On Saturday afternoon, the management team of Ruth’s Chris Steak House in Ann Arbor, MI had a bad case of indigestion.
That’s because they faced a week of giving 50% discounts on every check.
Read on for the explanation and marketing analysis, but first the headline.
This is why you need Marketing Discipline. Strategy first, then tactics.
Ruth’s Chris Steak House (Ann Arbor, MI) decided to implement a sports marketing promotion tied to the local University of Michigan football team.
Beginning with Saturday’s game and running for the rest of the season, the upscale eatery would offer percentage discounts equivalent to the Wolverines’ margin of victory. For example, a 17-point win would mean a 17% discount.
The “Score Big” promo would be in effect, after the game, Sunday through Thursday.
Michigan beat Rutgers 78-0.
Some people expected a 78% discount, because apparently, the original Facebook post did not cap the promotion at 50%. SB Nation obtained the following version of the post and shared it on its Twitter account.
Did Ruth’s Chris change its promotion rules?
Maybe, but it’s not clear.
The time stamps of the two posts don’t make sense (the original version seems to be later than the modified version – could be due to time zone), but Ruth’s Chris clearly acknowledged a problem with its original post.
Regardless, Ruth’s Chris had to cover their proverbial backsides. That’s understandable. Given the potential confusion, perhaps they should have gone ahead and covered a 78% discount this week and then instituted the 50% cap starting the next game.
In a previous post, I shared “4 Keys to Sponsorship and Sports Marketing Success,” using an example from the Ashley Furniture HomeStore in College Station, TX.
The prerequisite to those four keys is that a marketing strategy is in place, and the sponsorship/promotion is a tactical output of that strategy.
Marketing Discussion & Assessment
Brand Positioning. Ruth’s Hospitality Group (RHG), which franchises the Ruth’s Chris Steak House brand and also runs company-owned restaurants, defines Ruth’s Chris Steak House as a “premier upscale steakhouse brand.”
Marketing Strategy. RHG defines its “marketing efforts” this way:
“To increase restaurant sales by attracting new guests, increasing the frequency of visits by current guests, improving brand recognition in new markets or markets where it intends to open a restaurant and to communicate the overall uniqueness, value and quality exemplified by our restaurants. The Company uses multiple media channels to accomplish these goals and complements its national advertising with targeted local media such as print, digital media, radio and outdoor billboards.” (Source: RHG 2014 Annual Report)
In the case of Ruth’s Chris in Ann Arbor, it’s not clear if the restaurant, which is a franchisee, developed this promotion in sync with a clearly defined marketing strategy and plan.
Consider the restaurant’s July 2016 promotion.
The restaurant, which opened in May 2015, celebrated its one-year anniversary by offering a free 8-oz. petite filet mignon to anyone with a legal name of “Chris” or a close variation. The general manager explained the strategy:
“We have loved bringing this excellent steak house legacy to the Ann Arbor community, whom we’d like to thank for a fantastic first year. We thought this promotion would be a fun and unique way to pay it forward.”
It’s debatable whether a free-food promotion is consistent with the proper brand management of a steakhouse the company says is “focused on the upscale dining segment.”
It’s also debatable whether the victory margin-check discount promotion fits with the upscale steakhouse brand positioning.
Since we don’t know the local restaurant’s objectives, let’s analyze the football promotion against RHG’s corporate marketing objectives.
- Would the football promotion attract new guests? Out-of-town game-day visitors mostly won’t be around Sunday through Thursday, so local residents would be the target. The steep discount might incentivize new customer trial, although conversion to repeat dining would be unlikely. That’s because high-end steakhouses are expensive, and are probably considered as more of an infrequent, dine-out treat. If the promotion were valid Saturday night, perhaps the restaurant could tap into visiting fans and alumni.
- Would the football promotion increase the frequency of visits by current guests? Yes, the steep discounts could very well achieve this during the rest of the football season. But, do consumers want a hearty steak meal every week?
- What about “improving brand recognition in new markets?” The Ann Arbor Ruth’s Chris was well into its second year of operation. Only they know if they were falling behind in restaurant traffic and/or sales due to a lack of awareness. And, if so, there are other marketing tactics to consider.
- Finally, what about the marketing goal to “communicate the overall uniqueness, value and quality exemplified by our restaurants”? Hmm. Sorry, the free food and high percentage discounts don’t fit with the positioning of a “premier upscale steak house.”
Finally, even if we give the Ann Arbor team a strategy benefit of the doubt, there is a tactical activation error, especially with the timing of the promotion. Someone didn’t do a good job with their homework.
Prior to Saturday’s game, undefeated Michigan won its first five games by an average margin of 32 points. They won their first four games by an average of 38 points. Coming into the Rutgers game, Michigan was ranked fourth in the country (USA Today Coaches’ Poll). And Rutgers lost the week before to Ohio State 58-0.
Granted, there may have been an expectation of stiffer conference opponents for the balance of the season, but Ruth’s Chris management had fair warning. They should have been, and maybe were, planning to honor discounts in at least the +20% range, and maybe higher for some of the games.
Note: On Sunday morning, Ruth’s Chris posted this statement on Facebook: “As of now, we are fully committed with reservations through this Thursday for the Score Big promotion with no additional availability.”
Word to the wise. Promotions that change product or service price, especially on an event dependent, variable scale, can be tricky and financially destabilizing. Do your homework, and make sure to develop and follow a strategic plan. Sometimes event insurance is required. Of course, the best marketing discipline can’t guarantee winning, but at least it should prevent you from fumbling the game away.
Harvey Chimoff is a versatile marketing and business team leader who believes good marketing sells. Contact him at StratGo Marketing, a “nuts and bolts” strategic marketing resource.