P-O-P is Served

Americans are eating more meals away from home than ever before. As a result, restaurants and other foodservice outlets are becoming an increasingly profitable retail venue for marketing to consumers. The National Restaurant Association (NRA) predicts that food and beverage sales in restaurants will reach $399 billion in 2001, a 2.7% gain in real sales (adjusted for inflation) over the previous year -- representing the tenth year of consecutive growth. And the trend shows no signs of stopping. By the year 2010, it is estimated that 53% of the food dollar will be spent on food away from home.All of this activity has produced a highly competitive atmosphere, and foodservice operators are anxiously looking for new ways to differentiate themselves from their competitors. Diverse menu items and attention to service have been the traditional ways for restaurants to set themselves apart. However, according to the Restaurant Settings 2000 Survey conducted by the NRA, restaurant operators are paying closer attention to their "front-of-the-house" image. According to the report, "...the physical setting where customers dine is becoming an integral part of the competitive battleground. In other words, after years of devoting attention to gaining a competitive edge almost exclusively through food and service, more restaurateurs are recognizing a new and perhaps the final frontier in the battle to make their restaurants stand out in the crowd."For marketers of food and beverage products, this means that there is a tremendous opportunity to help restaurants differentiate themselves by providing them with targeted promotions and P-O-P. The need to stand out from competitors is making restaurants more receptive to non-traditional merchandising programs and approaches to in-restaurant promotion.Marketers often target restaurant chains where one corporate decision-maker can give promotion approval for hundreds of restaurants. This ensures that the product will be seen by a mass audience."Industry forecasters had predicted that by 2000 casual dining chains would reach a 50% market share," says Matt Borgard, senior national accounts manager for Chicago-based Barton Beers Ltd. "By 1999, the chains were already at a 52% market share. That means that the chains are growing fast."And it's not only casual dining establishments. Fast food servers, too, are poised for further growth in 2001. According to the NRA, quick-serve restaurants (QSRs) are expected to total $111.9 billion in sales in 2001, representing a 4.4% increase over the segment's 2000 sales of $107.3 billion.The Chain GangMerchandising is not new to restaurant chains, particularly to fast food feeders. What is new is the pace at which chains work and the importance that they now give to the in-store environment. At Burger King, new P-O-P is constantly being designed and developed. The company continually runs a Kid's Meal promotion and a national promotion simultaneously. The supporting P-O-P for both programs is changed every four weeks. "It's a very quick pace and it requires restaurant staff to put up and pull down P-O-P on a very regular basis," says Ben Morse, director of merchandising, U.S.A., for the Miami-based burger chain.During a recent promotion, BK partnered with Coca-Cola for "Green Food Month." The program was intended to build anticipation for DreamWorks' animated film, "Shrek.""We worked with Coca-Cola and we changed the color of our frozen cherry Minute Maid drink from a red color to a green color," says Morse. "It was a fun way to dial up enthusiasm for kids leading up to 'Shrek.' Coke helped us get the product into the system and develop the merchandising for the product."When working with third-party partners, like DreamWorks, Morse says that he begins producing merchandising materials by generating a creative brief that states the objectives, strategy and tone of the promotion. He then submits that brief to his agency of record, Draft Worldwide in Chicago. Once a program is decided upon, he presents it to the third-party company. "In some cases, we actually travel to New York or Los Angeles and make a full presentation, showing them what the TV ads and the in-restaurant point-of-purchase will look like," he says.Morse says designing merchandising materials with a third-party can be challenging because the property is often still in development while his merchandising team is designing the P-O-P. That means he sometimes has to make last-minute changes. "Sometimes, between the time that they come up with the style guide and we're ready to put our materials into stores, the styles change," he says. "All of a sudden, what had been a blue background becomes a green background so we have to change our materials to show that."In addition to beverage makers and third-party affiliations, BK also has partnered with a variety of food manufacturers such as Kraft Foods. For a Western Whopper promotion, display materials featured the burger as well as Kraft's Bullseye barbecue sauce. "Kraft is a company that we turn to as a partner to bring us ideas about tastes that our consumers might like," says Morse. "If they come up with something that tests well and consumers enjoy it, we might schedule a promotion."In this situation, BK depended on Kraft to participate in the creation of merchandising materials. "We lean on them for assistance in how to position the product and for behind-the-scenes stuff, like providing photography," says Morse. "We want to make certain that they get some visibility and that we capitalize on the good name of their brand."While BK has been aggressive in its attitude toward P-O-P in the past, the restaurants are actually reducing the number of items on display. The company recently conducted research that indicated distinct merchandising zones. As a result, Morse has designed P-O-P that focuses on these areas of the restaurant."We've been trying to clean up our restaurants and target our point-of-purchase," says Morse. "By targeting our messages, we're able to better communicate with fewer pieces."Subway, too, is attempting to reduce the amount of P-O-P in its stores and merchandise its products more effectively. "There is definitely a trend toward less clutter in our stores," says Mike Charest, production supervisor for the Subway Franchisee Advertising Fund Trust, Milford, Conn., a not-for-profit organization that promotes the Subway brand.Charest says he produces eight different national promotions per year. "The national programs are designed to work in all stores in all regions of the country," he says. "On the local level, additional promotions can be brought in, as long as they have the approval from the Advertising Review Board at corporate headquarters."Subway produces a variety of different display materials including backlit signs, window clings and outdoor banners. The company's Kid's Pack programs are promoted with display cards that feature third-party tie-ins, such as with Nickelodeon and The Cartoon Network, with the toys attached to the display cards.Though produced in-house, many of the company's P-O-P materials feature a co-branded partner. For example, many programs prominently feature Coca-Cola, Pepsi-Cola or Frito-Lay. These partnerships are driven both by marketers and by the restaurant chain. "Sometimes they bring us ideas that they develop and sometimes we'll have ideas that we could use some support on," Charest says.At Denny's restaurants, Lowell Petrie, senior director of brand marketing for the Spartanburg, S.C.-based company, doesn't accept any manufacturer-supplied P-O-P. However, he is always open to new promotional ideas and new display pieces. "Sometimes a vendor will come to me with an idea that I had no intention of promoting, but it's a great idea so I'll say, 'We have to do this,'" he says.Petrie recently worked with Coca-Cola to develop a tabletop merchandising piece to reduce clutter on tables. The piece is made of stainless steel. It holds salt and pepper shakers on one side and sugar packets on the other. A cardboard wrap fits inside the unit and can be easily switched out to support the company's promotions.Petrie cites this as a good example of a marketer understanding the needs of restaurant operators. However, not all marketers have been so insightful, he says."It's been a slow learning curve for some manufacturers," says Petrie. "Quite honestly, a lot are slow to come around to the fact that over half of all meals are now eaten away from home and that number is growing every year. A lot of companies are starting to realize that their future is more and more with restaurants and less with grocery stores."Value-Added MerchandisingWhile the need for effective P-O-P has increased, the actual volume of display materials being used in restaurants has declined somewhat, according to marketers interviewed for this article. Restaurant chains are now in a mode of consolidating their images and strengthening their own brands. They are attempting to unify their look and theme across all of their stores. That means promotional programs have to have a national scope. Also, merchandising programs often have to be presented to food and beverage directors at the chain's corporate headquarters.The challenge is to come up with programs that will work in every region of the country, while still offering a flavor of originality. "It has to be general enough to meet all of the stores' needs but still be specific enough to separate that chain from the other chains," says Barton Beers' Borgard. "The advantage for us is that we can get into an account and meet with the president and the food and beverage director to build merchandising programs. If I can go in and develop a customized program, I can get the approval for a lot of restaurants in one swoop."However, restaurant chain executives want more than a simple branding campaign, says Borgard. They want programs that add value to their stores, reinforce their own image and increase check averages."That's the big difference between restaurants and supermarkets," says Borgard. "Supermarkets work mainly on price. On-premise, you're selling value-added merchandising rather than price."Sometimes creating value-added merchandising also means being inventive. Ken Madison, director of on-premise business development at Golden, Colo.-based Coors Brewing Co., recently organized a football-season promotion for Chili's Grill & Bar, Dallas. The program was designed to promote draft beer sales and included football-shaped glasses. When consumers ordered a draft beer, they could then keep the glass. Retailers appreciated the program because it encouraged draft beer customers to purchase a larger-size beer.Table tents accompanied the program, and Madison also seized on another merchandising opportunity. Noticing that Chili's restaurants have a standard backlit sign to promote margarita sales, Madison developed an add-on piece for the sign that tied in with the football promotion. "We went in and asked them, 'If we come up with a transparency that plays off of this football theme, could we use your existing sign?' They said, 'Yeah, that's a great idea. No one has ever asked us for that before.'"Interactivity Helps SellAmong the many nuances that separate foodservice merchandising from supermarket merchandising is the length of time that a consumer has to engage with a brand. A consumer may spend as much as an hour-and-a-half in a casual dining establishment. As a result, interactivity becomes a more important issue, says Jana Gabe, promotions manager for Allied Domecq, Westport, Conn.Gabe is trying to get consumers to change the way they think about Allied Domecq's Kahlua brand and open their eyes to a variety of new cocktails that use the liquor. To that end, she has produced a table cube that shows many of the company's advertising images and introduces the consumer to new drink alternatives that feature Kahlua. The cube can be bent and inverted to show a variety of different images. The images and messages are integrated with the brand's print advertising."If you just have a table tent that sits on the table, consumers aren't going to take anything away from the experience," says Gabe. "It may get them to order one of your drinks, but it doesn't necessarily build the brand."Gabe designs a wide assortment of temporary display pieces, but she also tries to include a permanent display piece with each program she presents to an account. "We like to do something that is going to stay in the account after the promotion ends," she says. "We like to have permanent displays so that after we've gone, we're still top-of-mind."Barton Beers' Borgard agrees that the additional time spent by consumers in foodservice establishments can provide some unique opportunities. For example, in a recent promotion for Cinco de Mayo, he included an explanation of the holiday and its historical and cultural significance on the promotional materials.Share of StomachSometimes value-added merchandising can even mean working with competitors. Borgard points out that in a foodservice establishment, everyone is a competitor, from other beer companies to soda manufacturers to bottled water makers. Competition on-premise is not just for market share but for share of stomach, he says. But that doesn't hinder co-branded partnerships."We've actually done programs that featured both us and Budweiser on the same menu," says Borgard. "We would have been a little more concerned if another import brand was represented. It's a competitive environment, but we're all in the same boat. If we can produce something to increase sales for the restaurant, it's better for everyone."Borgard recently worked with the brand managers for Jose Cuervo tequila on a "Ronas and Ritas" promotion. The program featured the Corona brand with a Cuervo margarita. "In most casual dining restaurants, margaritas are the number-one selling alcoholic drink, besides beer," he says. "When we get a company like Jose Cuervo to go in with us, we're both on the table tent or merchandising piece and we split the cost."The beverage area is where most restaurants make their profits," he continues. "They don't make it on the food. If we can come to them and increase their sales and profitability, they're going to keep coming back to us when they want another program. The more items and the more ideas that you can bring to the casual dining decision maker, the better your relationship gets."Hold the PickleJust as restaurants are striving to offer their consumers a flexible menu of food choices, they in turn are asking food and beverage manufacturers for customized P-O-P. In many cases, customizing merchandising programs to a specific chain's theme is essential to getting placement."Some of the chains, like Outback Steakhouse, have a strategic direction that doesn't allow for a lot of neon signs," says Coors' Madison. "They will only allow three to four neons in each of their restaurants and they have to have some sort of Australian theme. If you just have a generic sign, it's not going to make it. If you don't have an Australian theme, you're out of the ball-game."Allied Domecq's Gabe also sees a trend in account-specific messaging. "We are moving toward producing customizable P-O-P that fits national programming," he says. "We want to offer chains and independents the opportunity to customize existing P-O-P that the national teams have already provided."For Nestle FoodServices' Kathy Lenkov, communications manager for the foodservices division of the Glendale, Calif.-based company, sometimes giving restaurants what they want means leaving off their own branding altogether. "Some of the materials that we provide aren't branded at all," she says. "For example, our salsa or cheese sauce might not be branded, but we still will produce posters that show a plate of nachos, for example. The cheese sauce is ours and we're helping the restaurant sell it, but it's not going to have our logo on it if they don't want it."At Milwaukee-based Miller Brewing Co., Joe Jones, director of retail marketing, is working with his distributors to provide both customized display pieces and localized materials. He provides his distributors with high-quality graphics, images and messages so they can produce professional, customized signs. "Sometimes retailers ask for help with special events -- events that are specific to that account such as local theme nights or local holidays," he says. "Most retailers have a specific strategy of what they want to do in terms of merchandising. We're obviously willing to work with them on things like custom signage.""We try to allow for modular customization pieces," says Coors' Madison. "For example, we might have a neon sign with a piece that snaps in and out. That way, a base unit can be fitted with a piece and matched to the theme of a particular restaurant."Barton's Borgard took a similar approach when designing a neon sign for Bennigan's. The company already had an existing neon sign in its catalog of display pieces that featured a bottle of Corona with a lime wedge. To match the Irish theme of Bennigan's, he substituted a green shamrock in place of the lime. The simple substitution, he says, made the sign specific to Bennigan's and helps to reinforce the theme of the restaurant.Colleges, Schools and OthersRestaurants are by no means the only venues for foodservice P-O-P. Institutional foodservice also represents a growing opportunity to market to consumers.Tom Graves, director of marketing services for the South Beach Beverage Co., Norwalk, Conn., sees the institutional foodservice segment as an important market and one that will continue to grow. The company works with Sedexho Marriott Services, a food and facilities management company that provides the foodservice at approximately 5,000 locations across the country, including colleges, schools, stadiums and business accounts.The company recently ran a sweepstakes promotion at 251 colleges. The program was supported with counter cards and static clings on cooler doors. "It was something that worked really well and added value to the account," says Graves. "If there are promotions that will make college kids eat in the cafeteria, as opposed to eating somewhere down the street, the schools are very open to them."Graves has also done promotions in elementary schools and high schools, though he admits that getting placement in those locations can be tricky. "Public institutions are hard because the foodservice people do not want to be perceived as being at the beck-and-call of corporate America," he says. "The process is that you go in to see the foodservice manager of a school district and you tell her what you want to do and why. If it makes sense to her, she'll do it. If it doesn't make sense, she won't."However, the right promotion can still spark interest. Programs that have an educational theme or provide ambiance or entertainment value are often considered. In these situations, the brand is generally not the focus of the piece and the logo has to be downplayed, says Graves.Regardless of the particular foodservice venue, there is no denying the demographic trends that point to more meals being consumed away from home. That positions foodservice establishments as an increasingly important retail force in selling and marketing branded products. Marketers with the right promotional "recipe" will find themselves seated at the head of the table.

P-O-P is Served

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