You may not have taken note of it when it happened back in September, but that month, a brick-and-mortar location of MrBeast Burger opened. Up to that point it had existed only as a virtual restaurant brand operating out of some 1,700 existing restaurant kitchens (more than Applebee’s). More intriguing, 10,000 people showed up within the first 10 minutes of the opening of the brick-and-mortar, which was inside the expansive American Dream Mall in New Jersey.
MrBeast, aka Jimmy Donaldson, came to the restaurant business via a different route than most — he’s a YouTube celebrity with more than 100 million subscribers, and he’s one of the highest-paid content creators. He’s been merchandising his brand for years, and restaurants are now just the latest play.
Others see the success of MrBeast Burger as symptomatic of a larger trend in foodservice toward the convenience of direct-to-consumer (DTC). From my perspective, the rapid growth of MrBeast Burger may have been due in part to his digitally-savvy audience, but also, virtual brands and the ghost kitchens supporting them are becoming prolific and are here to stay.
This trend largely impacts restaurant operators' abilities to capture consumer traffic via mobile ordering more so than it impacts the foodservice manufacturer. This phenomenon demonstrates that small brands and startups that master the understanding of DTC will have as much success as any brand.
Foodservice must capitalize on the opportunity to manage its online presence more directly. This doesn’t mean giving up long-time partnerships with distributors. It means finding ways to augment those selling efforts with a more direct-to-customer approach that helps manufacturers gather data and learn more about operators. The bottom line: The companies that can master DTC in foodservice will become the leaders in the segment. The manufacturers that don’t start participating now will watch their competitors change the industry.
Customer experience is key
Navigating how best to do this takes some finesse, but there is a tremendous opportunity for selling to a different audience if done thoughtfully. For many food brands, DTC can be an effective product testing ground, allowing you to learn and adapt, and in many cases can become a new sales arm for your company.
For foodservice manufacturers, DTC offers more than just another revenue stream, but can help directly influence product development and market testing and act as a direct pipeline to better understand buying habits of operators. Owning a database of operators that buy direct may be new to some foodservice companies, but it’s more important as manufacturers close the gap between brands and businesses.
So what are the risks for brands and manufacturers that don’t properly implement DTC?
An experience with a brand is key to brand loyalty. For manufacturers who want to get into DTC, you must be willing to understand the operator well and create a brand experience that will delight them. All parts of the experience must be accounted for. Remember that “service” is still the key to foodservice, even in a digital world.
Also, consumers have expectations for one-click shopping and ultra-fast shipping experiences from brands that know them and have their information stored. Foodservice operators are consumers too, so naturally their patience for difficult ordering experiences and long lead times for product deliveries are frustrating. DTC gives operators an easy way to order where they're most comfortable — on their phones — and with the confidence of product delivery time.
Best practices for DTC
One of the biggest barriers to getting into DTC is the distribution of your products — especially those products that are fresh or frozen. To overcome challenges in DTC, you must master not only product and pricing, but also the ordering and return experience. Understanding the customer experience is the key.
- Just go for it. Invest in the right technology and stick with it. It takes about 3-6 months to gain momentum with key audiences.
- Start small but plan big. Implement systems that can scale, but start only with SKUs that are most popular or easiest to distribute.
- Make evidence-based decisions. Use the first-party data and analytics you get to build your growth strategies.
- Remember to put to use the ability to launch a larger or smaller case count to see if there is a better size that might appeal to your audience. Also, think about offering LTOs for a new product to excite trials and test viability.
- Build a multipack of best-selling SKUs and offer them at discount prices.
- Try out subscribe and save strategies with top-sellers and repeat customer databases.
Foodservice will always be a people business. We gather together to share and expect personal service. While DTC will continue to grow, it won’t replace some of the services and consultations from manufacturer and distributor salespeople and reps. But the search and purchase of products will become more spontaneous and buying habits will change as systems become more efficient and robust.
The key to thriving in this new economy is making the brand available in multiple purchasing platforms and making sure the experience with your brand is what you expect at every touchpoint.
Sherry Gorsich is the director of business development at CSSI, a member of the Marlin Network, the premier branding, marketing communications, culinary and experiential/insights agency network fully dedicated to the hospitality industry.