The CEO Apology: A New Kind of Brand Booster?

"I'm sorry …

So sorry …

Please accept my apology."

These days, CEOs are singing Brenda Lee’s song.

Unless you were comatose or on a shuttle to Mars last January, you would've caught the chatter about Domino's CEO Patrick Doyle's apology advert for products that — judging from focus group comments sprinkled throughout the ad — the pizza-eating public detested. Doyle lamented that his company had forgotten how to produce the kind of great pizza that people actually preferred over "cardboard" crust and sauce like "ketchup."

If you opened the Wall Street Journal on June 7, you probably saw the article featuring Starbucks CEO Howard Schultz discussing the mistakes his company made when it placed growth above great coffee. The company's excesses, he admitted, had resulted in fussy concoctions and frantic expansion that turned off core customers who felt that Starbucks had come unmoored from its hip, homey origins.

And if you've spent 15 minutes in front of the TV lately you cannot have missed BP's 60-second Gulf spill mea culpa featuring BP CEO Tony Hayward in full-on repentance mode: "To those affected and your families, I'm deeply sorry," Hayward mourns. He then promises to make any oil-soaked American shores as good as new, his British intonation weirdly reminiscent of the Orbit Gum Girl ("Dirty beach? Clean it up!")

What are we to make of this recent trend of corporate self-censure? Could we be seeing the latest, most counter intuitive-ever approach to brand building? That might be taking it a bit far. But it does seem that companies — especially restaurant chains — are discovering the power of the apology.

And that's not a bad thing. In the first place, it suits the tenor of the times. After the Great Wall Street Debacle, consumers are feeling used and abused by banks in particular and by all large companies in general. A chain restaurant that can buck up and say, "We admit we haven't always done our best for you, but we’re going to do X to fix that" can generate uncommon goodwill in times like these.

In the second place, an apology can satisfy consumers' desire for connection with a company. A sincere apology credibly delivered (more on that later) can demonstrate that you actually grasp and regret your customers’ frustrations. This, reasons the consumer, is a good basis from which to start a mutually beneficial relationship.

So yes, when an apology is due, it can help build positive feeling about a brand. But glib, "Oh, gee, sorry 'bout that" contrition … not so much. That ranks with zipping in to steal a parking space another driver has been patiently waiting for, then shrugging your shoulders and mouthing, “"h, sorry!" as you nip into the mall. In response to your disingenuous gesture, you can expect the business equivalent of nice key-job from your customers.

To benefit your brand in the end run, an apology must accomplish several missions, many of which must be undertaken even before your CEO wraps his tongue around those three scary syllables, "I'm sorry." Here are five:

Before you apologize, make sure you fully understand the problem. The last thing you want to do is apologize for not meeting certain expectations, only to have customers (or worse, the media) heckle you for not having a clue why people were annoyed with you. Don’t assume you know already what the issue is; believing you knew everything is what gave rise to the problem in the first place.

Commit to solving the problem. Howard Schultz was so determined to fix Starbucks that he jettisoned every distraction — including outside board obligations — in order to concentrate on the immediate task of righting the ship. What's more, he made sure that his vision was also the vision of every other Starbucks employee from C-level to store-level, going so far as to close stores early to retrain baristas. That's Problem-Solving 101: Everyone takes ownership; everyone takes action.

Implement the solution before issuing an apology. People don't want to be told that BP will clean up the spill; they want to know that BP has stopped the flow of oil that's causing the spill. At best, vague promises are written off as self-serving noise. At worst, they deepen consumers' cynicism about your intentions and motives. If you want people to think you're serious about making things right … make things right.

Make your apology credible. That means no spin. When KFC president Roger Eaton apologized (sort of) for his company's bungled free grilled chicken promotion, he represented the problem as a good thing. In a video released by KFC, Eaton explained that people were so crazy for the taste of KFC's new grilled chicken and the response had been so positive, they were going to have to modify the coupon program. His painfully over-the-top performance seemed to indicate that this rationalization rang false even to him. "Really? The problem was that the promotion was too popular and not that it was so poorly planned that it couldn’t be properly executed? Who knew?" Uh, everybody knew. Even KFC, which has since carefully scrubbed the Web to remove every embarrassing trace of the Eaton video.

Once the apology has been issued, continue to work on building trust. Encourage customers to return with offers that show your appreciation for their business (Starbucks announced recently that it will offer unlimited free Wi-Fi). Keep core customers loyal with deals aimed at them (more on Starbucks: The company also has announced free access to subscription-only online sites such as The Wall Street Journal, starting this fall).

Above all, stay vigilant to ensure that problems don't reemerge. If you have to keep issuing apologies, you're going to start looking awfully inept; and at some point, even offers and deals can't overcome the deficit. Eating a little humble pie is one thing. Putting it on your regular menu is quite another.

The Frugal Diner: Here to stay?

Could the worst of the bust be behind us?

It’s hard to say. As of today, the Dow is up almost 20 percent from its abysmal low of March 9. Despite the daily dire pronouncements from CNN that we could still be on the brink of economic catastrophe, fears of the Later Greater Depression seem to be receding.

On the other hand, a Nation’s Restaurant News article today announced that consumer spending had taken a significant dive in early March, down more than 10 percent compared to January and February and more than 32 percent compared to the same period a year ago.

But that was early March, and as stated above, the Dow has moved convincingly northward since then.

Whether now or months from now, we can be sure that the market will recover and consumer confidence will rebound. When this happens, the death grip that even the comfortably flush have maintained on their wallets will ease.

To which restaurateurs from all corners reply, “Yes, but by how much?”

As Americans climb out of the consumer confidence basement (feeling a little like Auntie Em venturing out of the root cellar after an F5) … then what? Will optimism swiftly return and have consumers spending again like there’s no tomorrow? Or will caution prevail and keep consumers saving like there’s definitely a tomorrow … and it’s going to be absolutely terrible?

Most economists agree that the economy will show signs of recovery in the second half of 2009. Almost all also agree that increases in consumer spending will be more gradual than in past recessions, when spending has come roaring back based on pent-up demand. This time, it was consumer demand — specifically for credit and real estate loans — that created the bubble that burst so suddenly and dramatically.

So the likely answer is that consumer spending will resume … but with the housing market still gasping for air, working Americans desperate to bolster their diminished 401k plans and a pervasive sense of national animosity toward conspicuous consumption, spending won’t begin to reach previous levels for years, not months.

As markets and jobs stabilize, consumers will slowly but surely begin to trade up again in their choice of restaurants, just as they traded down when things were looking grim. But with a bit more hesitation this time. A key component of this trade-up will be the attraction of greater perceived value at more expensive establishments.

The best way to encourage this perception is to continue to promote the value-oriented menus, pris fixe dinners, two-for-one specials and combos that helped keep restaurateurs from losing loyal customers from defecting during the downturn.

The message, of course, must be freshened up from the “we’re helping you in hard times” mantra that consumers have heard throughout the recession. A new, optimistic message will be in order.

Additionally, restaurateurs will need to consider freshening the offers themselves to come across as being responsive to a changed outlook; diners will be looking for something new, a break from the value-menu staples that got them through their budget crisis. As long as that break doesn’t look too dramatic. And this presents an excellent opportunity to begin to walk margins back to a more comfortable place. “Walk” being the operative word.

Your new message, new look, new offerings and new specials will signal to your customers that you’ve weathered the downturn with them and are looking forward, just as they are, to better times to come.

Even if they don’t come quite as quickly as any of us would like.

What Do You Do When the Party’s Over?

Lent begins today. So? Why mention this in a restaurant blog unless it’s a reminder to stock up on fish fillets?

Well … actually, Lent is worth mentioning because it presents a fitting parallel to the economic climate restaurants find themselves in just now: After the mad abandon of the Mardi Gras party, a period of sober reflection.

Right now, plenty of operators are dazed and wandering in the desert of diminished expectations, wondering exactly when the refrain changed from “We’re in the Money,” to "Brother, Can You Spare a Dime?" and when — if ever — they’ll hear “Happy Days Are Here Again.”

All they know for sure is that it was Fat Tuesday and then, suddenly, it wasn’t.

But the thing about Lent is that we’re supposed to wind up better for having spent 40 days in a process of self-reflection, right? This is absolutely key, and dazed wandering absolutely does not count as self-reflection. So, the question becomes “What do we do during this time of consumer self-denial?”

The answer lies in a three-step process:

1) Stop wandering. In difficult times, the natural reaction is to bounce from gimmick to gimmick hoping that one will appeal to some demographic group that still has cash they’re willing to part with.

Stop. Just stop.

If consumer perceptions are hard to change in good times, they’re downright impossible to budge in hard times. If you’ve built your image as a family place, do not think that you will begin to draw millennials by firing up Jack Johnson on the PA and mentioning WiFi next to the $1.99 kids meal promo in your next FSI.

You are what you are. This is the time to refine your focus, not redefine it.

2) Start thinking. So, okay. Things are slower. Be still. Sit. Breathe. Take time out while you have it and contemplate where you were (and how you got there), where you are now (and why), and where you want to be when the music starts again. Because it will. It always does.

Make a list. Make many lists. There’s nothing more clarifying than seeing your thoughts on paper.

Who loves you? Why? What have you historically done exceptionally well? What do you do that nobody else can? How can you communicate this to the people who love you … and others like them who have not yet discovered you? How can you help them justify spending money on your products?

Remember: It’s the economy that’s changed, not the consumer. People still crave the same things, still aspire to the same experiences. Your task is to figure out how to package your products with empathy — that is, to appeal to your customers’ traditional cravings in a way that allays their insecurity about spending.

3) Begin planning. The U.S. economy will revive. Consumer confidence will return. Give consideration now to what you will need and want to implement when the time comes, from POS systems to marketing materials to franchising packets. In the process of looking ahead, you’ll uncover not only long-term objectives, but also some surprising short-term opportunities.
Again, it’s that pen and paper concept. When you begin to formalize plans, all sorts of related ideas and opportunities emerge.


Finally, during this time of self-reflection, consider this: the further you hold a looking glass from yourself, the more you see in it. Have someone with considerable distance from your enterprise hold the mirror for you — and the earlier in your “wilderness experience,” the better.
A responsible outside marketing and promotions specialist will certainly help you in the process of refining, list-making and preparing. And they’ll do it within the context and perspective of your broader market, not with just a close-up view to your brand.

Start now. This could take more than 40 days. And you’ll want to be ready when the music starts again.

A Downturn Is a Terrible Thing to Waste.

If you're one of the many casual dining restaurant operators who are terrified about the state of the economy, I've got some encouraging news to share.

I just returned from the Restaurant Finance and Development Show a week ago and what did I learn there? Things are going to get better for the restaurant industry next year.

Yes, that's right.

Here's why:

• The downturn will weed out weaker competition. Primarily, this group is made up of single-unit "mom and pop" restaurants, but it also includes inefficient chain operators. Once the dust settles, customers with fewer dining options will be yours to capture.

• Real estate opportunities are everywhere. Boarded-up "A" locations are up for grabs at a discount. So, keep your eyes open!

• Pretty soon aging baby boomers will be succeeded by a larger, untapped demographic group: Millennials. This is great news for restaurants because millennials have no desire (and no idea how) to cook! Instead, studies show they travel in packs to QSR, fast-casual and casual restaurants.

• Higher unemployment gives you the opportunity to upgrade your people. Highly qualified individuals will be looking for employment at all levels and in all positions.

If you want to turn things around, you can't just wait out the storm. You have to put forth serious effort and, probably, make major changes. Here are my recommendations:

• Conduct research to determine who your real core customers are, and why and how they use your concept. (Most operators think they know this, but they don't!) I recommend Perception Testing, a qualitative research instrument offered by the top restaurant marketing firms. It will reveal truths about your concept that you never even suspected.
  

• Based on what the research reveals, take a hard look at your branding. It must be one-hundred percent aligned with your core customer! If it's firing on all cylinders, stick with it. If not, find a trusted chain restaurant marketing firm to fix it.

• If you don't have one, invest in a new, professionally produced custom photo library. Do not cut corners in this area. People eat with their eyes, so give them top quality fare. Spend what it takes to get a mouth-watering "menu" of shots that will last for years to come. (See our white paper about this at www.ideastudio.com).

• Examine your trade dress. Is it time to modernize? If you want to succeed in downturn, you must be up with the times!

• Stay top-of-mind. Expand your marketing with promotions built around existing menu items that are operationally easy to execute. I'm a big believer in LTOs that utilize a variety of mediums, including inexpensive ones such as e-mail and four-walls marketing and PR events. But don't try to create your promotion on the cheap; hire a good marketing firm to do it.
  

• Step up your service. Every guest should be greeted upon entering or leaving your restaurant. If your customers feel especially appreciated, they'll tell their friends. (On the other hand, if they feel they haven't been treated well, they'll tell the whole world!)
  

So how will you respond to this economic downturn? Will you hunker down, slash costs and hope for the best? Or will you seize an unprecedented opportunity and position yourself to ride high on the upswing? You can be sure that the most agile and assertive operators today will be the powerhouses of tomorrow.

Why Your Food Photography Doesn't Sell Your Food.

If you're doing food photography the right way — paying what it takes to hire an expert food photography team with a specialized food photographer, food stylist and art director — then you can pretty much ignore this post.

For you other guys who aren't doing it the right way (and you know who you are), I've got a bone to pick with you!

You're probably falling back on one or more of these rationalizations:

• I get a cheaper price by using a general photographer.
  
• Why hire a stylist when we have a corporate chef to style food?
• I want to cram a boatload of shots into a shoot day and specialists don't like that.
  
• Why pay a premium to shoot a bunch of photos we might not end up using?
  
• We bought an expensive digital camera and lights, so we can do it ourselves.
• Our foodservice company gives us pictures for free, so why pay?

For the record, none of these wash.

Nearly every restaurant marketing or operations manager will swear that the food is what makes their restaurant. So why do they place so little importance on making their food absolutely irrresistible to potential and core customers in photographs?

The only way customers will realize how "craveable" your menu offerings are is to see them. And the better they look in pictures, the better your customers know they'll taste. In fact, along with price and cuisine, the appearance of your food is the chief criterion a diner uses to measure you against your competitors.

After 15 years of doing restaurant promotions, I can cite plenty of before-and-after stories of double-digit sales increases that followed when resources were properly allocated to food photography.

Given that a relatively small investment can pay impressive and almost immediate dividends, I'm baffled that so many large, established chains are willing to skimp.

What's wrong with this picture?