanticizing. So the point being is if you
were a market if you're a marketer, and you're trying
to come up with themes around this. First of all,
the money saving theme, budgeting theme, the loud budgeting concept,
all of those could be created as a marketing campaign
(14:15):
that would hit the gen Z absolutely, that would hit
a gen X would hit a boomer. You know, everybody's like, Okay,
that's a fun way to save money, you know, based
on if you make it in a way in which
a loyalty component is done. So I thought that was
interesting data in terms of what people are looking for.
Speaker 2 (14:36):
I'm not sure how well they're all being executed, but
something like a subscription program or something that resonates for
me I could get for pay one price could be
considered you know, frugal, unusual way to be Yes, I
think about you know, when we're talking about this, I
think about mindsets. And my daughter is on that cusp
(14:59):
of kind of you know, she's twenty eight, so she's
just maybe the first gen Z, maybe the last millennial. However,
look and we have this constant push pull over thrifting,
which is a big way which is a huge thing
(15:21):
among Gen Z of like from several perspectives, not just
being frugal, but also from being sustainable. And so she
will spend her time, hours and hours and hours thrifting
where I will for an outfit, like tons of the
(15:43):
things at her wedding this past June. We're kind of
in that vein whereas I will where I'm in the
mindset as a gen xer as this sandwich generation of
going time is money, yep. And so for me it's
I would rather go to the store, see what I want,
buy it, and leave and be done. And that, I think,
(16:05):
in a nutshell kind of explains the two different kind
of mindsets that are.
Speaker 1 (16:11):
Going on well. And I think as a restaurant brand,
you've got to be able to deliver both those kind
of components. If you do have something that's gamification, we'll
talk about in a second, but gamification is a good
example of how to maybe integrate to something like what
you're talking about, which is more of a sustainability component.
The other thing that has been the gamification topic that
(16:33):
everybody's talked about for the last few years has been points.
Some were just peer points somewhere you know, you earn
rewards against certain things. The one debacle that happened in
the industry that everybody knows about is this one right here,
and that is Starbucks.
Speaker 2 (16:52):
Now.
Speaker 1 (16:53):
Starbucks back in late twenty two early twenty three revalued
their entire loyal platform. So the psychology behind this was
changing the rewards program, which now at that point stirred
up ridiculous amounts of bad will, and mainly what it
(17:13):
meant was is that you had a lot less you know,
right here, I'll focus The main focus of there are
was that starting February this was in twenty three, it
would cost twice the number of program reward points or
stars to get a free copy coffee. So it was
basically you deflated the Starbucks reward system in half. You know,
(17:37):
it'd be like saying, hey, your dollar today, which I
feel like is probably the case anyway, but your dollar
today is now worth fifty cents, and that really did
not create any kind of loyalty long term. Do you
think that's the reason we continue to see the sales
driving down? Oh?
Speaker 2 (17:56):
I think there's a lot of things going on at Starbucks,
and hopefully they can turn it around, because you know,
even though I have a coffee brand, we you know,
a rising tide lifts all ships. So I think that
that definitely had consume Starbucks guests kind of lose confidence
(18:19):
and lose stressed. It's kind of like you're pulling You're
pulling the rug out from under me. I feel like
I'm getting ripped off. Even though at some point restaurants
had to realize that points programs cost.
Speaker 1 (18:34):
Them money money, yeah, cool, yeah, but did it cost
them the amount of money that they lost in foot
traffic and declining sales and long term brand impact because
if you lose, for instance, me, a good what I
would say is a good Starbucks customer until twenty twenty three,
(18:57):
you know, and at that point when I realized this
was just a bad move, I didn't really use loyalty
points that much, but I just thought it was just
it was just cheap, I thought. And I thought, well,
this is used to be the value not the value brand.
This used to be the experiential brand. And I felt
like that was just the last straw for me. That
was why I left Star Starbucks. I've never been back since.
(19:19):
I haven't been to a Starbucks unless I'm in an airport,
you know, going somewhere and it's the only coffee company there.
But if Duncan is there, I'd go to Duncan, you know.
So wow, okay, yeah, yeah, I mean I'm that I'm
that upset at them, you know, in the sense, and
so me and I would say, I would spend thousands
of dollars a year. Here's the here's the unusual thing. Yeah,
(19:42):
my kids don't know Starbucks really and they're a gen z.
Speaker 2 (19:48):
They're not cake pop driven no.
Speaker 1 (19:51):
So so once you damage one demographic, especially one that
has children that can move them in to your brand ecosystem,
you've lost possibly generations of opportunity there. That to me
is what restaurant brands miss is they lose the forest
(20:13):
for the trees and they're worried about that immediate little
tick on the line, Oh, the loyalty causes this much
and we should cut it. You know, some idiot ceo
that runs these restaurant brands instead of looking at this
in a long term effort. If you don't, if you
can't afford the loyalty program, don't do it. They would
appreciate that much more than doing a loyalty program and
(20:35):
then cheaping out on it.
Speaker 2 (20:37):
So that's the well, it comes down to transparency. So
in your in your theory, if Starbucks would have just said, like,
this is costing too much, it's affecting.
Speaker 1 (20:49):
The quality of the they should have eliminated it.
Speaker 2 (20:52):
Eliminated it.
Speaker 1 (20:53):
Yeah, they should have had a wind down period. Everybody
use your points, but maybe even acceleer. We'll give you
double points to use them. Okay, wind it down and
eliminate the entire program and go back to the values
that they used to have, because you remember, Starbucks did
not have a loyalty program when they were growing under
(21:14):
star Charles Schultz. That was a new entry that only
happened really in the last fifteen years.
Speaker 2 (21:22):
So Geen Howard Schultz, because Charles Schultz.
Speaker 1 (21:26):
Is the ill sorry Howard, Yes, yeah, Howard Schultz. And
but that's my point is that when he was running
the brand, when they kind of came off of d
El Jorno or whatever that brand was that he bought
out from under Pete's, when they were growing that restaurant brand,
there was no loyalty program. They were building it, and
(21:46):
that's what puts Starbucks on the map. I think they've
missed that, and I understand Nichol is trying to go
back to that, but it just seems like, and I
would say restaurant brands, if you can't afford the loyalty
and you should you should really look at this, you know,
from an economic standpoint, and if you do it in
(22:08):
such a way. These would be my two tips to brands.
And I you know, obviously here at Saber, we invest
in companies, and we're constantly consulting with restaurants CEOs, but
I tell them say, hey, listen, first of all, two
things unloyalty. You can't afford it, don't do it. And
if you are going to do it, you've got to
make it worth the while. Don't cheap it out to
(22:30):
where it looks like you are cheap. And because that
sends a message as well, probably a bigger message to
the customers than even not having having a loyalty program.
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(24:20):
you there. If you can deliver something else, like, hey,
let's do instead of loyalty, let's do gamification programs throughout
the year. You know, where you earn whatever.
Speaker 2 (24:32):
It might be. You know, yeah, something that we do
frequently as a lever in several of my brands. So
making it more fun, making it way more interactive, making
it something different from earn spend spend X, get X.
(24:54):
I think that we're missing a big point though, Paul. Yeah,
I want to separate true brand affinity from loyalty programs
from okay, and I think brands need to really figure
(25:14):
out what are they doing besides having a platform that
makes something somebody loyal. Yeah, So it's about the entire
experience beyond just the points, no matter what generation you're in,
the fact that I order from this sandwich place and
(25:37):
they write my name with a smiley face on it,
and it just makes my day when that bag comes
Like that helps with brand affinity. Good service when I
go into a restaurant helps with true loyalty, Like.
Speaker 1 (25:54):
Those to the cornerstone of hospitality that I believe kind
of delivers a loyal customer. It's the same thing with
you know, certain restaurants and brands that I frequent are
often just because they do it right, you know, because
the minute someone does it wrong, it doesn't matter how
loyal you are. If you've messed up an order or
(26:16):
an experience. People remember that, and that is a problem.
I think that just lives in the industry.
Speaker 2 (26:22):
Well, I think that maybe if we looked at loyalty
programs as a as a tool for more of a
tool for brand affinity for example. And you're going to
talk about personalization in a second, every almost every loyalty
platform out there figures out what your birthday is. You
(26:44):
have to, you know, it's part of the onboarding and
the sign up of any loyalty platform. If the cash
cheer at a QSR knows it's your birthday and wishes
you a happy birthday when you come in, that's cementing
the loyalty beyond just whatever they're going to give you,
right beyond just giving you that free drink, but the
(27:07):
acknowledgment and making you feel.
Speaker 1 (27:09):
Oh, it's your birthday, Hey, welcome in man, exactly, and that.
Speaker 2 (27:16):
That encourages true loyalty as opposed to, oh, you've got
a free beyond your app.
Speaker 1 (27:22):
Yeah, that's exactly. Yeah, And I think that's your you're
den with that coaching brands. That is so when you're
talking to CEOs. Out of all the CEOs you talked
to as a fractional CMO, how many would you say,
get that. You know, they look at loyalty as not
(27:43):
a means to an end, but just a tool in
the bag to improve the overall experience. How many people
get the difference?
Speaker 2 (27:54):
I would say it's fifty to fifty.
Speaker 1 (27:56):
Really fifty wow. And I would say that I would
say less faith in the industry.
Speaker 2 (28:03):
That I would say that brands are demanding more from
their platforms. A lot of that has to do with
tech stack. So a lot of that isn't even on
the loyalty provider. It's how it's integrated into the POS
and so all the data may be there, but the
(28:26):
sixteen year old cashier may not be able.
Speaker 1 (28:29):
To No, can't execute all it. Yeah, correct, Well, and
that's the you know, to me, that's a cop out.
You know, if you're a brand CEO, if you're leaning
so much on your operational tech that you can't deliver
because this is not one of those critical tech pieces.
It's different if it was a point of sales system
(28:49):
that you need to operate your business. You know, I'm
talking about this is an accouterment that is added to
the overall experience model. And I think if you rely
so much on your tech to do the job for you,
especially in the hospitality business. We're not that automated now
enough to where anything knows. I mean Gmail can barely
(29:09):
filter spam much less you know, much less a brand
figure out you know, these intricacies around personalization, which to
me is the holy grail. I just have yet to
see it happen at a high performance level. Have you
seen anybody do that? Uh? Who has done it? Who?
(29:32):
Just give me one brand that has delivered personalized you know,
because it's like this article right here, I'll bring it
up here. This is to me, this is a BS
you know, to me, this is BS right here. Future
of a restaurant loyally starts with personalization. Who it may
start with it? But who does it?
Speaker 2 (29:52):
Who's doing it? Right now? Like super well? Yeah, yeah,
at the top of my head, I'm not prepared to
answer it.
Speaker 1 (30:00):
See they're that right, there is the answer.
Speaker 2 (30:02):
Okay, I'm sure, I'm sure there's somebody in our.
Speaker 1 (30:05):
One in a hundred or one in a thousand.
Speaker 2 (30:08):
Small brands. A small brands aren't doing it. Small brands
are definitely not doing it. Emerging brands are definitely not
doing it. Super well.
Speaker 1 (30:15):
Okay, so is that an attainable goal because based on
the tech that you know is out there, you you
reverse review these tech companies all the time. I've talked
to many of these loyalty companies most of the time
when I talk to them because we invest in you know,
startup tech, and a lot of times when I talk
to these you know the blue sky pitch is really wow,
(30:38):
this is going to change you know, the industry. But
when you dig down in you realize that it's a
bunch of you know what. So to me, this is
this is a fake goal in the industry is personalization.
It's impossible to achieve.
Speaker 2 (30:56):
Here's the thing, Paul, here's the thing. I always look
to retail first, like, have has retail really phoned in? No?
And no, because I'm still getting congratulations on your baby.
Speaker 1 (31:15):
Yeah. No, they haven't honed in the best of the
best brands have, even the good fast fashion brands, who
I would say are a little bit more savvy in
connecting with you know, customers. It all boils down to
just basic automation tools that are already out there. There's
nothing special about this personalized mantra that they're spitting around
(31:38):
the industry. I'm just in I'm one of those guys.
Maybe I'm just getting too old or something where I
just don't believe that this is this is possible. I'm
just skeptical about this crap, you know. Is It's just
doesn't in my opinion, does not work. And if I
could go to one restaurant and see this in action,
I have yet to see it today and not named
(32:00):
one brand. I've been in, thousands of fast casual brands,
hundreds of fine dining operations. No, doesn't exist.
Speaker 2 (32:09):
I would say, we're all kind of working on it
with our loyalty programs. I mean, no, the segmentation of
you know, the basics like lapsed users who haven't been
in in various times. There's a lot of AI driven
tools within the loyalty programs where they can predict people
(32:32):
who are going to lapse, that sort of thing. But
have I gotten a I drink a London fog almost
every day?
Speaker 1 (32:43):
What is the London fog?
Speaker 2 (32:45):
What is that? Oh? It's delicious? It is that steamed
oat milk when I get it from a competition, a
competitor to Ziggy's, because Ziggi's is not available in Baltimore.
Speaker 1 (32:59):
Okay, all right, because you are a coffee brand, CMO,
you know I am.
Speaker 2 (33:04):
I mean, if you watch this podcast, I've been drinking
it but with a shot of vanilla and I get
an extra shot. Now anybody, Have I gotten any sort
of communication from them that said probably not when to
London or.
Speaker 1 (33:21):
For sure or My point is is this I'm trying
to make a point here is that nobody is delivering
on personalization. So my point is maybe you could just
figure out another model to create the loyalty. And that
is through because I do think that this one will
work is gamification. Nobody cares you know that you had
(33:42):
a London not me personally, but nobody cares you had
a London fog today. But they might have something that
would gamify it, that would make you feel a little
closer to the brand.
Speaker 2 (33:54):
Do you remember, like in twenty sixteen and seventeen when
Starbucks did their like they had this amazing game like Sprints.
It was kind of like, oh, I remember that they
were term promos and like ye, even though I wasn't
(34:16):
drinking coffee, I was like thrilled to like I challenged myself.
And we do do some of that in my brands.
We that are have a particular loyalty program that I
won't plug that I used to I personally was very
(34:37):
loyal to this loyalty company, and they allow us to
do visit challenges. So visit a certain time in short
periods of time, visit five times in two weeks and
you get X. And then what we've been able to
(34:58):
do a couple of times is leo over some like
audacious prize like free burritos for life or free coffy
for your whole family, or so we've done some gamification
within the platforms that we have. But I do believe
that the more fun you make it and the more
(35:20):
relevant to what's going on. So I've done several visit
challenges like during the Olympics. Yeah, like when you know,
earn gold, bronze or silver and that can resonate and
do pretty well.
Speaker 1 (35:36):
Yeah. And I think that's the point, you know, when
you think about everything that's happening right now. And I'll
show you guys some examples of you know, what might
end up working overall. What I will tell you is
this is another good example of what's, in my opinion
is what is not working. And I'll share open table,
(35:58):
all right, an open table in a while. Yeah, well,
this is my point is and I'm going to share
a personal story I had with open table. And first
of all, open tables system of users sign up is broken,
So open Table, if you're listening to this, this is
(36:19):
not a scathing review, but it's one that everybody needs
to understand. So they do a lot of points rewards,
right and they give you, you know, their little blog
of here's eight examples of restaurant loyalty. First of all,
I've been using open table for you know, probably since
it began, and I make reservations religiously on the use
(36:42):
of open table. The amount of points I had were astronomical.
Speaker 2 (36:47):
How many? How many do you have?
Speaker 1 (36:50):
It was they were trying to give me. I don't
even remember, but I could have eaten multi free meals
for maybe a year, you know, at restaurants. I had
that many. Okay, because you remember, I go out you know,
with clients, you know, fancy.
Speaker 2 (37:07):
I don't know if everybody knows that in the podcast for.
Speaker 1 (37:10):
Okay fancy, I wouldn't say I'm fancy. My point is,
I never used the points ever, never, not one time
have I ever used an open table points on a
reservation First of all, I think it would be tacky
because most of the places you're going to to use
an open table reservation. I just think that would be
tacky as you have friends or guests or family or
(37:32):
clients and you're using rewards points. I'm sorry, no, I
wouldn't do that, but not saying that everybody would. I'm
not a snob. I'm not saying that. I'm just saying
it just doesn't.
Speaker 2 (37:43):
It doesn't.
Speaker 1 (37:45):
It doesn't mix well. But here's the problem with open table.
When you sign up, I had an old email address
that was so old I didn't even have access to
the server anymore. That's how old it is. Over a
decade old. Okay, for whatever reason, open table logged me
out of all my accounts. I had to re sign
(38:07):
in and it does a password reset. Guess where it
sends it to an email not get to you go
to open tables community and support. You can't update it
through customer service, so there's no update. So what did
open table do? I had to sign up under a
(38:28):
brand new email account and I all of those points now,
granted I could care less about them, but it showed
a lineage of the restaurants that I had been to
over fifteen years. That to me was more important because
it had all my ratings, you know, because I rate,
(38:49):
I rate people in those restaurants. So this is my
point is even that which is coming from a very
very well known company, even they can't get it. So
I hate to say, guys, I just feel like loyalty
is a scam. It's a scam. I think we've got
to go beyond loyalty into something that is not a scam.
(39:12):
The only one out there that I've seen that might
end up going into this is Blackbird, and Blackbird's probably
the only one in my opinion, that might end up
doing it.
Speaker 2 (39:23):
Right. Okay, let's educate me on Blackbird. All right.
Speaker 1 (39:30):
So Blackbird is a platform that's using crypto blockchain, using
blockchain and they're doing a win win for both the
businesses and the consumers. But the idea is pretty straightforward.
What they're doing is they use tech and gamification to
be able to offer this. And this is coming from
(39:50):
the guy Ben eleventh Thal. He also guess what he
founded was the app Rezi, which is a competitor. It's
open table. So the the long standing issues right here
long cutting out the middleman, and creating a direct connection
to the consumer and the restaurant. That to me is
(40:10):
the issue.
Speaker 2 (40:12):
Okay, so that what does that look like in real life?
Speaker 1 (40:16):
What that looks like is you would not need you
would not need an open table, You would not need
all these tech products that are in between you and
your customer to deliver a loyalty mechanism. And that might
be gamification, you know, whether it's whether they're getting ready
to launch. So this is brand new, brand new, Uh,
(40:39):
this is one that I'm watching. They're building, and there's
a couple others out there that are building. The point
I'm getting at is that that this industry is so
broken that now the next generation technology I think will
take over will circumvent this issue. I don't think we'll
see loyalty companies in the restaurant industry within the next
five years. The loyalty stack tech stack will either completely
(41:01):
change or it will disappear.
Speaker 2 (41:02):
I don't know five years. I think five years yearsssive.
But I think what's happened. I mean we're already kind
of seeing it right Like you just saw Patronics get acquired. Yeah,
you know, who would have thunk that that would have
happened last year because they were kind of this legacy
loyalty program exactly.
Speaker 1 (41:19):
Yeah.
Speaker 2 (41:19):
Yeah, that's also branched out into other things. So they
do order and delivery, they have a little bit with payment,
they do you know, they act a little bit as
an aggregator I think for a third party. So the
question becomes like, since they their bread and butter was loyalty,
(41:42):
well they still do all of these other pieces or
are they just going to go the way of the DODO.
Speaker 1 (41:48):
I think that is well, I don't know if they will,
but you know, you look at the issue that they're
Blackbird's trying, and there'll be other companies like Blackbird that
will figure this out. But it's primarily the cost because
most of it right now I was reading in the
article says there's somewhere between three and five percent of
(42:11):
a restaurant's top line revenue that's leaking out into these
third parties, and this through these loyalty systems. And that
three to five percent of a margin that is already
super thin and slim. Okay, so you look at that,
you should not cost you three and a half percent
for a restaurant just to collect a payment from you
(42:36):
in a loyalty model that is built through a mechanism
like you know what Toast is doing with you know
and Stripe. You know these companies which are now scrambling
to deal with what could be a next generation opportunity
around payment, especially if stable coins and all this crypto
(42:57):
stuff gets it's through this administration and we see it implemented,
which is why MasterCard and Visa all those guys are
scrambling right now to figure this out. As soon as
they pass the stable cooin act, I think that will
change things pretty quickly. But that, to me is going
to be huge because if a restaurant can deliver a
loyalty mechanism and take a payment without a third party,
(43:22):
it's a game changer. It's a it's a new innovation
area that we have yet to begin to see. So
there you go. Wow, all you guys setting out there, including.
Speaker 2 (43:34):
We've had predictions. Today we call out platforms. Today we
found out that you spend millions of dollars at restaurants,
not millions all those points. This was a very informative
massive today.
Speaker 1 (43:51):
Here's this is this is how bad it's getting in
the industry that there has to be a website to
tell you how to use your well lay rewards. All right, guys,
this is how you do it.
Speaker 2 (44:05):
It's complicated. They're complicated a lot of the time.
Speaker 1 (44:10):
I'll enjoyed what you earn double protein.
Speaker 2 (44:15):
I mean, I would say that obviously Chipotle is doing
something right there, because well, this.
Speaker 1 (44:21):
Is a Chipotle. It's my point is this is the
third party.
Speaker 2 (44:24):
No, that's what I'm saying. Yeah, I mean, even though
a fan, there's to me, the fact that a fan
created that page says that Chipotle has major affinity and
so they have true loyalty. Do they do they?
Speaker 1 (44:42):
I mean, that's my question is you know when you
have when you as a brand. Now, I love to
see user generated content because I think it only magnifies
a brand's awareness, but when it dismantles you in a
sense of saying, they can't explain this to you well enough,
so we're gonna you know me, as a fan, I'm
(45:03):
going to do it for you, you know kind of thing.
So I look at it and I think of it.
If I was Chipoli, I would consider that, you know.
Speaker 2 (45:11):
I wouldn't. I don't think I think I would be.
I think I would have mixed feelings about it. To me,
it's kind of like.
Speaker 1 (45:19):
The very minimum. I would do the same thing. Oh sure,
I would make sure that my my uh my website
answered all those questions.
Speaker 2 (45:28):
But I think the other thing might be there's this
when you really love a brand, you want to feel
like you're in on it right, that you're part of
the conversation. Yeah, for sure, are you getting away luggage
and drive art the beauty place? I feel like I'm
in audi part of the game team all the time.
Speaker 1 (45:50):
But see that's a different to me. That's different. It's like,
you know, there's certain kinds of luxury items that I
would feel affinity that way, or or certain kinds of
things that I frequent much more often or not as often,
but I feel very connected to. But restaurants are not
one of them, you know, Now I do when I
go to a high end restaurant and they know my name,
(46:14):
it's not because of some loyalty system. It's because of
some guy that I've seen there for ten years. And
that to me is hospitality. But I don't know that
it can be replicated with technology, at least not yet. Now.
Maybe AI will change that. I am hopeful that that
might be interesting enough to where it could, but I
haven't seen it yet. We'll see.
Speaker 2 (46:36):
I mean, by then you and I could just be
eating soft foods.
Speaker 1 (46:40):
Gross. I'm not gonna I'm not going out that way.
I'm not going out that way. Stacy, I'm not going
out that way.
Speaker 2 (46:52):
I think I'm just I'm not far off.
Speaker 1 (46:56):
Oh my god, this is crazy. What a crazy show
we have today. We have given you, guys so much,
I think so much. Download This is why you should
subscribe to the show. If you are not subscribed right now,
put a little button like this, Yes, kick the little
button down below. And I also like the video because
(47:16):
that also helps put it out there in the algorithm
on YouTube. And did you know that if you put
a star over on iTunes or on Apple Podcasts, it
also accelerates the podcast. And if you like it or
follow it over on Spotify, it also accelerates the podcast
the audio side. So if you are listening to us
while you're driving or maybe working in a shift right now,
(47:39):
kudos to you guys, as you're doing it right as
a restaurant operator. So that's what this podcast is all about,
is to help you, guys get past all the bullshit
that's out there, and that's what I'm just saying. Get
past all this BS and listen to people who have
(47:59):
lived it and have bled it for years, like you know, Stacy.
Speaker 2 (48:05):
And oh freaking Gory today.
Speaker 1 (48:07):
All right, anyway, kudos to all you guys for listening in.
We love it, and of course Stacey, it was great
seeing you again.
Speaker 2 (48:15):
It is a pleasure.
Speaker 1 (48:16):
Paul, you bet, thanks for listening in right here on
the Restaurant Masterminds podcast
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