Out (of pocket) for a byte to eat

“One cannot think well, love well, sleep well, if one has not dined well”, wrote Virginia Woolf. A friend of Zeitgeist’s is coming to town on Friday for what will surely be a sybaritic weekend. For the first time, Zeitgeist found themselves on Toptable booking dinner at a very nice restaurant nestled in London’s Mayfair district. The reservation came with an offer of 50% off the usual a la carte menu price. What had Zeitgeist done to deserve this? Nothing. So what is in it for the restaurant? See previous answer, perhaps. As any Toptable devotee knows, offers like this are plentiful, and reflect the state of the restaurant industry as a whole, particularly in the premium sector.

Zeitgeist was walking in Notting Hill about eighteen months ago with, as it happens, this same friend. We happened to pass Nicole Farhi’s restaurant, which sits next to a Daylesford Organic. Both were teeming with people literally overflowing into the streets enjoying their expensive brunches. “Credit crunch, what credit crunch?” my observant friend quipped at the time. It was hard to disagree. The numerous plates of food and cups of coffee being consumed by these Chloé- and Zegna-wearing denizens were totally out of sync with the times. Perhaps what these people had been doing though is downtrading. Instead of going out somewhere special for a dinner, they had instead chosen to go somewhere more informal for brunch. Or perhaps instead of going away on holiday for a weekend break, they had decided to stay at home and enjoy the fruits of London. This is an anecdotal example but the argument is supported by the reams of analysis conducted by those boffins at places like Forrester and Datamonitor; JWT’s AnxietyIndex wrote in May “Ostentation is out, practicality is in.” Witness brands like Starbucks and Louis Vuitton.

It’s this lack of ostentation and sense of frugality (which, for the most part, still pervades) that perhaps explains why, writes The Economist, “Visits to posh restaurants in America declined by 15% between May 2008 and May this year… Fast-food restaurants, on the other hand, saw traffic decline only 2%.”. It would be nice to know how a “posh” restaurant is defined, but otherwise it makes for an interesting statement. The decline at both ends of the dining spectrum lends credence to the notion that there is a “cocooning” going on where people are quite happy to order in or to cook their own meals, surrounded by their HDTVs and microwaves. Clearly though it is the high end that is fairing particularly poorly.

The article notes that Restaurant Week – held during the dog days of summer in Manhattan, when the city fills with tourists and any sensible residents have escaped northward – lasts for six weeks this year, and notes that the 21 Club “usually sees its business increase by around 25-40%” during the Week. So, similar to Taste of London, the event must attract those who would not usually consider dining at such a place (for such a price). Are these the customers the restaurant wants though? No mention is made in the article as to retention rates. As pointed out in the Wall Street Journal, (which contains details of several interesting promotions),

“‘Having dollar menus and value menus has become unsustainable, from an operating profit standpoint, so restaurants need to be able to establish consumer continuity with loyalty programs. Instead of getting customers in three or four times per year for special events, they need to get them in two to three times per month,’ says Burt P. Flickinger III, managing director of Strategic Resource Group, a consumer consulting firm.”

The industry has had to adapt though as the Internet plays an increasingly dominant role in people’s lives, not only exposing the consumer and restaurant to every bad review detailing every morsel of undercooked food and every supercilious waiter, but also forcing the establishments to adapt to people’s psychology when shopping online, which mostly falls under the category of ‘bargain hunter’. A similar thing has happened with high-end fashion. Members-only sites offering significant discounts on luxury brands have sprung up everywhere. The Economist reports that two of these, Gilt and Rue La La, have begun offering restaurant discounts as well:

“Gilt, for example, recently sold a four-course meal at the Tribeca Grill, a restaurant owned by Robert De Niro, an actor, for $160 (36% off). Shopping sites like these attract image-conscious restaurants, because only the site’s members can see that the restaurant has started to offer leaner prices.”

The other lure for the restaurant in this case is knowing that those whom the offer will be seen by are likely to be a suitable target audience for your establishment; at the very least a more specific one than might be found on somewhere like Toptable. These restaurants are innovating (mostly because they have to). The prospect of drawing crowds is an attractive one. Sites like Groupon offer significant discounts on meals, but which only become active once enough people have signed up to the offer. Foursquare similarly relies on encouraging a group of people doing virtual battle in order to obtain a mayorship that grants them free coffee at Starbucks or free champagne and a great seat at Galvin’s Windows. In the long term, having offers that keep the customer loyal (and accustomed to a consistently-priced menu) will hopefully, for the sake of the restaurants, trump the savage discounting some have become imbroiled in. For Zeitgeist, value-add to the proposition is far more attractive than saving on a regular meal. Let’s hope others think the same.

“Lost” opportunity

Interesting article last month from Reuters. Those innovative folks at Disney have previously crafted interesting virals for the TV show “Lost”. Recently they created an intricate and delicate campaign to pique the interest of the uber-nerd ahead of the new season’s premiere (the show’s last season on the air). This included select scenes from the show that had not yet been seen – all TV spots for the new season used footage from previous years – which the ABC network hoped would then go very, very viral.

The reaction, that fans would rather wait until they could experience the show in full in all its HD glory, was very surprising. The entire episode was uploaded to YouTube by a few people when it premiered early in Hawaii – where a friend of Zeitgeist was in attendance – but this too drew paltry views. The presumption was that big fans of the show would be desperate for any crumbs the network might scatter their way. The insight was that big fans of the show enjoy it so much they would rather wait to experience the show as an event, than see a clip or low-quality recording a week early.

TV Evolves Before Our Eyes

From the October Zeitgeist…

As Octavius once said of the Roman Empire, so now says the TV industry and the advertising that supports it: we expand or we die.

In the US, the once niche and piffling cable networks now command a much larger slice of the advertising pie, and in terms of quality, their output speaks volumes; Mad Men, The Sopranos, Sex and the City and Dexter; these same shows are rewarded at the annual gush‐fest that is the Emmy Awards in Los Angeles. In the UK, the BBC is defending attacks on its unique position in the marketplace as a Public Service Broadcaster. It’s licence fee revenues mean it is moving relatively easily through the recession compared to its moribund rivals. ITV is desperately trying to find someone crazy/stupid enough to take control of the network and Channel 4 is angling for a slice of the BBC’s licence fee to help support it’s own PSB commitments. Sky meanwhile, under the stewardship of heir apparent James Murdoch, is resilient. It is having little trouble courting advertisers as the little personal liquidity that exists is sunk into home comforts like HDTV.

The crowded and volatile marketplace in both countries has led to audience fragmentation, but some are convinced there is not yet saturation. Variety wrote recently about the US push to broadcast TV to devices over ad‐supported mobile DTV; creating a “world where travelers waiting in an airport lounge will watch golf live on their laptops, or homemakers who have to dash out… won’t miss the last 10 minutes of Oprah because they can catch the end… on their cell phones”. 70 TV stations will soon be making their broadcasts available to the country’s 270m mobiles, providing another way for advertisers to create more impressions and reach more eyeballs.

Last month, Culture secretary Ben Bradshaw announced the end to the ban of product placement on commercial TV. The ban was somewhat arbitrary since imported US and Euro shows flagrantly display their wares already. The FT believes benefits to broadcasters are “hazy…a lot of the [money] would simply be transfers from traditional spot advertising”; they also might be tightly regulated, discouraging use. Advertisers though are really more fearful of no one watching their product. DVR penetration continues: most people tend to fast‐forward the ads. US networks are now trying to blur the lines even more between entertainment and advert; American Idol now inserts auditions in the middle of ad breaks.

All this risks putting off the consumer, but Brand Republic notes that viewers think product placement will “add a sense of realism” to fictional fare. If done sensibly, that is.