Friends of Branded!
Happy Saturday and I hope you had a great week!
Life is not fair! How many times have you heard that, felt that or believed that to be true?
My daughter is a rising second grader and the wonderful teachers at her school have explained to me that this is an age where fairness is a big deal. A very big deal.
I suppose I’ve never grown out of the fairness phase, b/c I’ve been obsessed with fairness my entire life, have no intention of changing and to be clear, I’m also completely comfortable with that.
Despite my obsession with fairness, I do know the adage or maybe response when someone believes (complains?) that they’ve been treated unfairly; “who says life is fair, where is that written?”
Therefore, if you believe in fairness, but you also understand that life isn’t fair, are you simply stuck in an unwinnable situation and destined to be frustrated when unfairness presents itself and is not correctable?
Well, in certain situations (probably many in fact), yes, yes, you are.
In life, sometimes you’re the bug and sometimes you’re the windshield. The important thing is to understand which role you’re playing in any given situation and to a certain extent, accept it and move on.
However, I’m not remotely a defeatist person (and I encourage you not to be one either). When faced with challenges, obstacles or otherwise, if I believe the juice is worth the squeeze, I’m going to exhaust every path until I figure out how to get through it, around it, under it, over it or make the best of the situation as I can.
Bringing it home and of course back to the world of hospitality, I’ve been hearing a great deal lately about how unfair the industry is specifically to restaurant operators. As an operator-centric platform, we’re on the team, we hear you and most importantly, we want any and all injustices to be addressed!
Will we, as an industry, be successful at addressing all the things that are unfair? Spoiler alert, not a chance, but we can address many of them.
The most recent spat or maybe rants of unfairness I’ve been hearing about is specifically about restaurant pricing. To be crystal clear, while Branded works in the world of hospitality and for our platform, we define that as any venue that sells or serves food & beverages and engages with guests. As you can imagine, the breadth and depth of venues that sell or serve food & beverage and engages with guests is large (and I dare say HUGE)! This includes restaurants, hotels, stadiums & arenas, airports, colleges & universities, corporate cafeterias, and more (yes, this single industry that is “hospitality” is a wonderfully BIG one).
When I bring up the issue of pricing and this unfairness, I’m specifically talking about restaurant pricing and the surge of attention on dynamic pricing or as Branded prefers to call it, revenue management. This week alone I read a number of articles on dynamic pricing and the overall frustration customers are experiencing and as one journalist wrote, a “driving sense of fatigue.”
In an effort to be fair (one of my obsessions), I understand the guest’s frustration and even dislike of dynamic pricing. Much of my understanding, similar to one of Branded’s most important investment themes, is that guests have a false sense of familiarity with our industry and even a level of comfort that they don’t have with almost any other industry.
It’s that false sense of familiarity or maybe more directly stated, a lack of understanding, that creates so many opportunities where we can work with and support operators in this digital transformation that is underway.
Quick sidebar, this false sense of familiarity also contributes to guests feeling entitled and to have expectations of restaurants that are hard to meet, but that’s topic for another Top of the Fold article. 😊
One article I read, a great one by Emily Stewart of Business Insider (I love Business Insider), was about this age of wild price swings that she feels we’re entering and how Americans are sick of never knowing what something costs.
Here’s the link to the article if you’d like to check it out for yourself: Americans Are Angry Because Prices Are Constantly Changing - Business Insider (apologies that it’s behind a pay wall, but Business Insider is awesome if you'd like to check it out).
I’m totally serious when I say that I enjoyed Ms. Stewart’s article and believe her reporting is accurate and on point. I respect that she’s speaking up for the customers / guests that don’t like that restaurants are more clearly and publicly than ever before joining so many other industries where dynamic pricing isn’t only used, but where it’s been established for a long time.
My favorite part of the article was the very reality-based point that dynamic pricing isn’t new, and that it’s been part of industries like airlines, hotels, sporting events and concerts for a long time. Her point, when it comes to these other industries, the consumer may not like paying extra, for example, for a Christmas flight or summer hotel room (or Taylor Swift concert tickets), but that there’s a familiarity and acceptance of the reality that such is the case in these industries.
When it comes to restaurants, the guest is not familiar with dynamic pricing and therefore reacts extremely negative to it. That’s fair or at least understandable and therefore fair enough (Kenough).
How negatively do guests react? Please see Wendy’s surge pricing public relations fiasco (Wendy's dynamic pricing debacle) or more recently, a rant on Reddit by a gentleman that I don’t expect is going to be making many more visits to Burger King as a result of what appeared to be a $0.29 change in price in the middle of his placing an order. Burger King has chalked this up to a “technical error,” but people aren’t convinced such is the case.
Ms. Stewart's article captures the frustration of the customers, respect. Branded, of course, cares deeply about the guest, but we're first and foremost an ally to operators and that’s where my perspective is derived.
Both of these positions can be true.
Dynamic pricing already exists in restaurants (the OG strategy was Happy Hour) and the importance of operators embracing these revenue management tools is critically high.
The restaurant industry is not known for its tech-forward thinking and in fact, I’d argue we’re still the single largest industry to remain mostly antiquated and analogue. That’s changing now of course and it’s an exciting time to be in hospitality.
Revenue management is well-established in other industries, and it will become that way in ours as well. It’s happening b/c it needs to happen and is overdue.
Operators, friends, our guests will not like this, and they may never like it (just as they don’t like paying up for a holiday flight). But they will learn to accept it and it’s our job to effectuate a revenue management strategy that is both transparent and fair.
Branded’s restaurant evangelist (and leading food crawl organizer), Rev Ciancio, contributed an article below about his biggest takeaways from the 2024 Restaurant Technology Report. It’s a strong piece and I highly recommend that you scroll down and read his article (but please don't do that just yet, and at least wait until we’re done with the Top of the Fold). 😊
While Rev highlights some of the industry’s biggest disappointments with current tech stacks, its these very deficiencies that restaurant operators need to effectuate in order to execute a successful revenue management strategy. Digital marketing, loyalty programs, customer data platforms and CRM systems are not only important for operators, but these are some of the very tools required for a transparent and fair (to the guest) dynamic pricing strategy.
All the above-mentioned tools fall under the category of guest engagement.
Operators, you need to know and connect with your guests in a far more meaningful way. Executed successfully, this will improve your guest acquisition, retention, and satisfaction. Prices are of course an important factoid in a customer’s buying pattern and decision-making, but prices are of course not the only factoid and that’s where your digital (and far more personalized) marketing and commitment to guest engagement is so important.
I’ve written often (and far too lengthy) that the restaurant industry is different, and reason number 763 is that dynamic pricing, while not loved, is accepted in other industries, but not in restaurants. We can’t change how guests feel about restaurants and why there’s a more personal connection with restaurants that creates such negativity towards our embracing revenue management strategies that allow us to improve our operations and margins. In this situation, we’re the bug.
But we can improve our engagement with our guests, reward them for their loyalty, listen to their feedback, and communicate with them. This is the tradeoff or maybe balancing act we need to establish.
Help is also on the way. With the embracement of digital menu boards and with digital pricing entering the grocery markets in a big way too (just wait until customers see changing prices in the aisles of supermarkets), the customers’ familiarity and I dare say comfort level with price changes will become more normalized. We of course need to do it in a transparent way and ensure that we continue to deliver value for our guests (its never about expensive or cheap, it’s always about value). That’s only fair, right?
If you’d like to speak about dynamic pricing strategies and the tools available to help all different types of restaurants, sincerely, we’re here to help. Based on all the headlines and press, it can be a scary path to consider, but it’s necessary, it’s time and it will be worth it.
It takes a village.
There’s no question that Branded is best known for its work in the restaurant industry and specifically with emerging technology, innovation, and brands. As written above, we view the hospitality industry as being much broader than restaurants alone and includes the myriads of venues that serve and sell food & beverage.
I’m thrilled that sports and entertainment play such a large role in the world of hospitality and how important F&B is to the sports and entertainment fan's experience. Yes, I accept that fans don’t go to the game, match, concert or show for the food & beverage, but I bet it’s rare that you’ve ever been to a live event and not engaged or enjoyed an F&B offering.
This weekend on both sides of the pond, the CONMEBOL Copa America tournament (in Miami) and the UEFA European Championship (in Berlin) will take place. While I can’t imagine any match-up wouldn’t garner incredible attention, Argentina vs Columbia in the Copa America Finals and Spain vs England in the Euro Cup Finals are both juggernaut matches!
No, the H^2 is not attempting to be your weekend sports section, but our engagement in The Tamias Fan Zone fueled by ComAve, and the official fan zone of the CONBEBOL Copa America, has been an amazing experience for Branded and I dare say, a demonstration of how emerging tech, innovation and brands can contribute value to and increase the fan engagement at these live events.
This weekend, I’ll be down in Miami for meetings with our global partners at ComAve as we work towards building the world’s largest sports fans community. You’re correct, our ambition isn’t a small one and our goal is to create a worldwide community for sports fans (and I think you all know what Branded feels about the importance of community).
No, Branded is not focused on what happens on the field, court, or pitch, but we know that fans want to be engaged, rewarded for their loyalty and desire personalized experiences. These are all themes that were mentioned above in the Top of the Fold as I wrote about restaurants and they’re pervasive in all aspects of hospitality.
The sports and entertainment industry has the incredible advantage of a captive audience that enthusiastically come to watch their favorite teams, athletes, artists, or performers. We know that F&B is a supporting actor, but it still a very important part of the equation and contributor to the value of these assets and operations. This weekend will be both productive and certainly (hopefully) fun. But it’s also just the start of Branded’s work in the sports and entertainment industry and our partners at ComAve deserve a big shoutout for that!
Our second shout out today takes us from Miami to Texas!
A big shout out to our friends at the Texas Restaurant Association who are hosting the Texas Restaurant Association Show this weekend in San Antonio, TX! As they say, everything is bigger in Texas, and that includes the restaurant scene with over 40,000 restaurants.
Our friends at the TRA have given us permission (which will either be a big mistake or a big win on their part) to extend an invitation to any of our readers who find themselves in and around San Antonio this weekend. Pop over to the Henry B. Gonzalez Convention Center and tell them Branded sent you! We're definitely having some FOMO about sitting on this bench this year, but we know the TRA team (looking at you Emily, Joe & Ben) is going to knock it out of the park with this truly excellent and insightful event, showcasing the hospitality that only Texans can deliver!
Branded invites readers of the H^2 that are interested in learning more about our portfolio companies, and investment strategies to become part of our Access Hospitality Network.
While everyone is getting their summer started we are brining you a special Hospitality Hangout re-wind episode this week! Michael Schatzberg, “The Restaurant Guy,” and Jimmy Frischling, “The Finance Guy,” sat down with Don Fox, former CEO of Firehouse Subs.
Tune in to learn about his rise from Dishwasher to CEO. Don also shared a few career highlights, including an incredible story about him and Shaq - you won’t want to miss it! So fire up the grill or pop open a cold Pepsi and enjoy this re-wind special!
You can tune in on Spotify, Apple, Amazon, iHeart, or your favorite listening platform!
CONMEBOL Copa America Tamias Fan Zone
Get ready for the ultimate fan experience at the CONMEBOL Copa America 2024 Tamias Fan Zone
TECHNOLOGY
Navigating the Restaurant Market: Strategies for Success with Multi-Unit Brands
By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures
The restaurant industry is dominated by single-unit operators, but the real challenge lies in capturing the attention of the few multi-unit brands through patience, persistence, and exceptional value.
Welcome to the new IFMA
The future of food-away-from-home is evolving—and so is our membership structure.
MARKETING
BIGGEST TAKEAWAYS: 2024 Restaurant Technology Outlook
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
Do you love industry reports? I love industry reports. I especially love industry reports when they have accuracy, relevancy and share insights on what I need to be thinking about to move my business forward!
ASK THE HEADLINE
🔍 Got Questions? We've Got Answers! 🌟
Satisfy your thirst for knowledge? Look no further! It's time to dive into our brand-new segment: "Ask The Headline"! 🎉
📅 We'll be answering YOUR questions every week. And here's the best part: you can choose to stay anonymous or receive a fabulous shout-out when we feature your question!
That’s it for today!
See you next week, (about the) same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality Ventures
jimmy@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and advisory platform at the intersection of food service, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its portfolio companies through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance