A famous New York City restauranteur – Danny Meyer – has become something of both a hero and a pariah because of how he’s attempting to transform his industry. Meyer first appeared on my radar screen when Dave Richards bought me his book, “Setting The Table,” a number of years ago.
In the book, Meyer talks about the mindset, architecture, and preparation it takes to launch a successful eatery – staffing, training, décor, service, and of course, the content – the food. Yes, the book reads much like what it takes to launch a new radio station.
Meyer’s Union Square Hospitality Group of restaurants are some of the best in the business. And Meyer has gone on to become a celebrity spokesman for the restaurant world, while creating the immensely popular “Shake Shack” chain – analogous to creating a new radio format.
So, when he makes a bold move, you can bet everyone in the business is paying attention. And recently, he’s been challenging the entire system of how restaurant food is priced and how his servers and staff are paid.
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He’s moving his restaurants to a “menu pricing” system – which is a more complicated way of saying “no tipping.” Meyer claims that no gratuities translates to a fairer system. Of course, it means a higher-priced menu, but a more honest approach.
As Meyer notes, “People are just as important as food.”
But to change a system that’s been part of people’s lives since the first time they walked into a sit-down restaurant, a little education – and a lot of hand-holding – is required. That has meant teaching (and convincing) his staff, and communicating the same message to his diners.
It’s not an easy task to fix or change an entrenched system that’s been in place for decades. But when an ecosystem is in need of different thinking, it requires courage, commitment – and patience – to pull it off.
And that’s why Meyer’s tectonic shift in the restaurant business should be of more than passing interest to radio sellers, managers, and owners. Because the current system hasn’t really changed since Cousin Brucie, Wolfman Jack,and Wally Phillips ruled the airwaves.
We schedule as many commercials as possible into clusters, and we call it good. In PPM markets, those spots are crammed into just two stopsets – to maximize “meter retention.” But as we noted in yesterday’s post, that business model is being challenged and even undercut by subscription radio services, audio streams, and other alternatives consumers – and advertisers – are adopting and enjoying.
Meyer isn’t just championing a new restaurant compensation architecture – he’s launching a new paradigm that he believes has value. And his “no tipping” venture reminds me of a couple of radio initiatives that are doing very much the same thing:
Challenging the status quo by providing proof of concept.
And it’s a heavy lift. The first of these is a new effort by Suzanne Grimes, president of Westwood One, along with Nielsen. The “ROI Guarantee” initiative utilizes some of the protocol that Jerry Lee (profiled in yesterday’s post) has espoused: pretesting creative, bolstered by Nielsen measuring a campaign’s return based on its ad spend.
And at the end of that process if ROI falls short, “Westwood One will run no-cost supplemental media weight sufficient to deliver the guaranteed ROI.” That’s directly from their press release.
Grimes, along with Nielsen, is convinced radio can buck advertiser perceptions and deliver results. Like Danny Meyer’s initiative, it’s not just about Cumulus or her network – a positive result will “lift all boats” – in this case, the radio industry. It’s a bold plan that hopefully marketers will test drive.
But like anything new, it comes with obvious risks.
Speaking of which, what about cutting your spot load in half and limiting your commercial breaks to just two minutes? And then guaranteeing it.
It’s not a guarantee – it’s a promise. And like Westwood One’s maneuver, KNDD/Entercom Seattle felt the need 3+ years ago to go big or don’t bother. The End – as the station is best known as – was listing in the ratings, dragging in sales, and showing signs of distress. That’s when market manager Jack Hutchison and VP programming & ops Dave Richards went all in on the creation of “The 2 Minute Promise.”
From there, PD Leslie Scott and her on-air, programming, promotion, production, and digital teams went to work solidifying and positioning this very different concept to a skeptical, jaded audience that had frankly already suffered through many changes and iterations on The End since its birth in the early ’90s.
Unlike Westwood One which is still in the early stages of determining the efficacy of their “ROI Guarantee,” The End has already enjoyed strong results – in the ratings and in sales. Pre-#2MP, the station was hovering in the high teens in 18-49 year-old adult rankings – not a good spot for an Alternative station. Just six months into the initiative, they were in the Top 10. And these days, it’s not uncommon for them to be in the upper echelon of their target demo.
The chart below tracks KNDD’s growth since #2MP was launched (red line). The station’s ratings trajectory has been on a steady uptrend since the initiative hit their air.
There’s been sales growth as well, but as Jack Hutchison points out, maximizing these great ratings with a limited inventory is a tall order and an arduous task. It requires creative sales approaches, as well as connecting with sponsors and advertisers who “get” the unique commercial environment The End has created.
Sean Pollock serves as the station’s “Millennial Marketing Specialist,” and he’s tasked with making the case that a small spot load and a clean commercial environment is more conducive to longer listening and better results – including the perception that End fans actually listen to the commercials. They’ve put together compelling videos that tell the #2MP story – and they’re persuasive.
But you’ll notice there aren’t a dozen other stations around the country – or even in the Entercom group – adopting this tactic. Like Danny Meyer’s “No Tipping” strategy, you’re probably not dining at restaurants bold enough to launch a game-changer of this scale and risk. Like those Olympic dives with a “high degree of difficulty,” these initiatives aren’t for the mild, the meek, or the followers.
So what do Danny Meyer, Westwood One, and The End have in common?
They believe in their industry. They believe in their brand. They believe in the value of their product and service. They believe in change.
And they believe there’s a better way.
So much so that they’re willing to take a make a big commitment and take an even bigger risk in order to demonstrate the efficacy of their idea.
As Danny Meyer has proved throughout his career, there is no one way to run a restaurant.
And there’s no monolithic way of selling spots, setting advertising limits, or designing clocks.
Anybody in radio could do this, but few actually will.
At a time when the industry needs to step up and find new, different, and innovative ways to skin that commercial cat, who else will walk up to table and go “all-in?”
And remember, no tipping.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,000 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
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