This Foodie Friday, it’s all about the humble burrito and what it can teach us about business and life. I’m sure you’re familiar with the burrito. As we know it here in the USA, it’s a rather large tortilla filled with meat, beans (usually refried), cheese, sometimes rice, sour cream, guacamole and often more. You need to be a “little burro” to carry all of that!
Here’s the thing though. Burritos in Mexico are a totally different matter. They generally contain one thing, usually a protein. Maybe it’s shredded pork that’s been cooked for hours in a mojo. Then a sauce of some sort is added and the meat is placed, with or without refried beans, into a tortilla, usually flour (corn tortillas are generally smaller and better for tacos or flautas). It’s much simpler but this simplicity does a few things.
Each ingredient must be perfect because the flavors of each is a point of focus as you’re eating. You can’t hide bad meat behind a lot of cheese and sour cream. Your seasoning must be aggressive or the dish will be bland. After all, it’s wrapped in a bland tortilla that can tend to deaden its contents. In short, the Mexican burrito mirrors some of the world’s great dishes – simple ingredients but complex flavors. Think cacio e pepe – pasta with cheese and pepper. Like the burrito, it’s not about difficult techniques or hard to find ingredients or even complex timing like a souffle. Instead, it’s about having the patience and skill to bring out the best in your materials and the confidence to present them to stand on their own.
That’s a great lesson for those of us in business. Too often we hide behind buzzwords or present materials in a way that hides the basic thoughts we’re trying to convey. How many powerpoints have you seen with 50 words saying what 5 could have said? We try to make what we’re doing exceptionally complex instead of trying to simplify it. We add the unnecessary toppings – not guac and cheese and sour cream but hard to read contracts and user agreements or black-box systems that add nothing but cost and marginal improvements.
The next time you’re in a meeting, think of the humble Mexican burrito. Keep it simple but make each piece spectacular. The ingredients of your business – the people, the business model, the systems – must all be the best and you’ve got to combine and season them to make them better. Not more complicated and not hidden behind unnecessary glop. Make sense?
A very wet Foodie Friday here but that won’t deter me from posting a few thoughts about what I think is a post-value world. What I mean by that is that value seems to be more of a given today that it did a few years ago. I also hope by now you’ve learned the difference between value and cost because your customers certainly have.
In the food business, you see this playing out in spades. Everyone has a deal, whether it’s $1 menu items or $5 foot long subs or free cheeseburgers from using an app to order. I suspect that many of these items are loss leaders. They certainly can’t be maintaining the margins which are already slim in the restaurant business. They’re designed to build traffic and that traffic will buy other, more profitable items.
The problem with this is the restaurant business is one where the supply has outstripped the demand. Chain restaurants are growing faster than the overall population and there aren’t enough hungry folks out there to support them all. Because deals are so prevalent, it actually frees the consumer to decide if they place more value on the price of the meal or if they value higher quality ingredients or better service or just the overall dining experience an establishment offers. More often than not these days, the price is less of a concern. Why? Because everyone’s got a deal!
What does this mean for your business? It means you’ve got to continue to get beyond thinking about cost in terms of how your customer values your product or service. The health of the business depends on more than a lot of customers. Fewer, more profitable customers seem better to me than a lot of slim-margin ones. Ask K-mart, whose profitability peaked in 1992, if the low-margin, high volume strategy can work over the long term. Someone can always compete on price (Walmart).
The “deal” I try to offer to my potential clients is the highest level of value. That value is defined in THEIR terms, not mine. If all they’re after is a low price, I’m probably not going to be working with them. If what they want is a profitable result that advances them to their goals, well, that’s my deal. What’s yours?
Foodie Friday is here at last and with it comes some great information from Earnest Research. My data tells me that screeds about research don’t score particularly well with many of you but I think what the study I’m highlighting today is an excellent reminder of a basic business fact that pertains to the balance between keeping customers happy and attracting new customers. Read on!
What the study examined was the top 10% of various restaurants’ customers by the frequency of visit and how that compares with the average frequency. As reported by The Franchise Times, the gap can be enormous:
At McDonald’s, that top 10 percent customer went 86.5 times each year on average. That’s 309 percent more than the average customer, who went 21.1 times through the year. Even the most frequent Starbucks customers don’t reach that. The top 10 percent of customers by frequency went 80.7 times—though they visited 374.5 percent more than the average customer who stopped in 17 times.
Earnest researchers checked in on a handful of brands for this data (see chart, right). In green are national QSR chains, orange is national fast-casual restaurants and blue represents chains that are regional but have a traditionally strong customer base. While the numbers jump around a lot, the highest frequency customers come between three and five times more than an average customer.
Your reaction to that may be a large “duh” since the Pareto Principle is probably burned into your head by now. What impressed me, however, was the size of the gap. If you factor in “average order value”, the amount of money spent by the top 10% is huge even though as it turns out they tend to spend a bit less per trip. In real terms, for example, the difference between a top customer at McDonald’s and an average one means a $708 annual value compared to the average customer’s $187.
Money spent to keep a customer happy is money well-spent. Money spent to get a customer to become a more frequent customer is even better. While there’s no question that we all have to keep adding new customers to our base, once they’re there, we need to shower them with love, great service, and incentives to grow their engagement with you. The data shows it’s true in the franchised restaurant business and I’m pretty sure it’s true of yours too.
Filed under Consulting, food
This Foodie Friday, let’s consider the Red Delicious apple. Until very recently, it has been the dominant apple in orchards all around this great nation of ours. According to the US Apple Association (as quoted in the NY Times), it has recently lost its dominant position to the Gala, and Granny Smiths are closing fast. You can probably hear Honeycrisps off in the distance too.
I know what you’re wondering: is this some sort of tangent brought on the by the start of football season (Go Blue!) and, therefore, the fall apple season? Not really, because there is a business lesson in the fall of the Red Delicious that can be used by any of us.
Have you ever eaten a Red Delicious apple? If you’re not sure, buy one the next time you’re at the market. They will be easy to spot. They’re very pretty – your prototypical apple. It’s a lovely deep red and their skins are generally unmarked. If you were trying to find an apple to use in an art class, the Red Delicious would top your list. So what’s the problem?
Bite into one. What do you get? Not much. They are bland and almost flavorless. That skin is so beautiful because it’s too thick to bruise. Oh sure – you get a blast of sweetness but there really isn’t much of a flavor there, especially when you compare it to pretty much any other apple. While people do eat with their eyes, at some point what they’re eating gets to their mouth and the food needs to deliver on the promise made by how it looks. That’s true of any product or service. Nice packaging, wonderful design, or a fancy sales brochure may attract a large consumer base but if what’s delivered doesn’t fulfill the promise made, it will be one and done. Either you’re solving the customer’s problem and providing superior value or you’re not, and it doesn’t matter how pretty you are.
Don’t be the Red Delicious of your business sector. It may be nice to be number one (and it’s probably pretty profitable for a while), but over time, it’s unsustainable if all you are is pretty. Substance matters, don’t you think?
This Foodie Friday, I want to write about something that’s been on my mind for the last month. It was about a month ago that I made my initial – but definitely not my last – visit to Skylight Inn. If you’re not familiar with the place, it’s the premiere BBQ joint in North Carolina and certainly one of the best in the country. It specializes in whole hog, eastern North Carolina BBQ, which is chopped meat combined with a vinegar and pepper sauce. It’s simple food but incredibly difficult to do well, and very few anywhere do it as well as this place.
Why has it been on my mind for a month? Because I had an experience which has only happened once before in my life. The food was so unbelievably good that it brought me to tears. I’m not kidding. The last time this happened was in Venice and my poor daughter had to endure me running into the kitchen to hug the chef while weeping praise in my bad Italian. While I didn’t run to the pit this time, I did run back for another plate.
The question I’ve been asking myself since my Skylight visit, besides when I can find the time to go back, is what other consumer experiences have brought about a similar reaction. I couldn’t think of any, which is unfortunate. While I realize that there is something multi-sensory about food (we see it, we smell it, we touch it, we taste it), I think it’s an interesting question for any business to ponder. How can what we offer prompt an overwhelmingly good feeling in our customers? How do we get them to be thinking about their interaction with us a month or more after it takes place? How do we instill that goal into every person and every touchpoint that engages with a customer or potential customer?
We may never send our consumers running to the kitchen weeping with joy but it’s not a bad goal to have, is it?
Foodie Friday! I came across a piece recently that got me thinking. Even though it’s food-related (or we wouldn’t be discussing it today!) I think it touches upon a subject that is common across other areas of business. Let’s see what you think.
The article was in The Guardian and it seeks an answer to the question “why are we so fat?” The author had stumbled upon a picture from 1976. It showed beachgoers and the first thing he noticed was that there weren’t any fat people. He wondered why into his social media channels and every answer he got was wrong, much to his surprise. It wasn’t because we eat more or are less active (thanks, Internet) or due to antibiotic use or less exercise or even due to chemicals in our food. What seems to be the cause is:
While our direct purchases of sugar have sharply declined, the sugar we consume in drinks and confectionery is likely to have rocketed (there are purchase numbers only from 1992, at which point they were rising rapidly. Perhaps, as we consumed just 9kcal a day in the form of drinks in 1976, no one thought the numbers were worth collecting.) In other words, the opportunities to load our food with sugar have boomed. As some experts have long proposed, this seems to be the issue.
The main reason there is sugar in damn near everything (start reading labels more carefully if you don’t believe that) is that sugar is addictive. It defeats our natural appetite regulators. We aren’t eating more but we’re eating lower quality and getting more of our calories in the form of sugar and the food producers are doing this knowing that it will trick us into eating more than we need. They want us addicted and constantly hungry. We eat more; they sell more.
You think food folks are the only ones doing this? Tobacco manufacturers are cited in the article as doing pretty much the same thing. You might be doing it as well if you’re constantly focusing on “engagement”. The job of the product people at Facebook and others is to get you to keep coming back for another dish. All those little alerts on your phone are the digital equivalent of your gut saying “I’m hungry – feed me!”
If there is anyone in your business whose job it is to break down consumers’ self-regulation, you might want to think about if you want to be in the same business as a drug peddler. Many food companies are pushing an ultimately fatal addiction. So are many tech companies. Are you?
This Foodie Friday we’re going to have a think about blockchain. If you’re thinking that “food” and “blockchain” don’t relate as well as, say, peanut butter and jelly, apparently you’re underinformed.
If you’re unfamiliar with blockchain, you probably ought to do something to learn about it since it’s weaving its way into everything these days. Basically, it’s a list of records called blocks which are linked to one another cryptographically in a publicly available ledger. It makes tracking things easy and it’s an extremely secure method for doing so.
Applying blockchain to food is happening. Think about a chicken you find at the market. What if you could scan the package and know everything about the contents? When the bird was born and where, what its diet was, if it’s GMO-free, etc., when and where it was processed, packed and shipped, ad infinitum. Cool, right? It’s also possible with food that routinely gets mislabeled as something else: fish. It makes everything traceable, which is a big help with respect to food safety.
I see two issues. One is the cost. Think about what’s happened in digital advertising. We’ve layered on technology to buy and sell ads and at the same time, we’ve added a huge layer of cost. Blockchain in the food area won’t be cheap, I’m sure. We’ve also made the entire industry less transparent, and while blockchain is just arriving in the ad world, it points to the fact that there are a lot of bad actors out there.
This points to the bigger issue which is an old, familiar one: GIGO. Garbage In, Garbage Out. Who is to say that the information in the system is accurate? The data may say one thing while the truth might be quite different. Criminals will learn how to cheat the blockchain just as they have learned how to game the ad business out of billions of dollars every year. While we will be able to trace food we won’t be able to tell if it’s been adulterated without a robust system of inspection.
Do I think this technology belongs in the food business? Probably – the benefits of things such as pinpointing shelf-life or finding the sources of bacterial outbreaks quickly are huge. I guess I wonder about the cost – at what price will this all happen? Will the benefits only accrue to those who can afford to pay for the food that’s blockchain certified? What do you think?