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AUGUST 2024
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I have always known that my clients — fast-food franchisees on the front lines of the industry — have a far better understanding than many Americans of what it means to live life at the lower end of the income spectrum. That is true both because of the customers their employees serve and who their employees are . WIth fast-food worker turnover running at 130% a year or more, many franchisees are desperate for low-cost ways to boost employee retention. A smart way to accomplish this is to use what you know about your employees to make their lives better. One thing that holds people down, for example, is payday loans. Many hourly employees live paycheck-to-paycheck with no emergency savings. A mishap as minor as a flat tire can force them to take out payday loans at interest rates as high as 400% a year. At a regional franchisee conference in 2022, I met representatives of a company that has a solution for that — Tapcheck. They partner with franchisees, integrate with their payroll systems, and provide employees a benefit called earned wage access (EWA) — instant access to a predetermined percentage of their pay. I pushed these guys, asking all kinds of questions. By the time I was done grilling them, I was sold. This is a legitimate service. The cost to the franchisee is zero, and employees pay only the equivalent of an ATM fee — a far better option than doing business with payday loan sharks. If I am a job applicant with a choice between a job where I can get the cash I need for emergencies now, and a job that pays the same but doesn’t offer the emergency cash, why wouldn’t I take the first one? Since I met the Tapcheck reps in 2022, the company has pulled down several fintech industry awards and is currently working with Burger King, Dunkin’ Donuts, Little Caesars, and other major brands. One Tapcheck customer, Retain Your Team Reduce Employee Turnover Via Low-Cost Benefits
a four-generation, family-owned McDonald’s franchisee in Pennsylvania, says his employees take out an average of $150 each time they use Tapcheck. Other companies have developed similar benefits used by fast-food franchisees, including Instant Financial, which offers employees same-day pay, and Branch, which provides instant tips and mileage reimbursements for hourly employees. Another unmet need among fast-food workers is access to basic banking services. Intent on lowering the 150% turnover among his 2,000 employees, Farzin Ferdowsi, a Taco Bell franchisee, realized that he wasn’t offering hourly employees the same kinds of incentives to stick with the company that he gave management. So, in 2022, he partnered with a banking executive to co-found Sonata Bank. Sonata partners with fast-food operators to offer creative benefits for hourly employees, including telehealth, savings accounts with attractive interest rates, roadside tow service, and cellphone insurance. If I’m a bank with close ties to a business and its employees, and I understand the employee’s history and role in the business, maybe it’s easier for me to underwrite a car loan for that employee. Franchisees bear part of the cost, but Sonata Bank also benefits from gaining new customers. Other successful operators hold down employee turnover with non-financial perks. I once asked a Taco Bell franchisee as he was preparing to sell his company, “What do you think the brand did for you?” His response: They made it cool for kids to work at Taco Bell, and that was a huge, huge help. The best franchisees I’ve met know that their customers want a consistent, reliable experience and want to be treated with respect. They also know that treating employees the same way can go a long way toward achieving that goal. As the industry grapples with rising costs and shaky customer traffic, there has never been a better time for operators to think creatively about low-cost ways to meet their employees’ needs.
– Nate Riordan
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Interactive Marketing Connecting With Audiences in a New Way In marketing, we find two forms of content: passive and interactive. Passive content is a form of advertising that does not require anything of the viewer, like a sign, an ad, or a television commercial — many traditional forms of marketing are decidedly passive. Interactive content, however, demands something of the viewer and, in turn, draws further engagement from them. If you want to learn more about this type of marketing, then read on about what interactive marketing is and how you can use it to strengthen your brand. Components of Interactive Content If your marketing efforts included polls, contests, assessments, quizzes, games, or interactive e-books, they were interactive. While most marketing revolves around one-way communication with the viewing audience, interactive content requires some reciprocation. Not only does this content increase engagement, but you can also leverage it to gather valuable data about your customer base and increase brand engagement simultaneously. The Interactive Impetus Interactive content is becoming more prevalent, especially among larger corporations. An astounding 87% of marketers agree that it increases engagement compared to passive content. As of this year, 62.3% of companies are utilizing some form of interactive content in their marketing campaigns, an increase of more than 16%. Serious Engagement According to a study by the Content Marketing Institute, 60% of content marketers listed “producing engaging content” as a top challenge. That problem has an answer: interactive content. With the high numbers of people who use their cellphones daily, interactive marketing is more accessible and prolific than ever before. A survey by Inc.com rates interactive content as 93% effective as opposed to static content, which ranks at 70%. More than just a tool for advertisement, interactive content can also educate potential customers about your product or service. And those who engage with your content are more likely to appreciate its message, which improves your brand’s strength. Creating interactive content can help reshape your engagement levels and give you a stronger brand and a more loyal audience.
Care to Try a ‘Philly Cheesesteak TikTok Chipotle Quesadilla’? Viral Menu Hacks
If your life is missing a little drama, consider surfing social media for some fast-food menu hacks.
Posters on TikTok, X, and other platforms have served up some entertaining videos in recent months, from flaming the CEO of Chipotle Mexican Grill for allegedly shorting customers on chicken, to producing horror-comedy screenplays portraying McDonald’s blob-like purple mascot, Grimace, as a deadly assassin. The TikTok backlash against Chipotle arose from customer claims that servers were dishing too much rice and too little chicken on their entrees. Chipotle CEO Brian Niccol took to TikTok himself to declare that portions have not gotten smaller, asserting that customers have always been able to ask for and get a little more of certain ingredients. TikTokers immediately flamed his good-natured video, including one who posted her critique to a soundtrack of Bonnie Tyler’s “I Need a Hero” anthem, “Where have all the good men gone?” Influencers on TikTok hold more sway over Gen Z customers than traditional advertising, according to The New York Times. And when influencers rebel against brand advertising, the impact can be seismic. McDonald’s 2023 release of the Grimace Shake, served up in a pastel shade of Grimace’s deep purple fur, sparked a response reminiscent of recent horror-comedy films. A flurry of videos on TikTok showed customers downing the shakes, then faking gruesome deaths with purple remnants of the shake spilled all over themselves. The playful videos drove hashtag #GrimaceShake to more than 1 billion views. McDonald’s responded on X with a photo of Grimace “pretending i don’t see the grimace shake trendd (sic),” but continued offering the Grimace Shake to the end of the promotion, as planned. Menu hacks that go viral can compel chains to alter their offerings. Late last year, a Chipotle customer claimed on TikTok that a quesadilla with extra cheese, steak, and fajita veggies tasted just like a Philly Cheesesteak. The post went viral, and viewers flooded Chipotle outlets with orders for the “Philly Cheesesteak TikTok Chipotle Quesadilla.” Chipotle responded by introducing a new Fajita Quesadilla in 2023 for online customers. As fast-food companies strive to reach more customers in their 20s, their laser-like focus on social media is likely to continue. Taco Bell has drawn good reviews for listening closely to social media comments and shouting out and re-posting customer- generated content — an effective way, marketing experts say, to build traffic and trust.
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Quiz for the day: What struggling restaurant chain recently sparked a media pile-on by the Los Angeles Times, Fast Company magazine, the New York Post, and John Oliver, host of “Last Week Tonight”? If you guessed Red Lobster, you’re right. Numerous media outlets criticized Red Lobster ownership for management moves that helped drive the chain into Chapter 11 bankruptcy proceedings in May. Oliver had a memorable backdrop for his attack on Red Lobster’s past owners. When equipment from 50 closed Red Lobster locations went up for sale at auction, Oliver’s crew bought the entire contents of a restaurant and rebuilt a simulated Red Lobster dining room in the “Last Week Tonight” studio. The Emmy-winning TV host called out Golden Gate Capital, a private equity firm, for using a $1.5-billion sale leaseback of Red Lobster’s real estate to help finance its purchase of the business in 2014. That required Red Lobster to start paying rent on properties it once owned, benefiting Golden Gate’s bottom line. “That private equity firm did exactly what private equity firms always do: immediately try and suck the value out of the company,” Oliver said. Pressured by escalating leasing costs, the chain has closed at least 99 locations and marked hundreds more for closure unless leasing concessions can be reached, court papers show. Red Lobster Sinks Management Missteps Leave Iconic Chain Floundering
BRETT & ADAM SIBERT — YUM! Brands franchisees
Media commentators are actually late to the pile-on party, industry expert John Hamburger writes in Restaurant Finance Monitor, an industry newsletter. Red Lobster’s slow-mo meltdown started well before Golden Gate arrived on the scene. All of these “armchair quarterbacks … conveniently forgot it wasn’t a rocketship business back in 2014 when Darden unloaded it,” Hamburger wrote in his June newsletter. By that time, Hamburger had already coined a phrase, “Red Lobster Syndrome,” to represent the problems that arise when a chain steadily raises menu prices in the face of weak customer traffic and sales. Thai Union Group, a seafood company, bought a large stake in Red Lobster in 2020 and dug it into a deeper hole by expanding a one- day “endless shrimp” promotion to seven days a week, contributing to an $11 million operating loss. The takeaway: While escalating leasing costs inflicted a potentially fatal wound on the seafood chain, mismanagement had already weakened the patient.
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In This Issue 1
Smart Strategies to Improve Employee Retention Social Media Prompts Quirky Fast- Food Menu Hacks Interactivity Is Revolutionizing Marketing Red Lobster: Historic Chain Trapped in Slow, Painful Demise Chick-fil-A: Good Service Creates Brand Loyalty
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Employee Training Fosters Lasting Customer Ties at Chick-fil-A Case Study in Customer Care
Fast-food customers are among the most fickle in the country, abandoning quick-service restaurants at the slightest sign of poor service or disrespect, according to a recent survey by Qualtrics, a software and consulting company. One company leads the field in earning customer loyalty — Chick- fil-A. The chain ranked No. 1 in the industry in a study by the University of Michigan. A case study of Chick-fil-A’s training and culture shows what it takes to motivate employees to behave warmly toward customers. New team members receive training covering customer service, food preparation, and cleanliness standards, in addition to ongoing skill development after they start. Chick-fil-A also trains all employees to adhere to shared core values, says Ryan Magnon, senior principal operations lead at Chick-fil-A, in a 2021 podcast interview with John DiJulius, a consultant who has worked with the company. Operators are taught to value caring for everybody who walks through their doors, and that attitude tends to attract team members who have the same values, Magnon said. The company
also trains employees in soft skills. When a customer is upset, employees memorize an acronym to guide their response: LAST, which stands for Listen, Apologize, Solve, and Thank. For many employees, “these team members … are learning manners, etiquette, and service excellence that possibly no one else is going to teach them,” Magnon says. When customers say thank you, employees are taught to say, “My pleasure,” a gracious response borrowed from the culture at Ritz- Carlton Hotel Co. “That phrase, ‘My pleasure,’ comes across like beautiful music if you truly mean it from the heart,” says Magnon, a former executive with Capella Hotel Group, a hotel company founded by Horst Schulze, co-founder of Ritz-Carlton. Operators even feature their bonds with customers in ads. One local TV spot highlights a busy single mother who was late arriving at her local Chick-fil-A Family Night for free kids’ meals, arts, and crafts. Seated nearby on the set was a Chick-fil-A employee who noticed the mother was late and extended the Family Night activities, just for her. The ad leaves no room for doubt: That customer felt cared about by her local Chick-fil-A.
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