Tapping into PepsiCo Brands to Increase Snack Bar Profits. Session Agenda. Bowling Category Overview and Consumer Trends
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1 Tapping into PepsiCo Brands to Increase Snack Bar Profits Bowl EPO 2010 Session Agenda Consumer Insights Shereen Besselle, PepsiCo Picking up Spare Profits Amy Arcuri/Terry Taylor, BPAA Question and Answers All Bowling Category Overview and Consumer Trends
2 Within the Foodservice Amusement Category, Bowling Represents 11% of Occasions Amusement Category: % Share of Occasions Movie Theatres 19% Bowling 11% Amusement Parks 34% Other 11% Stadiums 25% Source: NPD Crest, 12 mosending April 2010 Bowling Participation Is On The Rise However Food and Beverage Occasions Are Down 69.3 Million Users 4.6% % Change Vs. YAGO Bowling Users Food/ Bev Occasions -15% Source: NPD Crest, 12 mosending April 2010 Declines Are Being Driven by yr olds Bowling Occasion % Chg vs. YAGO 72% 53% of Occasions 31% Share of Traffic -18% -13% -41% -31% < % 10% 13% 23% 17% 16% Source: NPD Crest, 12 mosending April 2010
3 Soft Drinks Are Very Important Key Beverage Incidence: Bowling Soft Drinks Beer Tap Water Cocktails Coffee Source: NPD Crest, 12 mosending April 2010 However, Soft Drink Incidence Has Been Soft Soft Drink Incidence Over Time: Bowling pts Source: NPD Crest, 12 mosending August 2009 So What s s Driving This Consumer s Behavior? The Economy Health & Wellness The Speed of Life Social Responsibility
4 Consumers Adopt Different Trends to Deal With the Macro Factors Impacting Their Lives Consumer Trends Economic Downturn Speed of Life Health & Wellness Social Responsibilit y Considered Consumption Health 3.0 Focus on Forever Connected Experience Search for Authenticity There Are Three Key Trend Impacting Bowling Consumers Consumer Trends Economic Downturn Speed of Life Health & Wellness Social Responsibilit y Considered Consumption Health 3.0 Focus on Forever Connected Experience Search for Authenticity Consumer Trend: Considered Consumption Drivers Awareness of economic risk and uncertainty about present / future Job losses and declines in disposable income Greater availability of information
5 Consumer Trend: Considered Consumption Insights Manifestations Need to Justify Spending More cautious More pragmatic Value Meals 62% 9.3% Renewed Focus on Worth 70% have cut spending Will pay more for worth Retail Meals Economizin g is Smart 90% agree that I consider myself to be a bargain hunter Personal Savings Rate: 5/09 6.9% Implications For Bowling Proprietors Consumers have many different ways of defining value It s important to provide consumers with more than one value experience when in center Price Value Happy hour deals, $2 combos, coupons, free game of bowling Benefit Value Beverage Promotions (Buy+Get+Win), door prizes, grab bags Consumer Trend: Connected Experience Drivers Advances in personal, mobile technologies Search for meaning and more engaging experiences Desire for community and interconnectedness
6 Consumer Trend: Connected Experience Living Life to the Fullest Social Networking Insights Valuing a sense of play and novelty Desiring new sensory experiences Transforming personal interaction Shifting brand / media landscape Manifestations Tuesday Game Night 9.3% Sharing experiences with kids Seeking Experiences The continuing desire for small pleasures and new experiences Implications For Bowling Proprietors Leverage technology to drive marketing efforts, grow center awareness and increase consumer engagement Facebook/Twitter Announce the new menu or drink specials of the day Promote a happy-hour event or special in center event Solicit ideas for new menu items or specials of the day Offer a special prize for people who follow you on Twitter by a specific time and date, to be entered to win a free game of bowling On Line Reviews Review sites are a great way to connect with consumers chances are your center is already on review sites like Yelp If it s not, be sure to encourage your customers to post a fair review If there is a negative review left, try to reach out to that customer and correct the situation if possible Consumer Trend: Search for Authenticity Drivers Rejection of global, homogenized culture Diminished human interaction due to online Pressure on traditional family and institutions
7 Consumer Trend: Search for Authenticity Uncompromised Originality Focus on Heritage Tried and Tested Insights Staying true to original roots, recipes and values Local market / farmer growth interested in sources/ origins as indicators of what s real Trust in those things that have withstood the test of time 9.3% Manifestations 167% increase in Farmers Mkts since 1994 Implications For Bowling Proprietors Trying to be all things to all consumers will diminish authenticity and value Health & Wellness Increase awareness and presence of better for you food & bev options, but are still relevant to the environment (vegetarian pizza, bottled water, baked lays) Social Responsibility Consumers attach real value to companies that give back in an authentic way Support initiatives that are a good fit and are important to YOU Kids, local community etc. Seven Initiatives To Help Fuel Snack Bar Profits
8 Growth Opportunities Growth opportunities are focused on driving volume by increasing center food & beverage sales through best practices and business building initiatives Seven initiatives to help fuel snack bar profits: 1. Cup Price and Size Architecture 2. Brand Voids 3. Bottles to Go 4. Model Merchandising 5. Combo Meals 6. Suggestive Sell & Promotions 7. Understanding Pepsi Profits Cup Price and Size Architecture Basic Theories of Proper Cup size & Pricing Offer consumers at least three cup sizes beyond kid size 24 oz, 32 oz and 44 oz FACT: When a 44 oz size is introduced, almost 1/3 of the 32 oz consumers, migrate to the 44 oz cup Identify the largest size as the best value Use Simple names for each cup size Small Medium and Large vs. Tall, Jumbo, Grande Utilize cup merchandiser to communicate cup sizes & prices
9 To Maximize Volume and Revenue Sell smaller sizes (16 oz and 24 oz) at highest prices to encourage trading up to larger sizes Sell Cruiser cups (best demand / cost ratio) at highest possible prices Sell the 16 oz or lower size as your kid size cup Don t offer a 12 oz cup on the menu. Use these for birthday parties pitchers of Pepsi Brand Voids
10 Brand Voids Brand variety has a positive impact on consumer satisfaction and incidence While soft drinks still account for most beverage purchases, alternative beverages have grown twice as fast over the past two years All-time highs in consumer awareness of health and wellness are driving growth of non-carbonated beverages in both fountain and bottles to go Brand Voids Optimization of the brand line-up not only enhances customer satisfaction, but also maximizes beverage funding and profits for BPAA members There are currently 1,348 Tropicana brand voids These voids alone represent an estimated 66,000 gallons, which is close to $250K in center level funding BPAA Recommended Brand Sets 8 Valve Set 8 th Valve Options Core 4: These top 4 brands make up approximately 70% of total fountain sales 6 Valve Set 6 th Valve Options
11 Bottles To Go Why Should You Offer Bottles To Go? Increased consumer interest in product variety makes bottles to go another opportunity to sell them what they want instead of walking away without a purchase When the Snack bar line is too long, bottles to go offers the bowler a choice if they can t wait If your snack bar closes before the lanes close, bottles to go allows beverage incidence to continue
12 What Bottled Beverages Should You Sell? 80% Non-carbonated bottles will complement fountain offerings Lipton Brisk (Lemon and Diet), SoBe, Tropicana Specific flavors preferred by most regional consumer demographics FruitWorks, Dole The #1 Non-Carb Brands Aquafina, Frapuccino Energy Drinks are top sellers with year olds AMP, Rockstar How Should I Merchandise Bottles To Go? DISPLAY IN A GLASS FRONT VENDOR Use one row for the Core Four carbonated beverages Use the eye level rows for the highest profit margin options, such as AMP or Rockstar Use a full row for Aquafina Key Takeaways Price bottles to go at same price as a 32 oz fountain drink, consumer will pay more for convenience Price SoBe, AMP, Rockstar and Frappuccino higher Fountain Drinks remain the preferred drink of choice (for On-Premise Consumption) with bottles to go offering consumer s solutions for variety and portability Beverage incidence increased 7% when BTG were added to the beverage offering
13 Model Merchandising BPAA Menuboard Testimonials The new menu board has increased awareness of our snack bar and increased food sales by 40% Most of our customers comment on the new menu board. It has had a tremendous influence over orders. Our sales snack bar sales have increased
14 Importance of Menuboards Menu boards are a major driver of the purchase decision Over 75% of restaurant customers read menu boards for pricing information, product selection, special offers and promotions, new items and product descriptions Menu boards must have a logical flow that aids the consumer in the ordering process BPAA Menuboard layout Combo meals in the middle where the consumer will look first Side panels should each have a theme: From the Grill and Sandwiches tells the consumer what you offer in each category Beverage should have their own space/panel Sides and Snacks should also have their own space/panel Menuboard Tips Use appetizing photos to highlight offers Use ingredients to prop photos and add to their appetite Let the props differentiate between similar offerings Its important to remember customers will recognize pictures before words Have beverages on the menuboard Feature branded bottles or cups with visible logos This will reassure the customer of quality, value and variety Only feature 6-8 combos on your menuboard Anything more than 8 is too much for the customer to take in
15 What consumers see at Taco Bell What Consumers See At KFC
16 What Consumers See At Some Centers Combo Meals The Importance of Combo Meals Combo Meals Drive Customer Loyalty Consumers are programmed to order from a QSR from a combo meal menu They tend to feel uncomfortable and even confused when one is not present Combo meals are perceived as a better value for the dollar Combo meals simplify the ordering experience Increases familiarity with restaurant provides a predictable experience Reduces wait time Better order accuracy with reduced mistakes
17 Combo Meals and Operational Efficiency Make it easier to process / fulfill order Less training required quicker familiarity with menu Reduce burden of cross selling and up-selling Reduce chance of customer dissatisfaction and negative feedback Moves the line quicker and reduces employee stress Combo Meals Increase Margins Moves your high margin items at a faster rate side items and beverages are your high margin items Drives incremental unit sales through bundling especially beverage Consumers are looking for value combo meals deliver Helpful Combo Meal Strategies Devote at least 60% of menu board space to their promotion. Have easy to order numbering Feature between 6-8 combo meals, no more An ideal offering is 6 everyday meals, and 1 or 2 daily specials Among your combo meal offerings, include at least one or two low price points $2.99 is very desirable, even it is a jumbo pretzel and a soft drink or a hot dog, Doritos and a soft drink Price the majority of combo meal offerings at just under $5.00 Price one combo meal offering over $5.00 Make sure the combo meal a value package price at least $0.50 off individual offering pricing
18 Suggestive Sell & Promotions Keys To Suggestive Selling Keep it simple offer one up sell per transaction Train your crew to personalize their add-ons Examples: A cold Pepsi would go great with that burger; I highly recommend making that a combo, you could save I can upsize that for you for just a quarter more. Train - Measure Retrain or reward Utilize a third party company to mystery shop your locations and evaluate customer service and suggestive selling program Use the data from the program to recognize, reward, coach and train your staff members
19 The Role Of Promotions and Specials Beverage Promotions have proven to increase profits by adding a compelling reason for a consumer to purchase a large beverage at a higher price point Special offers in the snack bar area can be as effective as they are on the lanes Consumers looking for value will respond to special one night a week that offers a free upsize or the chance to upsize for a modest increase in price Pin Down A Win For Kids: Evergreen (FREE) Centers give youth groups a batch of Pin Down a Win cards to sell with the goal of raising money for their community cause Each card contains 10 special offers from the participating center and an entry form to win a prize Pepsi-BPAA centers each will receive posters, counter cards and peel cards Fall Major Promotion: Rock the Lanes Buy a 44oz Fountain drink and receive a free music download plus the chance to win 1 of 6 trips for two to the Bowling ITRC Starts September 29 th December 22 nd Pepsi-BPAA centers each will receive posters, cups and cup merchandiser
20 Understanding Pepsi Profits Pepsi Profitability Example Annual Servings: 25,000 (44 oz) Price Product Cost Cup/Lid/Straw Gross Profit Beverage Profit % Per Serving $2.50 $0.25 $0.12 $2.13 Annual $62,500 $6,250 $3,000 $53,250 85% Key Takeaways: Increase Snack Bar Profits Understand your food and beverage operation Understand your food and beverage traffic by gaining consumer insights you can increase your average snack bar check: FACT: Average check for bowling food and beverage is $4.72 Take advantage of the BPAA/PepsiCo partnership providing not only savings, but promotions, insights and industry financial support Get to know all the Brands and products PepsiCo offers Source: NPD/Crest 12 months ending April 2010
21 Key Takeaways Questions?
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