The high cost of business in California is nothing new – the Golden State is notorious for high operational costs. Already, businesses were grappling with supply chain disruption, the rising cost of materials, and skyrocketing customer acquisition costs.
Now, California’s wage increase to $20 per hour for fast food workers has further compounded these challenges.
How are businesses responding, and what else can they do for long-term sustainability?
Fast food businesses are already pressed to offer customers fast, flexible service. They tend to be open longer and later than full-service restaurants, with some even open 24/7 – meaning more hours of labor coverage. A minimum wage increase creates a lot of impact on QSRs.
Faced with these rising costs, QSRs have had to reconsider their financial strategies, with some choosing to leave the California market altogether.
Many have responded by increasing their menu prices. According to a report by Kalinowski Equity Research, large chains like Wendy’s, Chipotle, and Starbucks have hiked prices from anywhere between 2 and 8 percent.
This strategy can only go so far though, as consumers may already be at their limit. Technomic’s Future of LSR Consumer Trend Report found that a $1 increase in menu prices could deter about one-fifth of consumers from ordering fast-food or fast-casual meals.
Others have opted for staff reductions. Two major Pizza Hut franchises eliminated delivery driver positions, instead announcing they would rely on third-party delivery services. Others still are cutting employee benefits, reducing hours, or investing in kiosks to reduce the need for human labor.
Right now the wage increase only applies to fast-food employees, but legislation could lead to similar increases across C-stores, FSRs, and others.
QSRs need a strategy that provides enticing offers that attract new and returning customers without compromising margins.
One solution that has grown in popularity with brands is to turn their self-funded offers into supplier-funded offers. For example, if offering “FREE FRIES” is your best-performing acquisition offer, rather than raising prices and lessening the offer to make up for the margin loss from wage increases, have your suppliers pay for the cost of the offer.
We recognize that not all suppliers are set up this way. Through Mobivity’s Connected Rewards, we turn a brand’s owned media into a form of currency that increases engagement, acquisitions, and foot traffic – all without increasing the marketing budget or eroding margins.
How It Works
With more than ten years of collecting and analyzing transactional and behavioral data, Mobivity has learned that the secret to getting new and existing customers to respond with higher engagement levels is to tap into where they are already engaging.
As it turns out, 70% of the QSR market is engaging with casual mobile games. We’re not talking about the stereotype of teens playing Xbox in a dark room! We’re talking about everyday people playing games like Solitaire, Wordle, and Match 3 games or solving puzzles like Sudoku, Ball Sorter, and Crosswords.
Casual mobile gamers represent the majority of us. And it’s the number one mobile activity we choose to do, even over social media or texting.
Through Mobivity’s large network of mobile game developers and relationships with restaurants, retailers, and convenience stores, we use our Connected Rewards platform to connect brand offers to the mobile gameplay of popular casual games. The result is brands see increased engagement and margins on their regular offers.
Mobivity does this by promoting a popular mobile game that catches your audience’s attention and ties your brand offer to the download and play of that mobile game. For example, download and play a game like Monopoly Go and get a free slice of pizza. Every time a person redeems the offer, Mobivity covers the offer cost of the redemption by reimbursing the brand.
Good For Your Budget
When you leverage the Connected Rewards to promote mobile games in your owned channels, you’ll earn reimbursement dollars on each redemption. The larger your owned marketing channels are, the larger your reimbursement checks will be. Imagine getting a 5 to 6-figure check every month for driving more engagement and orders.
Reimbursement dollars can be used any way you like. For example, they can be used toward offsetting higher labor costs, increasing margins on offer costs, or even applied to new customer engagement.
Whether promoting through your brand channels like loyalty programs, email club, text message club, or all of the above, brands can start monetizing their owned channels in a way that has substantial commercial value without increasing marketing spend.
Good For Performance
After two years of running Connected Rewards in mid-sized to large national chains, the results for brands, game developers, and consumers have been even better than expected. Simply promoting mobile games with brand offers through Connected Rewards has shown a 22% lift in redemptions on average compared to the same offer where no game was promoted. That’s not the only benefit.
As a recent example, a QSR brand looking to re-engage its lapsed users added a game promotion to their regular offers through Mobivity’s Connected Rewards and saw 54% of the redemptions came from customers who hadn’t responded to any offers in more than 90 days.
Another brand saw the game promotion drive 13% more offer opt-ins to their loyalty program and 20% fewer opt-outs compared to promotions that presented the brand offer alone.
Good For Consumers
By offering high-value, brand rewards to mobile game players as an incentive for downloading new games they’ll love, consumers show greater affinity and loyalty towards the brand, driving up customer lifetime value!
Consumers are impacted by rising costs too, and deals have a significant influence on their purchase decisions: 60% of consumers report looking for more coupons, discounts, and deals to offset higher prices. Rather than shifting the financial burden to consumers through price increases and risking traffic declines, Connected Rewards provides financial relief for brands and consumers alike through our reimbursement model.
By giving them an offer they just can’t refuse, you can attract more unplanned foot traffic to brand locations. As consumers bring their friends and family with them, that’s even more purchases!
As California's food service industry has faced unprecedented challenges over the last few years, there is finally a brand and consumer-friendly solution that doesn’t require you to buy a new technology or spend more money.
Mobivity’s easy-to-execute program makes for easy adoption, as it aligns with how brands are already marketing. By adding mobile games through Mobivity’s Connected Rewards, you not only tap into a new source of highly engaged users, but you also tap into a new revenue source to increase the profitability and efficacy of your marketing program. It’s a no-risk, win-win strategy for all parties.
Ready to get into the game? You’re just 30 minutes away! Connect with a brand strategist to see how it works.