Can mobile help get Red Lobster out of hot water?
By Chantal Tode
December 27, 2013
Red Lobster’s sales are suffering
With mobile marketing delivering a significant boost for some brands, money-losing Red Lobster which is being spun off and having its marketing budget slashed should take a close look at mobile to help it reduce marketing costs while driving value and loyalty for customers.
At the same time that other casual, full-service restaurant chains such as Outback Steakhouse, Chilis and Applebees are committing to mobile marketing, Red Lobster has remained loyal to a strategy of lavish and expensive – television ads featuring close-ups of steaming hot plates of food. With Red Lobsters sales down around 4.6 percent, parent company Darden is looking for a solution, and mobile marketing could be on the menu.
There is not a product or service category that will not be affected by consumers’ device usage shift to mobile and tablet, said Scott Thaler, executive vice president of digital growth and innovation at Zimmerman Advertising.
Consumers rank restaurant and food research as one of their top activities on mobile, he said. Brands like Red Lobster will be affected by trends like this.
Greater mobile connectivity will open access to new consumer targets, keep a brand relevant in today’s retail environment and give them access to new tools they can use to add convenience to brands such as Red Lobster, like mobile ordering, paying and reservations.
Biting into mobile
Red Lobster parent Darden Restaurants recently said it is looking to sell or spin-off the money-losing fast casual restaurant chain and promises to slash its marketing budget next year.
One way Red Lobster could reduce its marketing budget and still insure that it gets in front of consumers would be to leverage mobile. To date, the chain has not been very active in mobile – it has a basic mobile site and has run a few mobile ads – while Dardens other chain, Olive Garden has been slightly more aggressive in mobile.
There are quite a few moves Red Lobster could make in mobile.
It could follow the example of Applebees and install tablets in its restaurants. Applebees said earlier this month that it will put more than 100,000 spill-proof tablets in its U.S. restaurants next year so that customers can easily place orders or pay a check, making it one of the largest tablet deployments so far.
Outback Steakhouse targeted the competition via geotargeted ads.
With consumers already displaying a penchant for mobile ordering, as evidenced by the success of Pizza Hut, Dominos and others with their mobile ordering apps, the benefits of a similar strategy for Red Lobster would be helping it turn over tables more quickly, which can help drive sales.
Driving foot traffic
Red Lobster could also follow Applebees example and entice customers to its locations through location-based advertising. By placing ads featuring a store locator and menu items in popular apps such as The Weather Channel, Applebees is able to drive traffic from nearby consumers.
Outback Steakhouse is also leveraging location-based advertising with good results. This year, the chain used a strategy called geoconquesting, which delivers ads to consumers nearby a competitor’s location, and saw a 78 percent lift in click-through rates.
Applebee’s has also effectively used mobile video ads to highlight new menu items.
A look at Outback Steakhouse’s mobile strategy suggests Red Lobster could also benefit from partnering with third-party apps such as foursquare. Earlier this year, Outback Steakhouse ran a campaign encouraging consumers to check-in via foursquare to receive an offer for a free appetizer.
Assisting consumer decisions
As more consumers switch over to fast casual restaurants such as Chipotle and Panera Bread, mobile could also help Red Lobster drive loyalty with its customers. Chilis and T.G.I. Fridays are both using mobile to reward loyal customers and keep them coming back.
They need to look at their operations and target audience and determine if the brand and their customer base is ready for it, Mr. Thaler said. As part of Brandtailing, we encourage our clients to look beyond what is, but envision what could be with their business.
Building a mobile strategy, as part of a fully integrated media strategy, could take them to the next phase of their business, he said. Continuing to use television as a medium that can drive consumers online, in store and to mobile would make for a strong part of a successful Brandtailing campaign.
Red Lobster’s first step should be exploring how mobile could work within its overall marketing strategy and what role it will take within the consumers decision-making process.
Mobile could help with conveniences of ordering, making reservations or finding the right dish that a consumer did not know they had, Mr. Thaler said. Or mobile could be about discovery by location or time of day with geo-location campaigns flighted by day part and eating occasions.
No matter what role mobile will play in Red Lobster’s 2014 strategy, looking at how it can drive new revenue has to be at the core of the program.
However, with consumers embracing fast casual restaurants such as Chipotle and Panera Bread, it is not clear how much help mobile could give Red Lobster.
Honestly I don’t think mobile would of helped Red Lobster’s sales over the past few years, said Dirk Rients, senior vice president and director of mobile at DDB. I feel Olive Garden and Red Lobster attract different audiences. Olive Garden is more about families and value where Red Lobster tailors to the Gen X crowd.
One option could be a mobile-only loyalty club to generate some awareness and drive store traffic, he said.
Chantal Tode is associate editor on Mobile Marketer, New York