So Here's The Thing: Marketing's Role in Restaurants

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Hey, friends, welcome to this week’s edition of So Here’s the Thing with my friend, Jack Monson, where we talk about all of the things on camera so you can join the party. And that is what we do at So Here’s the Thing. We just say the thing. So first topic for you today, Jack.

Okay.

You’re gonna love this one because you’re my marketing person here. There is a lot asked of marketing these days. And indeed, some of the critical areas in restaurant profitability are landing in the laps of many a CMO right now. Just to name a few that are above and beyond the normal, menu engineering, third-party delivery, any sort of delivery, catering, pricing, right? Not to mention AI initiatives to help customize the marketing to the consumer. I got this sort of concept from a comment from our last post, actually, where we asked people to give their predictions for 26. And the question was, can marketing deliver? Is that a lot to put on one role’s plate? Thoughts?

Yeah, the marketing person in me, as you were listing off those things, all I could think of is, that’s nothing I want to touch. That’s nothing I want to touch. That’s nothing I want to touch. Marketing, to me, I’m a purist. Marketing should be all about driving customers, right? Awareness and leads. Bringing customers in the door. Getting people interested in the brand. Menu, delivery, catering. Most marketing people are hearing this and they’re saying, yeah, no, that’s operations. That’s someone running a business. That’s not marketing. It’s not anything leading to sales. An old agency guy I used to work for used to say that marketing is everything that touches a customer, which in that case, you’re right. All of these AI implementations would probably fall to marketing, but I don’t personally believe that. So I’m going to push back and say all of the menu items, the catering stuff, the operations stuff, the scheduling stuff, that should not be in the marketing department. I think AI has kind of fallen into marketing because it was technology, and it was cool, and it was digital, and it was whatever the cutting edge is right now, but I think anything that is using AI is not necessarily the realm of the marketer now, right? AI is ubiquitous. It’s everywhere. It’s in everything that everyone does. It’s sort of like, I would imagine, 100 years ago, companies had a chief telephone officer, right? And they would call in their ad man, right? You know, tell us how to use this newfangled telephone, right?

And this is, okay, so you raise a really excellent point, which is the C-suite roles change over time. Like, there are roles that literally just don’t even exist anymore. Your admin one is a perfect example of that, right?

Yeah, yeah.

And the chief information officer role is a new and emerging thing that we’re seeing in restaurants as a trend, which is different from, but sometimes the same person as the chief technology officer. Because all of this data and information that’s coming from third-party delivery, from the POS, from the Loyalty Program, website data, all the things needs to be aggregated and monetized, even if it’s just for the use of business intelligence. And there’s so many brands that are missing that. And I’m not sure if that is the answer that some of this needs to shift over to CIO. But when it comes to things like menu engineering, understanding actual versus theoretical costs and pricing models, you can’t put all of that on marketing. That’s just my opinion. You have to have other subject matter experts that either report into or work in a handshake with marketing. And listen, I want all my marketing peeps out there to weigh in on this because I think this is the unspoken truth, and that’s what we do here. We put the flashlight on it and we talk about it. I mean, what does marketing need to hand off? What better stated, what resources do marketing departments need to help contribute to the efficiency of every marketing dollar spent to contribute to profitability? Because that is mission critical right now. And my concern is that absent a discussion about this, we’re going to keep on keeping on, and marketing is going to continue to be the lightning rod for this. Because the ROI on marketing and ad spend right now is not what it used to be.

Right, because they’re doing 17 other jobs that have nothing really to do with marketing. And it has nothing to do with brand awareness or driving leads or driving traffic, right? So, but because it’s part of marketing, quote unquote, it’s on their desk, so.

Well, and they’re doing, they’re being asked to do more with less, just in a franchise system by way of example, declining year over year sales means declining ad fund contribution. And so, right, not to state the obvious here, but they’re, they’re being asked to literally poop gold bricks when they’re being shorted on the budget in the front end. And I don’t understand that. Like I, right.

I, that’s my new title, by the way, gold brick pooper, you know, aspire to be a gold brick pooper kids or a gardener that plants money trees either way.

You know, I just find this to be a really interesting evolution of the role, where it’s not, I would have said two years ago, it’s a handshake between tech and marketing. And I, this isn’t solving for all the issues because some of them are foundational to the unit level economics of the brand. Again, you know, baseline pricing on cost of goods sold, the menu engineering behind that, the optimization and the pricing strategies have become so critical to these companies. Who owns that? Who owns that? And if I were in any other business, I’d say who’s the chief revenue officer. If you do not have a CRO, who is in charge of revenue? And 90% of the time, I get a shoulder shrug and they point to the CEO. I got news for you. That is not the person to set the pricing. You need flash. There are people with PhDs in this stuff. Listen, I have a master’s and part of my master’s in business was studying pricing theory. That was over my head. It needs to belong somewhere is all I’m going to say. And I’ll get off my soapbox about this because with profitability compression being what we have seen repeatedly from 23 forward, we got to try something different this year.

Yeah, yeah. And I love what you said about the CEO not being the right person for that too, because especially in the restaurant business and especially in the franchised restaurant business. Think about this. So many CEOs are actually the founder, and it has nothing to do with someone who could come up with any of these things. It’s someone who had a cool idea for a type of pizza or a type of sandwich or a new way to make wings, right? And that’s who’s still running the company today. That’s not the person who should be setting pricing and delivery strategies and things like that. So you’re absolutely right. If you don’t have a chief revenue officer, you need to take a step back and say why.

Okay, so on the topic of revenue, boom, got another one for you. This is courtesy of my friend, give a shout out to Luke Stubblefield here, who loves to text me articles on this repeatedly. He’s a massive fan of Bitcoin and all alternative monetary, all of the crypto. Let’s just put that way. Right, right.

He’s a crypto bro, right?

He is, a bit, but he knows his stuff. And so the thing that he keeps sending me repeatedly since roughly summer of last year is the adoption of Bitcoin as an accepted form of currency at Steak and Shake. And what I find fascinating about this is when they put out their initial press release, their projections was that it was going to reduce their credit card fees by 50%. Now, for everyone out there that may not think that this is a big deal, the average US restaurant pays somewhere between three to five percent of their sales to credit card processors. So you are not doing any restaurant a favor, by the way, when you pay with your credit card. There are actually in many restaurants is a cash discount. If you pay with cash, you get a little bit of a discount, because they’d rather give that money to you as a customer than to a credit card.

That’s like a throwback to the 80s, where you used to get charged more if you were using a credit card.

Yes, there’s all kinds of kinds of legislation now on transparency, on passing on those fees, et cetera. But the point here is Steak and Shake has been accepting Bitcoin as currency since May of last year. In the two quarters following that announcement and that operational change, they had double digit growth in each of those quarters over a year prior to the tune of 11 and 15 percent, I believe, and attributed that lift to the Bitcoin announcement. Okay, like, very interesting, like, very curious to see if that trend continues into Q1 and Q2 of this year. But the notion of cutting the credit card fees and the immediate savings from that means everyone’s bottom line gets better.

If I’m a business owner, that’s all I heard in that entire paragraph was cutting credit card fees. A couple of things I’ll point out, and this is not throwing any shade on Steak and Shake because I love me a steak burger.

And some beef tallow fries.

Beef tallow fries are the best fries in the industry right now.

Not sponsored by Steak and Shake, by the way, we’re just saying.

Yeah, but if you’d like to send over a little this afternoon, I won’t turn it away. A couple of key things there. There have been a lot of press releases about this story. So it always makes me wonder, are they really doing it because they believe the future of restaurant payment is Bitcoin, crypto, so forth, or is this the next shiny object that we want to jump on? Beef Tallow might have been in that same category, that that was a hot topic, a hot discussion happening at the highest levels of government and a lot of conversation on social media, and Steak and Shake really did well with that news release, right? So is that really where they’re going, or is this a news jacking situation where they’re jumping on a hot topic and they’re making a lot of hay with it?

I think they’re getting some movement out of being the first mover, and I don’t hate on that.

Oh, not at all.

Can it be both a brilliant PR move and also a smart play to position them as an early adopter who is taking an older brand and getting hip with the times?

Yeah, most brilliant PR moves are also great business moves, too.

Well, here’s the thing I wanted to say before we wrap up today, is I think this is a longer term play, and the reason they are signaling that is because they are carrying the Bitcoin on their balance sheet, as we hedge against any volatility on that currency, which is a stroke of genius. I’m saying this both from a legal defensive view, lest you have franchisees who push back on that, or investors in the brand, etc. Really smart move, but also shows a commitment to it that says to me, not a gimmick.

Right.

Just saying, it’s a big deal to put it on the balance sheet.

I’ll buy that part of it, definitely. Yeah. The one thing when you first brought it up, the first thing that came to my mind for a future news story is, we’re going to hear about some guy in probably Indiana, who bought a steak burger and fries, paying with Bitcoin, and now that same amount of Bitcoin would be worth, you know, $2 billion, right? Like, we see those stories all the time, that someone paid for something with Bitcoin and now it’s worth a fortune. And yeah, so look for that story in the year 2029. But as we wrap up today, what would you like to hear from everybody in the comments? Do you want to, should we talk about Bitcoin or should we hear from marketers on where they think the line should be drawn with their duties?

I think we’re going to get some Bitcoin aficionados in the comments today, but I’d love to kind of like double down and double click on this marketing discussion, because I think this is what is happening in real time. And if we’re going to pull the lid off this, let’s go ahead. Let’s have some cooks in the kitchen. Throw some stuff in this pot. Let’s go. Let’s go.

Cooks in the kitchen. Love it.

All right.

Leave us a comment. Tell us what you think. We love to hear from you and we will see you again next week.

Thanks, friends.