The following is an excerpt from Paul Barron’s new book, “The Chipotle Effect,” slated for publication in 2012. Visit the website to get the full copy of “The Chipotle Effect.” Reprinted with permission by the author.
The number of power users who rely almost exclusively on mobile computing for their computing needs is booming. Apple has sold more than 60 million iPhones worldwide, while Google’s free Android OS is experiencing year-on-year growth of more than 800% across 60 devices in over 40 countries. Smart phones have tipped the balance of information in the consumer’s favor, allowing users to use Twitter, GPS data, and review websites to find restaurants with the characteristics and reviews that suit them and to post their own opinions in real time.
More and more, any restaurant chain that does not have both social media and mobile media strategies is working from a severe competitive disadvantage. On the other hand, operators who know how to leverage the platform can use it to power growth. One example is the now-famous Kogi Korean BBQ truck. Beginning in 2009, the operators of the single Korean-Mexican fusion mobile diner got the idea to begin promoting their food via Los Angeles bloggers and then on Twitter. As word got out about the quality of Kogi’s food, they began advertising the location of their truck exclusively by tweet, ensuring extensive retweeting. As a result of this social buzz, hundreds of hungry Angelinos would often show up at the truck’s location even in the wee hours of the morning. Today, Kogi has five L.A.-area trucks and has just opened its first sit-down establishment, but more importantly, they launched the Food Truck phenomenon now booming in cities like Washington, Miami, Chicago, Austin, and New York.
Much as fast casual completely upended the public’s perception of what quickly produced food could be (better than rewarmed fast-food and cheaper than a sit-down café), the Food Truck movement has taken what were once seen as mobile greasy spoons and turned them into “street cuisine” with high levels of authenticity and local flair. More and more cities — from Springfield, Ill. to Alameda, Calif. — are clearing the regulatory paths for mobile dining, providing consumers with yet another means to get fantastic, fresh food on a budget—while mingling with a local crowd.
We have entered the era of the two-way fast-casual relationship. No longer can restaurateurs assume that the one-direction dynamic of “we make the food, you eat the food” is acceptable to consumers. This is an interactive business now. The new era of mobile technology has emerged as the most intimate means for consumers to experience restaurants and retailers of all types. By using the myriad available tools wisely and actively, companies can connect with their customers and develop word-of-mouth relationships in ways that would have taken weeks or even months in the old world.
In this new dynamic, local is everything. Tapping into location-based media is the long-sought Holy Grail of the restaurant industry. Google has taken its shot with Google Places, its local business search engine. Social media plays a major role in this as well. But the real question is this: “With all the noise, how do I break away from the pack in my own market?”
Foursquare has provided one path to this. With their fast, furious adoption of location-based services (LBS) like Foursquare, consumers have shown by their actions that they are willing to divulge their whereabouts in return for learning more about local businesses. Foursquare launched in 2009, created by Dennis Crowley and Naveen Selvadurai as a location-based social network for mobile devices such as smartphones. Users “check-in” at venues they frequent such as bars and restaurants using either a text message, website, or mobile app. The more often a user frequents a location, the greater his or her status within the network.
Users can leave “messages” on the network about certain locations and find their friends in geographic space, making Foursquare a powerful tool for real-time dining decisions. Due in great part to this relatively seamless integration with “meatspace,” the company in 2011 passed seven million registered users and has a valuation of about $600 million. It’s likely that Foursquare will shift their model soon and transition the value of mapping most of the global restaurant map and where people go with a more Yelp-like system. I also expect consolidation in LBS to the big three in Facebook, Twitter, and Google in the future.
This kind of tightly integrated, highly practical, local social networking and contact with consumers is on the path to a new kind of popularity. I foresee in the near future that the ways that local networks will most benefit restaurateurs will not be the traditional advertising channels but mini food networks that focus on what’s the best of what’s around us. For example, Gilt City is Groupon based on luxury. Lockhart Steele may be local’s great visionary with his empire of food, fashion, design, and real estate: Eater.com, Racked.com, and Curbed.com. Thinkers like Steele are transforming how we think of local — taking it hyper-local. Consumers know what they know, and they know what’s in their towns and neighborhoods. These new apps, social networks, and technology platforms respect and empower that knowledge. The next step for evolving your business should be an all hands on deck discussion and action plan around Local-Mobile-Social.
Want more? Read last week’s post, “How Chipotle tapped into a fast-casual gold mine.” And check back next week for another selected chapter from Barron’s new book, “The Chipotle Effect.”