Thinking of Buying a Fast-Casual Franchise? Read this report first.

Operations | by Nick Diulio

The In-Store Strategy
Oftentimes, in-store marketing is the last opportunity to influence consumers and a good way to boost the bottom line during a slowdown.
Dunkin Donuts in store marketing.

News about the economic crisis is on the radio in the morning, on the television at night, and streamed all over the Internet throughout the day. But the ubiquity of bad news doesn’t seem to be scaring many in the quick-service industry into cutting in-store marketing strategies. In fact, some restaurant chains are using the souring economic climate as a way to promote the virtues of their individual stores even further.

“During these times we’re trying to make our restaurant an oasis. We don’t want people to be reminded that the times are tough, so we haven’t changed anything about our in-store marketing,” says Molly Catalano, director of public relations for Five Guys, which operates more than 300 locations in 25 states. “People still want to come in and hear rock music, see people hustling and bustling about, and feel good. They know how bad the news is outside.”

The temptation to view site-specific marketing as an unnecessary expense is significant, Catalano says, flawed though it may be. After all, the customer is already at the location. Why spend additional funds marketing to him in the store?

“Retail marketing is a company’s last opportunity to influence a sale,” says Laura Stanton, director of retail marketing for Dunkin’ Brands. “We know in-store marketing is a powerful tool. Sometimes it is the only communication we may have about a particular product. When we remove in-store messaging, products can decline in sales.”

Moreover, Stanton says, point of purchase (pop) marketing has proved powerful for Dunkin’ in markets where other forms of advertising are not present. Dunkin’ has seen in test markets that when it uses only POP and no other type of marketing, sales are driven by these in-store messages.

These are just some of the reasons Stanton says Dunkin’ Brands, which operates more than 6,000 locations in the U.S., is not planning to reduce in-store marketing, despite the economic downturn.

The same goes for Wendy’s, says Denny Lynch, senior vice president of communications for the fast-food giant. “We have absolutely no plans to pull back. On-site marketing is critical to our overall success,” he says, adding that POP advertising has the ability to convey nuances lost in broader campaigns like the ones seen on television and billboards.

As the economy crunches ad budgets, Lynch calls in-store marketing “the perfect opportunity.”

“We may not want to devote our limited advertising dollars to say, ‘Hey, we’ve got a Frosty shake’ and put that on television. But at the store? Oh yeah,” says Lynch. “At the restaurant, you have the opportunity to expose the customer to multiple messages, which allows us to merchandise add-on sales. That’s why it’s critical … and it’s not something that’s affected by economic conditions.”

Kris Miotke, senior director of advertising for Checkers/Rally’s, knows the power of POP marketing doesn’t exist in a recession-proof bubble. In fact, the chain is rolling out all new menuboards this year, despite the economic crisis.

“I didn’t encounter one franchisee who said, ‘Are you sure we should be going through with these new boards? Should we go through with the cost?’ If there’s a call for it and if it will advance the product, it’s worth it,” he says.

Miotke has yet to encounter a time when on-site marketing hasn’t been worth it. Now that the economy is in trouble and the competition for a customer’s dollar is that much more intense, POP marketing tactics are going to be equally ramped up.

A lot of people may consider it a safe bet to pull back on POP marketing, but that’s not how we’re building our brand.”

“We’re out there to win the battle, so in any situation—especially a tough situation—you don’t retreat,” he says. “Sure, we’ve looked at the economy, and a lot of people may consider it a safe bet to pull back on POP marketing, but that’s not how we’re building our brand. We may make some adjustments, but we’re not going to be doing any less.”

RBM Technologies is all about adjustments. The Massachusetts-based firm provides in-store management solutions for large retail clients. The company’s Web-based system aims to cut the cost of marketing presentations by tailoring POP strategies to very specific, regional characteristics.

Dan Wittner, chief customer officer for RBM, says that in the midst of this economic climate, efficiency is just as important as consistency.

“The first thing you have to do in this kind of economy is get smarter about every dollar you are spending, Wittner says. “We’re talking to a number of quick-service restaurant groups right now, and we’re going to get them organized around their individual restaurants’ attributes.”

According to Wittner, 20 to 30 percent of marketing dollars go to waste every year because brands haven’t invested in specific customization for each location. Tweaks include changing messages according to municipal laws, demographics, and even languages.

Wittner has had many conversations with quick-service marketing executives lately about the need to stay vigilant about in-store marketing. Not only will it serve them well in the long term whenever the economy recovers but it will also help them with their most immediate need: communication.

“The quick-service restaurant industry has a unique structure. The telecoms have a large number of locations, but in quick-service you have far greater numbers with more competition,” Wittner says. “When that lunch crowd goes out, the competition for that crowd is far greater than in any other industry, and that makes POP communication that much more important.”

Miotke from Checkers/Rally’s agrees.

“We consider on-site marketing a very important part of the marketing mix. It’s not secondary,” Miotke says. “It’s not an afterthought or an item down on the to-do list because it’s effective at the moment when the customer interacts. Why would anyone want to cut back on that kind of messaging in tough times?”