Having Servers Wear Fun Apparel


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Having Servers Wear Fun Apparel

  1. 1. Increasing Milk Sales in Foodservice Final Report March 2003 Developed for SmartMarketing 2003
  2. 2. <ul><li>Executive Summary </li></ul><ul><li>Project Objectives & Approach </li></ul><ul><li>Processor/Operator Interview Summary </li></ul><ul><li>Focus Group Findings Summary </li></ul><ul><li>In-market Test Reports – VOLUME II </li></ul><ul><li>Separate Project Reports </li></ul><ul><ul><li>Secondary Research </li></ul></ul><ul><ul><li>Detailed Focus Group Findings </li></ul></ul><ul><ul><li>Processor/Operator Interviews Full Report </li></ul></ul><ul><ul><li>Consumer Survey Responses (Electronic surveys) </li></ul></ul>Agenda
  3. 3. Background: The Importance of the Restaurant Segment to Milk <ul><li>Milk is only 3-5% of a restaurant’s beverage sales, while a much larger share of at home beverage consumption. The lower level of milk ordering when eating out, plus declining meals at-home, creates a doubly difficult challenge for the milk industry to overcome. </li></ul>Source: SIP Analysis 2002. Executive Summary <ul><li>Restaurant sales continue to grow as more people eat outside the home or bring take-out food home, yet 90% of milk consumption occurs at home. </li></ul><ul><li>Recent innovations in flavors, packaging and quality hold promise as part of an effort to reverse the decline and capture an enormous untapped channel for milk sales. </li></ul><ul><li>One point is clear, without significant action to reverse these trends, milk consumption will decline as food at-home continues to decline. </li></ul>854 870 885 1990 1995 2001 121 130 138 Annual Meals Purchased at a Restaurant Per Person Annual Meals Prepared & Consumed In-Home Per Person
  4. 4. Project Objectives <ul><li>The objective of this project is to develop proven ways to increase milk sales in foodservice outlets through innovative research and testing. </li></ul><ul><li>The project was designed to: </li></ul><ul><ul><li>gather currently available research about milk in foodservice operations. </li></ul></ul><ul><ul><li>interview dairy processors and foodservice operators about current attitudes and perceptions. </li></ul></ul><ul><ul><li>understand consumer mindset regarding milk away from home. </li></ul></ul><ul><ul><li>gain information about milk purchasing habits in foodservice settings. </li></ul></ul><ul><ul><li>engage consumers to design consumption-building programs. </li></ul></ul><ul><ul><li>develop, conduct and measure in-market tests based on learnings-to-date. </li></ul></ul><ul><ul><li>report on development opportunities. </li></ul></ul>Executive Summary
  5. 5. Approach <ul><li>Three Phase Approach </li></ul><ul><ul><li>Phase 1 – Gather Current Knowledge – Conduct secondary </li></ul></ul><ul><ul><li>research and milk processor/ foodservice operator </li></ul></ul><ul><ul><li>interviews to determine how milk fits into foodservice operations. </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li>More than thirty interviews were completed. </li></ul></ul><ul><ul><li>Phase 2 – Understand Consumers – Interview consumers in focus groups to determine awareness of milk's availability in foodservice outlets, perception of freshness, desirability and likelihood of milk purchase. </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Ten focus groups were conducted in three cities. </li></ul></ul><ul><ul><li>Phase 3 – Conduct In-market Tests – Design and conduct milk promotion tests for each processor/operator pairing. Analyze test results and develop market strategies. </li></ul></ul>Executive Summary Current Knowledge Consumer Understanding Testing 1 2 3
  6. 6. Approach (cont'd) <ul><li>Four key foodservice formats were included in the research: </li></ul><ul><ul><li>Quick Serve Restaurants (QSRs) – Offer a limited menu, usually specializing in a type of food and emphasize speed (e.g., hamburger, sandwiches, donuts, etc.). </li></ul></ul><ul><ul><li>Midscale Restaurants (MSRs) – Include a more varied menu than QSR, often geared toward family/value dining (e.g., Denny's, Old Country Buffet, Waffle House). </li></ul></ul><ul><ul><li>Upscale/Casual Dining Restaurants (USRs) – Offer an extensive menu, have wait staff, almost always sell alcoholic beverages (e.g., steak houses, Friday's, Chili's, etc.). </li></ul></ul><ul><ul><li>Business & Industry (B&I) – Covers a range of cafeteria or deli style settings in work places. Universities are included in this segment. </li></ul></ul>Executive Summary
  7. 7. Approach (cont'd) <ul><li>Important learnings were gained through preliminary research before development of the in-market tests. </li></ul><ul><li>The research conducted prior to the test development included: </li></ul><ul><ul><li>Processor Interviews – interviewed dairy processors about their foodservice customers' purchasing habits. </li></ul></ul><ul><ul><li>Operator Interviews – interviewed foodservice restaurant operators to gain an understanding of their buying patterns, views about milk and other beverages. </li></ul></ul><ul><ul><li>Focus Groups – conducted in 4 cities with teens, young adults, adults, and mothers with young children. </li></ul></ul><ul><ul><li>Secondary Research – conducted through the Internet, publications, etc., to gain a broader understanding of restaurant promotions and views on beverages. </li></ul></ul>Executive Summary
  8. 8. Research Participants <ul><li>PROCESSORS </li></ul><ul><ul><li>Berkeley Farms </li></ul></ul><ul><ul><li>Borden Milk * </li></ul></ul><ul><ul><li>Dean Foods * </li></ul></ul><ul><ul><li>Garelick Farms * </li></ul></ul><ul><ul><li>Mayfield Dairies </li></ul></ul><ul><ul><li>Roberts Dairy * </li></ul></ul><ul><ul><li>Schneider's Dairy * </li></ul></ul><ul><ul><li>Shamrock Foods </li></ul></ul><ul><ul><li>Smith Dairy </li></ul></ul><ul><ul><li>Suiza Southeast </li></ul></ul><ul><li>OPERATORS </li></ul><ul><ul><li>Anderson Restaurant Group – QSR, USR * </li></ul></ul><ul><ul><li>Bickford's Diner – MSR </li></ul></ul><ul><ul><li>Cracker Barrel – MSR </li></ul></ul><ul><ul><li>Dairy Queen - QSR </li></ul></ul><ul><ul><li>Denny's Restaurant – MSR * </li></ul></ul><ul><ul><li>Epicurean Feast – B&I * </li></ul></ul><ul><ul><li>Hardee's - QSR </li></ul></ul><ul><ul><li>Hyatt Regency – QSR, MSR, USR * </li></ul></ul><ul><ul><li>Johnson County Community College – B&I * </li></ul></ul><ul><ul><li>King's Family Restaurant – MSR * </li></ul></ul><ul><ul><li>Krispy Kreme Doughnuts – QSR * </li></ul></ul><ul><ul><li>Krystal Hamburgers – QSR * </li></ul></ul><ul><ul><li>Legal Seafood – USR </li></ul></ul><ul><ul><li>Metz & Associates/Erie Life Insurance – B&I </li></ul></ul><ul><ul><li>Sodexho/EMC – B&I * </li></ul></ul><ul><ul><li>Waffle House – MSR </li></ul></ul><ul><ul><li>Wal-Mart Radio Grill – QSR </li></ul></ul>* Test Participants Project Objectives & Approach
  9. 9. Processor and Operator Interview Key Findings <ul><li>Restaurant operators have made few changes to menu beverage variety in recent years, except for carrying bottled water. </li></ul><ul><li>A few restaurants had started offering milk in a plastic resealable bottle (mainly QSR and B&I outlets). </li></ul><ul><li>In the QSR and MSR segments, operators usually offer 2-3 varieties of milk (in USR, even fewer). </li></ul><ul><li>In B&I/College restaurants, 3-4 milk varieties are offered, in some cases as many as 5-6 varieties. </li></ul><ul><li>Milk is generally not sold in a plastic resealable bottle, although some restaurants are beginning to carry it after seeing the success of other retail operators and their own success with bottled water. </li></ul><ul><li>The way milk is currently served in restaurants gives it a commodity image to operators and they believe it is an uninteresting beverage to consumers. </li></ul>Executive Summary
  10. 10. Focus Group Key Findings <ul><li>Focus group participants said: they are open to ordering milk in restaurants, but aren't always aware of its availability; would like more variety in milk; don't usually view milk as a &quot;treat&quot; beverage as they do with other beverages. </li></ul><ul><li>When consumers sampled flavored milk in a plastic resealable bottle, they thought it tasted better and colder than milk in a carton or glass. </li></ul><ul><li>Participants liked the convenience and portability of milk in a plastic bottle. </li></ul><ul><li>Participants said they would be more likely to buy milk in restaurants if it were offered in a variety of flavors in plastic resealable bottles. </li></ul><ul><li>Consumers were shown several milk promotions and responded with enthusiasm. Kids-oriented promotions and meal deals were especially appealing. </li></ul>Executive Summary
  11. 11. Test Development Executive Summary <ul><li>Results from all preliminary research—focus groups, interviews, secondary sources—were analyzed and discussed with processors and operators participating in the in-market tests. </li></ul><ul><li>Processors and operators developed tests to validate the findings highlighted in the research. </li></ul><ul><li>Processors and operators tested: </li></ul><ul><ul><li>Adding flavored milk in plastic resealable bottles. </li></ul></ul><ul><ul><li>Providing milk flavoring straws that turn white milk to a flavor when sipped through a straw. </li></ul></ul><ul><ul><li>Targeting children by offering fun gifts featuring milk and accompanying point-of-purchase (P-O-P) material. </li></ul></ul><ul><ul><li>Offering milk combo deals with meals or snacks. </li></ul></ul><ul><ul><li>Promoting milk through menus, table/counter tests and other P-O-P. </li></ul></ul>
  12. 12. Tests Yielded Strong Results: +42% for the Average Program <ul><li>Average program increased </li></ul><ul><li>milk sales by 42%. </li></ul><ul><li>Milk sales increased on average 52% </li></ul><ul><li>in restaurants where children were the </li></ul><ul><li>primary target for promotions. </li></ul><ul><li>Milk sales rose an average of 35% in promotional tests where adults were the primary target, demonstrating adults will order milk if promoted properly. </li></ul><ul><li>Very little (< 20%) cannibalization occurred from other beverages. The milk increases were 80+% incremental to the restaurant. </li></ul>Executive Summary
  13. 13. Promotional Test Concept: Milk Flavoring Straws <ul><li>Children like the &quot;entertainment&quot; experience that flavored milk offers (through flavoring straws) and were excited to order milk. </li></ul><ul><ul><li>Flavored Milk was seen as a treat. </li></ul></ul><ul><li>Flavoring straws allow a restaurant to offer additional milk flavors without carrying more milk SKUs or inventory. </li></ul><ul><li>Straws increased milk sales 776% in an upscale/casual restaurant (USR), a format in which many USR operators believe milk doesn't sell well. </li></ul>Executive Summary * +55% growth over prior milk sales level Avg. Sales Growth +55%
  14. 14. USR Promotions Worked to Increase Milk Sales to Kids <ul><li>During the test, 94% of respondents said their children ordered milk – yet 44% said their kids “never” order milk when in restaurants. </li></ul>94% Yes Did Child Order Milk Today ? How often does child order milk when dining out? (any occasion) 6% 44% Sometimes 44% Never Frequently Always 6% 6% No Promotions converted Non-Milk Drinkers to Drinkers
  15. 15. Flavor Straws Were Very Effective in Increasing Ordering Importance of Promotional Item in Child's Decision to Order Milk 13% Not 14% Some 20% Very 53% Extremely 53% Not 34% Some 13% Very (Turns white milk to flavors)
  16. 16. Server Suggestion Was Very Important for Ordering Milk in USR units <ul><li>Server interaction is key to encouraging kids to order milk. </li></ul>Did server suggest milk? Did server mention flavor straws? Before ordering, did child see flavor straw poster? No Yes
  17. 17. Strong Opportunity Amongst Hispanics – Especially Male Teens <ul><li>The opportunity for flavors is especially strong among Hispanics, where Milk consumption is: </li></ul><ul><ul><li>higher than the general market. </li></ul></ul><ul><ul><li>flavors are consumed more often. </li></ul></ul><ul><ul><li>achieved (converted) more often from a lower awareness level. </li></ul></ul><ul><ul><li>higher than other beverages – especially amongst males. </li></ul></ul>Share of Teen Beverage Consumption Share (%) Milk Consumption Yesterday (% of People) Source: SIP Analysis 2002 Milk in Restaurants Hispanic General Awareness 42 % 50% Purchased 21 11 Conversion 2:1 4.5:1
  18. 18. Major Test Learnings <ul><li>Promotional Test Concept: Combo Meal </li></ul><ul><li>Develop combo meal programs that appeal to target diners </li></ul><ul><li>(e.g., kids meals with flavored, and potentially kids-sized milk; </li></ul><ul><li>breakfast and milk pint for B&I diners). </li></ul><ul><li>Show price and promote milk and combo item together. Note: Diners respond better to promotions advertising price. </li></ul><ul><li>Vary combo items with milk at least every four weeks to maximize sales and offer variety. </li></ul>Executive Summary * +30% growth over prior milk sales level Avg. Sales Growth +30%
  19. 19. Combo Meals Grew Milk Sales 57% in a B & I Outlet <ul><li>Milk sales grew 57% in Dollars and 21% in Units. </li></ul><ul><li>Cookie Sales doubled as well! </li></ul>Average Weekly Units Pre-Test Test +21% 296 1/2 Pints 246 1/2 Pints 111 Pints Average Weekly Sales $ Pre-Test Test $165 1/2 Pints $138 1/2 Pints $121 Pints 296 Units 357 Units +57% $165 $259
  20. 20. Milk Pint Sales Rose 47% During the Test in a Hamburger Chain Pre-test Test Milk Pints Average Store Weekly Unit Sales +47% 58 85
  21. 21. Sales of Milk Pints Grew 19% During a Combo Test with Donuts. Pre-test Test Milk Pints Average Weekly Unit Sales per Store +19% Double-digit sales growth shows even a highly-developed milk business can increase sales through promotions. 680 810
  22. 22. Major Test Learnings <ul><li>Promotional Test Concept: Promotions Targeting Children </li></ul><ul><li>Use as much child-oriented P-O-P material as possible – children </li></ul><ul><li>responded to repetition. </li></ul><ul><li>Include a promotional item that children can take home (e.g., got milk? temporary tattoos or stickers) – reminds them to return to the restaurant and order milk. </li></ul><ul><li>Flavored milk appeals to children – in a restaurant customer survey, almost all children said they would order it. </li></ul><ul><li>Promotions targeting children may increase the number of families dining, as they have a strong say in restaurant choice. </li></ul>Executive Summary * +48% growth over prior milk sales level Avg. Sales Growth +48%
  23. 23. Suggesting Flavored Milk – through Flavoring Straws – Impacted Both White & Chocolate Milk Sales White Milk Chocolate Milk Total Milk Test Locations % Change vs. Year Ago White milk sales increases were expected due to flavor straw popularity – straws turned milk into chocolate, strawberry or caramel flavor. The chocolate increase indicates the power of suggesting Milk.
  24. 24. Major Test Learnings <ul><li>Program Test Concept: Introducing Plastic Pints </li></ul><ul><li>Add plastic bottled milk to existing milk offerings, evaluate results </li></ul><ul><li>and determine products to be carried/ discontinued. </li></ul><ul><li>Add &quot;flavored milk&quot; without increasing SKUs by using flavor straws that turn white milk into flavored when sipped through the straw. </li></ul><ul><li>Link new products into existing promotional events to capture the target market, if appropriate, (e.g., ongoing kids eat free night event with new kids-size flavored milk). </li></ul>Executive Summary * +33% growth over prior milk sales level Avg. Sales Growth +33%
  25. 25. Milk Growth did not Cannibalize Coffee/Tea Sales at a Coffee Bar Coffee & Tea Milk % Change vs. Year Ago Pre-Test Test Pre-Test Test +32 +25
  26. 26. Major Test Learnings <ul><li>Suggestive selling was part of most tests. </li></ul><ul><li>Servers and/ or cashiers can reinforce the milk message by telling customers about milk and the promotion – encourages purchases at the point of order/sale. </li></ul><ul><li>Having servers wear &quot;fun&quot; apparel – got milk? hats, buttons, etc., is a visual reminder to the customer and server to order/suggest milk. </li></ul><ul><li>Promotional Test Concept: Milk Drinker Frequency Card </li></ul><ul><li>Frequency card returns show diners bought milk in a B&I setting </li></ul><ul><li>5.7 times per week. </li></ul><ul><li>A focus on meal purchases by frequent milk drinkers increases total dollar ring and the likelihood of buying milk with meals. </li></ul>Promotional Test Concept: Suggestive Selling & Promotional Effectiveness Executive Summary
  27. 27. Test Recap: Promotions delivered 30-60% sales growth Executive Summary Milk sales from the promotional and pint distribution tests grew an average of 42%. * due to a very low base. Average Growth From All Tests Upscale/Casual Business & Industry Midscale Quick Serve 0% 40% 80% 52% Children 35% Adults 42% Avg Test Milk Sales Growth Milk Flavor Straws Children-Oriented Promos Combo Deal Intro Plastic Pints & Flavors 60% 20% 62% MSR 55% 48% MSR 62% MSR 48% 48% MSR 47% QSR 34% MSR 58% B&I 47% QSR 23% B&I 30% 19% QSR 58% B&I 34% MSR 32% QSR 33% = Average 776% USR* 776% USR*  
  28. 28. &quot;Menu&quot; for Program Design – Quick Serve Restaurants <ul><li>Develop milk sales by promoting: </li></ul><ul><ul><li>Meal Combos – breakfast sandwich </li></ul></ul><ul><ul><ul><ul><ul><li>lunch sandwich/ burger </li></ul></ul></ul></ul></ul><ul><li>kid's meals </li></ul><ul><ul><li>Flavors – ready-to-drink product </li></ul></ul><ul><li>Support the promotion with: </li></ul>Server/Cashier POS Consumer Involvement Signage Giveaways • Suggestive Selling • Menu Boards • Temporary Tattoos • Apparel – &quot;got milk&quot; • Register Cards Shirts/ Buttons • Drive-thru Menu • Backlit Menu Board/ Extender • Cooler Decals
  29. 29. &quot;Menu&quot; for Program Design – Mid-Scale Restaurants <ul><li>Develop milk sales by promoting: </li></ul><ul><ul><li>Milk in existing programs (i.e., family nights, meal combo programs). </li></ul></ul><ul><ul><li>Adults and children at the same time. </li></ul></ul><ul><ul><ul><li>Adults may order as role model for child. </li></ul></ul></ul><ul><ul><li>Focus on flavors – RTD flavors and modifiers (powder, straws, syrup). </li></ul></ul><ul><li>Support the promotion with: </li></ul>Server/Cashier POS Consumer Involvement Signage Giveaways • Suggestive Selling • Coloring Placemats • Temporary Tattoos • Apparel – &quot;got milk&quot; • Menu Cards Shirts/ Buttons • Table Tents • Ceiling Danglers
  30. 30. &quot;Menu&quot; for Program Design – Upper-Scale Restaurants <ul><li>Develop milk sales by promoting: </li></ul><ul><ul><li>Milk in existing programs (i.e., family nights). </li></ul></ul><ul><ul><li>Mystery diner for server contests. </li></ul></ul><ul><ul><li>Milk served in a chilled glass – White and flavors. </li></ul></ul><ul><li>Support the promotion with: </li></ul>Server/Cashier POS Consumer Involvement Signage Giveaways • Suggestive Selling • Coloring Placemats • &quot;got milk&quot; Stickers • Menu Cards
  31. 31. &quot;Menu&quot; for Program Design – Business & Industry <ul><li>Develop milk sales by promoting: </li></ul><ul><ul><li>Meal combos (breakfast and lunch) – Between meal combos (2-4 weeks long). </li></ul></ul><ul><ul><ul><li>Cookie or muffin and milk. </li></ul></ul></ul><ul><ul><li>Frequent diner card. </li></ul></ul><ul><ul><li>Flavors through sampling. </li></ul></ul><ul><ul><li>To frequent milk drinkers who aren't purchasing at B&I location. </li></ul></ul><ul><li>Support the promotion with: </li></ul>Server/Cashier POS Consumer Involvement Signage Giveaways • Suggestive Selling • Cooler & Register • &quot;got milk&quot; Magnets for • Apparel – &quot;got milk&quot; Signs – Include Price Office Shirts/ Buttons, Aprons • Table Tents (Not as • Sampling Flavors Effective) Occasionally • Ceiling Danglers
  32. 32. <ul><li>Projections assume restaurants will experience the same sales increase if running promotions similar to those tested. Pint introduction assumes 52-week distribution; other promotions assume three 4-week long promotions during a year. </li></ul>Significant Sales Growth from Wide Range of Programs * = Not tested Note: The USR with +776% growth started from a low base, as would most upscale/casual dining restaurants. Executive Summary Sales increase projections were developed for each segment and test program. per Chain $45,000 - $ 113,000 * * $330,000 - $1,550,000 Combo Deals $ 489,000 * * B&I (100 units) Business & Industry $ 34,400 $ 16,000 $ 16,000 USR (20 units) Upscale/Casual $ 598,000 $ 186,000 $ 80,000 MSR (100 units) Midscale/Diners, Buffets $1,460,000 $800,000 $1,860,000 QSR (1,000 units) Quick Serve/Fast Food Introducing Pints Child- Oriented Flavor Straws
  33. 33. Implications for Processors and Operators <ul><li>Milk sales grew an average of 42% as a result of the tests. </li></ul><ul><li>The annual incremental sales potential (applying conservative adoption rates) from these promotion programs across the four segments studied, totals $100–200 million. </li></ul><ul><li>The key learnings confirmed consumers: </li></ul><ul><ul><li>are open to ordering milk more often. </li></ul></ul><ul><ul><li>need a reminder of milk's availability in restaurants. </li></ul></ul><ul><ul><li>respond to P-O-P, suggestive selling and combo offers. </li></ul></ul><ul><ul><li>view flavored milk as a “treat” beverage when eating out. </li></ul></ul><ul><ul><li>ordered milk in addition to other beverages. </li></ul></ul><ul><li>This final point indicates that milk growth will be largely additive for the restaurant operator and not reduce existing beverage sales and profits. </li></ul>Executive Summary
  34. 34. Implications for Processors and Operators (cont'd) <ul><li>The results provide strong evidence that restaurant operators and dairy processors can grow milk sales through focused and relatively easy-to-execute programming. </li></ul><ul><li>Upscale/casual restaurants benefit from milk promotions, even if selling little milk currently. One steak house format restaurant promoted milk to children and adults (with no price discounts) and saw a 776% increase since so little milk was sold before the promotion. </li></ul>Executive Summary
  35. 35. Key Steps for a Successful Sales-Building Program Executive Summary Determine the best milk promotion for the targeted customer. Present and gain commitment. Jointly plan the implementation. Implement. Track and report results – fine-tune for next time. Develop promotion revenue, cost and ROI. Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 If the restaurant is introducing pints, be sure to let your consumers know about it. Use P-O-P as suggested on the &quot;Menu for Program Design&quot;. Offer give-aways to children to keep them returning with their parents. Design the promotion based on your target customer and their consumer.
  36. 36. Final Thoughts <ul><li>Processors and operators should review the report for specifics related to their respective operations. </li></ul><ul><li>The breadth of ideas that delivered strong sales increases suggest there are many such ideas. Other ideas should be tested and implemented using a similar process. </li></ul><ul><li>Regardless of how attractive the consumer proposition, processors and operators will need to establish implementation steps and reporting to successfully execute even simple programs. </li></ul>Executive Summary
  37. 37. Final Thoughts (cont'd) <ul><li>Since there is relatively little milk program activity today, processors are encouraged to first learn how operators implement programs before designing specific events. </li></ul><ul><li>The sales growth potential from developing milk sales in foodservice outlets is large – ranging from $100-200 million annually. </li></ul><ul><li>Processors are encouraged to develop greater foodservice marketing and programming expertise to capture this potential. </li></ul>Executive Summary
  38. 38. Increasing Milk Sales in Foodservice Final Report March 2003 Developed for SmartMarketing 2003