Friends of Branded!
Happy Saturday and I hope you had a great week!
With a great deal of intentionality, the H^2 has always stayed out of politics. That shouldn’t remotely suggest that politics aren’t important to Branded or myself, but that we feel there’s a time and place for such debate (and this isn’t the place).
As a result of the amount of attention that a specific debate has garnered along with the Branded team being a subscriber to Quinn’s Laws, with one of the most important being that we all need to “stand tall and choose sides,” an exception will be made in this week’s Top of the Fold.
The Branded Team this week is announcing that it chooses Major League Eating (the “MLE”) over its biggest star and 16-time Mustard Yellow Belt champion of the Nathan’s Hot Dog Eating Contest, Joey Chestnut.
The team respects Mr. Chestnut and his team’s choice to embrace Impossible Foods as a corporate sponsor and we respect MLE’s right to ban the champion (and world record holder of eating 76 hot dogs and buns in 10 minutes) for his partnership with a competitor of Nathan's.
This decision to side with the league is consistent Branded’s views that leagues, organizations, and platforms create and provide a tremendous amount of value and that if done correctly, in a "PRB" (Professional, Respectful and in the Best interest of the collective group) manner and in partnership with its athletes, players, employees, contractors, and artists, the two sides can create and capture value together.
That’s all I’m going to say about this political issue (other than to share that I’m excited about the upcoming competition special, “Unfinished Beef” between Takeru Kobayshi and Joey Chestnut on Labor Day, Sept 2nd.
Any comments or specifically complaints aboutBranded choosing sides on this important issue should be sent directly to my partner, Michael “Schatzy” Schatzberg. 😊
Now let’s get into it!
The restaurant side of the hospitality industry may be slow to adopt the technologies & innovations that other industries have already embraced, but the digital transform that is underway will help us get there.
One of Branded’s favorite tech sectors is guest engagement, which encompasses a myriad of tools that allows a venue / brand to connect with its customers, deliver a better experience and earn a greater share of wallet as a result. There are a number of verticals that reside under the guest engagement sector and one of the most important is loyalty.
How important are loyalty platforms to the foodservice industry? Fantastic question.
According to ResearchandMarkets.com, the loyalty market in the United States is expected to grow by 10.4% on annual basis to reach $30.38 billion in 2024.
In value terms, the loyalty market in the country has recorded a CAGR of 11.8% during 2019-2023. The loyalty market in the country will continue to grow over the forecast period and is expected to record a CAGR of 9.0% during 2024-2028.
The loyalty market in the country will increase from $27.52 billion in 2023 to reach $42.83 billion by 2028.
I’ve written often (too often?) about the incredible people that comprise this industry, but I believe I’ve also written on the competitive nature of the foodservice industry as well.
Customer engagement is all about creating a more personal and better experience for our guests in order to beat the competition!
The speed in which guest preferences and needs are changing continues to accelerate and to remain relevant and accelerate revenues, foodservice venues need to be top of mind with its guests and that’s what’s driving the importance and competitive landscape for the loyalty program segment of the market.
How about some factoids to go with your coffee this morning?
According to the National Restaurant Association’s new Restaurant Technology Landscape Report 2024, 96% of loyalty and reward program customers say they’re a good way to earn more “bang for their buck,” and 52% say they already participate in them at restaurants, coffee shops, snack places, or delis offering them.
Please remember, foodservice operators don’t like discounts (we really don’t), but we LOVE rewarding loyalty. Discount shoppers roam the foodservice industry looking for their next discount (and don’t even get me started about the sin of offering these customers a better deal than your most loyal guests). A loyalty program done right, incentivizes more visits to your venue and the program itself provides your venue / brand with a way to promote upcoming events and deals.
The embracement and adoption of loyalty programs does differ by generation and not surprising, Gen Z leads all the other generations in the number of loyalty programs they engage with (and probably not surprising, Baby Boomers, while still engaging, are at the low end of the range).
On the negative side, there has been and continues to be App-fatigue, which is defined as the resistance guests have to downloading and engaging with Apps. Remember, the restaurant industry is extremely fragmented (70% of are independents). If you have 4 specific airline apps on your phone, in the US you’ve got almost 85% of the flights in our country covered. The fragmentation of the foodservice industry is a headwind (or friction) to guests, but operators, “best-in-breed” loyalty program providers have addressed this important issue.
Branded is biased and in full disclosure, we’re investors in Spendgo - Loyalty Marketing for Restaurants & Retailers. It was Spendgo’s embracement of the KISS theory (Keep it Simple Schatzy) that attracted Branded to the company.
Spendgo understands that each guest that is enrolled in its loyalty program on behalf of its customer represents a cost savings compared to the cost of new customer acquisitions.
The goal here is to make the process of signing-up for a loyalty program as easy as possible. You can’t make customers download an App or require them to provide too much personal information to enroll in your program.
How about a phone number for enrollment? Easy-Peasy!
For all loyalty programs, the three most important KPIs (Key Performance Indicators) are (i) Sign-ups; (ii) Adoption Rate, (iii) and Incentive Redemption Rate.
For avoidance of any doubt, all three of these KPIs are indicators of the guests experience and all have a direct impact on your top line!
- Sign-ups represent the number of new customers joining your loyalty program in a given period.
- Adoption Rate measures how much your guests are using your loyalty program.
- Incentive Redemption Rate tracks the number of incentives you offer that are actually being redeemed (and it’s the single best way of assessing the level of customer engagement with your loyalty program).
Last plug for our friends and partners at Spendgo, the industry average adoption rate is around 10%. With Spendgo, its customers regularly reach adoption rate of up to 65%. Mic drop!
As written above, our industry is extremely fragmented and as a result, there is no one size fits all and it’s therefore important that restaurants align their respective tech-stacks (and in this case loyalty programs) with its current customer base. We all must also be mindful of our future customer base and its this group that is particularly tech-centric. The majority of guests (60%) currently prefer a digital experience and using their smartphones to fully engage with loyalty programs (and I promise you that percentage of guests that want the digital experience will only increase).
Why is all this important? Re-visiting the report from our friends at the NRA, 61% of limited-service operators and 52% of full-service operators say they plan to invest more in loyalty programs and rewards systems in 2024.
Before the pandemic landed on our shores, less than 50% of restaurants hand online food offerings. With the above-mentioned percentage of operators planning to invest more in loyalty, this is an excellent time to explore the platforms and tools that help operators know their customers and earn a greater percentage of their spending on foodservice.
Technology is enabling venues / brands to market far more effectively than ever before and to use the data acquired to delight these guests (as well as attract new ones).
Yes, this is of course a people, service and food & beverage business, but it’s also fiercely competitive and targeting your core guests better and attracting them to return by rewarding their loyalty to your venue / brand is a winning combination.
Wishing you all a great weekend and for those in the US, a wonderful July 4th holiday weekend.
It takes a village.
Last week’s H^2 (War of the Roses) focused on the changing landscape in the reservations business.
This week and in the spirit of my continuing to make this section a little bit of a Family Table, I want to share that our portfolio company, Tablz, and our investment directly into the reservation segment of the market, turned 2 years old this week!
Tablz is a guest fulfillment system that works with the venues' existing reservation system to help restaurants better manage guests’ requests and create additional revenues for the operators.
I don’t want to remotely suggest that Branded’s portfolio companies are our ‘children,’ b/c that would be both pejorative to these amazing emerging companies we’ve been privileged to invest in and support (as well as to my young daughter). 😊
At Branded, however, we do love being part of the building and accelerating of companies and I’m comfortable saying that the challenges and joys that come with being engaged with early-stage companies is akin to a rollercoaster ride and makes for quite a journey.
Change is hard, and Tablz entered the reservation space with a simple, yet important goal, to create a differentiated and personalized engagement for guests that includes (i) seat selection; (ii) pre-ordering; and (iii) group bookings.
The company also IMPORTANTLY creates a new revenue source for operators.
The fact that operators can onboard and leverage Tablz at no costs, as you could imagine, was attractive to an operator-centric investment platform like Branded!
As Tablz moves into its 3rd year of operations, we’re thrilled that this one-sided marketplace has doubled in size every 8 months. One of our learnings about Tablz over the past 24-months has been that Class A restaurants are the most enthusiastic venues about the Tablz platform. The company’s product strategy addresses the features needed by Class A restaurants is the focus. Class A restaurants are known for many things and its property, design and location are most certainly important factoids in the success of these venues. Tablz uniquely creates a revenue stream for these operators that is correlated directly to its property.
If you’re an operator of a Class A restaurant / property, I will simply invite you connect with me to explore how this tech-platform can further engage and delight your guests while creating an entirely new revenue stream for your business.
As a straightshooter, I want to share that 4 out of 5 palm-tippers have expressed displeasure with Tablz as it democratizes the process of securing a table (and thereby reducing the value / impact of the palm tip). I’ll also add that it’s come to my attention that 5 out of 4 people don’t understand statistics. 😊
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.
As our friends and partners, Josh Halpern & Sam Stanovich like to say, “let’s grow!!!” and that’s exactly what this most recent addition to Branded’s portfolio is doing.
This week it was announced that Shaquille O’Neal’s Big Chicken is coming to the Hartland, Michigan. Big Chicken already has locations in 18 states and this Hartland unit will be the second in Michigan.
Franchisee Hafaid Gobah has the first Big Chicken unit in Clio, Michigan, and he’s super excited about this second one. The grand opening will be at the end of July.
For those that wish discuss opportunities with Big Chicken, please contact me directly.
LDV Hospitality continues to make its presence felt out in East Hampton and like the fictional, albeit legendary character, Ebby Calvin “Nuke” LaLoosh in the 1988 film Bull Durham, their presence is being announced with authority!
The Branded team is excited about our working with this discerning and esteemed team at LDV Hospitality and while this is most certainly NOT a new restaurant company, their growth plans and roadmap have us believing that this company’s very best days and moments still lie ahead.
The over 150-year-old boutique hotel compound has been reimagined and is now being operated by LDV Hospitality, in partnership with Irwin Simon and Mayank Dwivedi of ISMD Management.
The Maidstone Hotel presents an entirely rejuvenated experience, with a refreshed design and boasting an exquisite food and beverage program. Crafted by Chef Jorge Espinoza, renowned for his tenure at Scarpetta, the menu evokes quintessential moments of ‘Italian Summer’ in the Hamptons. Guests will savor beloved LDV classics complemented by new dishes inspired by the coastal delights of Italy.
In today’s episode of Hospitality Hangout, Michael Schatzberg, “The Restaurant Guy,” and Jimmy Frischling, “The Finance Guy,” sit down with second-time guest Sam Bakhshandehpour, CEO of José Andrés Group.
Sam started his career as a financial analyst, working with major banks such as Deutsche Bank, JP Morgan, UBS, and Bear Stearns, and has a background in real estate. He transitioned into the hospitality industry, starting with the SLS Hotel and later partnering with José Andrés through Silverstone and the Bazaar brand. His experience includes successfully integrating nightlife, dining, and hotel services to create a comprehensive guest experience. By combining his financial expertise, hospitality experience, and strategic vision, Sam has successfully guided the José Andrés Group to new heights, ensuring the brand's continued growth and excellence in the industry.
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
Nature's Growth and Business Revenue: Lessons from the Wild
By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures
Unlock the secrets of nature’s growth to cultivate a business that not only survives but thrives in the ever-changing market jungle.
Welcome to the new IFMA
The future of food-away-from-home is evolving—and so is our membership structure.
MARKETING
How to Increase Your Business With Free Sunblock and Hot Dogs on a Stick
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
The 10% method is a business improvement system with a very simple principle: you pick one thing in your business, just one thing and improve it by just 10%.
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