Blog Archives

Open for Giving

11/28/2015

by David Hagenbuch, Founder of Mindful Marketing

Many businesses gained positive publicity for their decisions to close for Thanksgiving in order to allow their employees to celebrate the holiday with family and friends and to encourage consumers to take a break from shopping. A few notable examples include: Barnes & Noble, Cabela’s, Nordstrom, REI, TJ Max, and Staples.

Why is it, then, that many are commending another company for doing the opposite—not only opening on Thanksgiving but promoting itself as a place to spend the holiday? It’s a small business most people haven’t heard of, but it’s certainly worth learning about: George’s Senate & Coney Island Restaurant.

Located in Northville, MI, a small suburb of Detroit, George’s Restaurant is in many ways a typical Greek diner, serving a wide variety of Greek and other ethnic dishes, as well as a deep selection of American fare ranging from lamb shank, to stir fry, to Philly cheesesteaks. Patrons seem to appreciate the restaurant’s good food, fast service, and low prices.

What really sets George’s apart, however, is what owner George Dimopoulos has done every Thanksgiving for ten years: He invites individuals who are alone for the holiday to eat at his restaurant for free for the entire day. Yes, that’s right: people who have no one else with whom to share Thanksgiving can have breakfast, lunch, and dinner at his restaurant at no charge. He announces the offer by hanging a large handwritten sign on his restaurant's front class door: “If anyone is home alone, come eat with us for free! All Day! Thurs. November 26.”

Many businesspeople likely look at Dimopoulos’s generosity and think, “That’s a great thing to do . . . if you want to lose money.” Of course, there is some truth to that criticism. For instance, last year’s Thanksgiving Day promotion attracted more than 80 lonely dinners. If variable costs like food and servers’ wages totaled $8 per meal, that’s $640 of pure expense, not offset by any revenue.

Dimopoulos is obviously a sharp and successful businessman, so why, then, does he donate so much free dining? Dimopoulos grew up in Greece as one of eight children in a very poor family that couldn’t afford to send him to school. At age 12 he left home for Athens where he lived homeless for some time, relying on the generosity of others to survive. He now believes the right thing to do is to share the fruits of his success with others who are in need, just as he once was.

On one hand, Dimopoulos’s lonely diner offer is a cash drain that makes little financial sense. On the other hand, however, the $600, $700, or more he’s giving away is a small investment compared to the goodwill and positive press he’s generated. News media all over the country have covered the story of this special restaurant and its owner, and a photo of the restaurant uploaded to Reddit has garnered almost 5 million views. It’s safe to speculate, therefore, that the eatery also has built considerable brand equity in the greater Northville area, which is likely driving some, if not much store traffic. It would be very hard to pay the same amount for advertising and enjoy similar impact.

Nevertheless, Dimopoulos doesn’t do what he does for a financial return. He gives away dozens of meals all Thanksgiving Day because he cares about people, especially those who are alone, and wants to brighten their day. As the restaurant’s owner, he’s free to be as philanthropic as he wants, which is what makes him happy.

But what about the idea of the restaurant being open on Thanksgiving Day? If big retailers like those mentioned above close their doors for the holiday, why shouldn’t a small Greek diner follow suit? The difference is that people can live without buying clothes or camping gear on Thanksgiving. They can’t, however, live without food. Sure, someone can eat and be thankful even if alone and without a special meal, but Thanksgiving is about celebrating our blessings with others in a special way, even if that’s in a restaurant with strangers.

Dimopoulos and the employees who work with him on Thanksgiving sacrifice some of their own celebration for the benefit of many others. It’s very likely, though, that those who prepare and serve the meals are blessed many times over because of their generosity.

George’s Senate & Coney Island Restaurant supports societal values such as stewardship and respect. At the same time, the kindness is not without its business benefits given the considerable goodwill the annual tradition elicits. Taken together, the Restaurant’s free Thanksgiving Day meals represent a generous helping of “Mindful Marketing.”

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No Tip for You!

11/21/2015

by David Hagenbuch, Founder of Mindful Marketing

Have you ever eaten at a sit-down restaurant and not left a tip? Most of us haven’t. Unless servers do something outrageously bad, we want to reward them for their work, which can be tedious and tiring. In the U.S. to receive good service and not leave your server a tip is either cheap or ignorant.

What should we make, then, of restaurants that have made tipping taboo, i.e., customers are encouraged to enjoy their entrées but are told not to tip? You may be thinking that such a policy is unfeasible, but tip-banning is happening at an increasing number of American eateries. While some are stand-alone stores, others are multi-location restaurants, and at least one is a well-known national chain with over 120 locations in 32 states: Joe’s Crab Shack, which is testing the concept in select stores.

Among the other restaurants that have chosen to ban tipping are two New York City sushi spots--Sushi Yasuda and Restaurant Riki, 13 NYC establishments owned by Union Square Hospitality Group, Chicago’s Alinea, and the French Laundry of Yountville, CA.

Taken together, these restaurants and many others have created what some are calling a “no-tip movement.” Although a trend against tipping may seem improbable, it’s actually driven by some compelling concerns:

Wait-staff compensation: some servers make just $2.13 per hour plus tips and rely heavily on the generosity of patrons to make up the difference between the low hourly rate and a living wage.

Back room compensation: cooks and others working behind the scenes have an impact on restaurant service, but the law prohibits servers from sharing their tips with them. Consequently, their compensation can be considerably lower than that of servers, although their work is no less important.

Many restaurants experience very high employee turnover as a result, which they certainly want to avoid. By abolishing tips they believe they can charge customers more for their food—between 12% and 21%, depending on the restaurant’s target market and normal price points. This newly-found cash flow enables the eateries to pay employees more. For instance, at select locations where Joe’s Crab Shack is testing “no-tipping” the restaurant can pay an hourly wage between $12 and $14.

As such, no tipping is consistent with and supportive of the bigger movement to increase the minimum wage of fast food workers. Some also contend that customers appreciate no tipping because it negates the need to evaluate servers’ performance and to calculate gratuity.

With all these apparent advantages, what’s not to like about no-tipping? Well, again, customers pay more for their food, as no-tipping restaurants don’t eat those extra labor costs; rather, they pass them onto their patrons. One also must consider that restaurant food is taxable, which means even higher costs for consumers in a no-tip context. Of course, if the combined price increase is at the lower end of this range (15-20%), the net effect is pretty much neutral, as most people would tip those percentages anyway.

There’s also the argument that tips encourage wait staff to provide better service. That’s probably true; however, how then does one explain the good service that millions of other employees provide who are not similarly incentivized? It’s likely that motivation to serve others well is largely intrinsic, i.e., based on desires to help others and to be a nice person. Furthermore, there is also the extrinsic motivation that nearly everyone has to perform their job well in order to remain gainfully employed and/or to advance in their organization.

Speaking of motivation, some restaurants are rumored to take a no-tip approach simply so they can expropriate servers’ earnings for themselves. Such is the charge levied at Joe’s Crab Shack, which “has been experiencing slowing traffic, with sales and revenue taking a hit in the third quarter.” However, Raymond Blanchette, president and CEO of Ignite Restaurant Group which owns Joe’s Crab Shack, contends that the new compensation structure will lead to a better trained workforce and to higher employee retention, which stands to benefit both wait staff and the people they serve.

So, are no-tip restaurants Mindful? Maybe. The practice could easily be considered Single-Minded, if the particulars of the approach are unfair to wait staff. Or, the strategy might be seen as Mindless if in addition to being unfair, higher food prices deter diners. While the tip/no-tip issue seems rather straight forward on the surface, it becomes surprisingly complex when one considers the different impact on the various parties involved.

In the end, both tip and no-tip restaurants can be credited with “Mindful Marketing,” provided that their business models provide appropriate value to all parties, namely employees, restaurant owners, and consumers. In other words, both approaches have the potential to be fair to and respectful of all those involved in the dining experience.

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Christmas Cup Controversy

11/14/2015

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by David Hagenbuch, Founder of Mindful Marketing

You’ve heard of the corporate coffee choice that has lit up social media like a Christmas tree. Starbucks’ shift to plain red cups for the holidays has elicited emotions ranging from apathy, to amusement, to anger. Of course, the question I’m pondering is whether these red cups represent Mindful Marketing.

First some background: For many years, Starbucks has replaced its traditional coffee containers with holiday-themed ones for the final two calendar months. Past images have been rather innocuous, for instance: snowmen, reindeer, snowflakes, carolers, etc. Other than one cup that included a Christmas tree, the graphics have been rather generic and not directly connected to Christmas.

So, when Starbucks reprised its holiday tradition just a couple weeks ago, some were surprised that the new cups contained no images. Instead, they utilize a simple, unadorned red coloring that’s brighter toward the top and darkens as it declines to the base. Other than the seasonal color, there’s no connection to Christmas or any other holiday.

When most restaurants alter their paper products no one notices, or at best the change prompts mild curiosity, e.g., “What’s different about this?” or “I wonder why they changed these.” As suggested above, however, some reactions to the new Starbucks’ cups have been severe, such as those claiming that Starbucks hates Jesus or that the company aims to take Christ out of Christmas.

In the meantime, one of Starbucks’ biggest coffee competitors, Dunkin’ Donuts, has introduced its own holiday cups, which are comparably more festive. Dunkin’s white cups feature the word “Joy” in large letters, encircled by evergreen branches. For some, the Dunkin’ design coveys more of the spirit of the holidays; although, it’s hard to claim that even this cup points specifically to Christmas. While joy is a term that has unique, positive connotations for Christians, it’s also a sentiment shared by many others, including those with no faith commitment.

So, the key issue remains: whether Dunkin’ Donuts and Starbucks should serve coffee in cups that more clearly connote Christmas. Here are some potentially helpful questions to consider in discerning the dispute:

What specific religious responsibilities do publicly held companies like Starbucks Corporation and Dunkin’ Brands have, given that they answer to a wide variety of stakeholders who represent many different spiritual commitments as well as nonreligious perspectives?
How would Christians feel about drinking coffee from cups that contained images from other faiths, e.g., Islam, Buddhism, etc.?
If companies could sell more coffee by simply imprinting their cups with explicit religious images (e.g., a cross, Shield of David, crescent moon and star), would we want them to do so?
Is it right for companies to profit from the gratuitous use of religious images?
Is it respectful to place religious symbols on common consumables, including paper packaging that’s impertinently discarded?
To what extent should the faithful look to commercial products for their religious inspiration?

Answering these questions can easily lead one to conclude that it’s not essential for either Dunkin’ or Starbucks to promote Christmas on their coffee cups. In fact, in some ways doing so may be undesirable.

As such, it’s hard to call Starbucks’ plain red cups ineffective marketing. Although some reactions have been harsh, most people seem to downplay the decision, while some even embrace it. Furthermore, the considerable publicity the story has spawned will likely cause the coffee retailer to be even more top-of-mind, increasing sales and adding stakeholder value.

Similarly, it’s difficult to say that Starbucks’ decision has compromised societal values. In fact, in keeping with the questions above, Starbucks’ red cups might be viewed as showing respect to more people, including Christians. An increase in stakeholder value and support of societal values, therefore, makes Starbucks’ strategy look like “Mindful Marketing.”

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Deciding Not to Photoshop

11/7/2015

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by David Hagenbuch, Founder of Mindful Marketing

Most people want to look their best. Yes, at times we don’t care as much about our appearance, but usually we want to look more attractive, not less; so, we wash our faces, comb our hair, put on clean clothes, etc.

In the digital age people are often seen more in pictures than in person, which creates unique opportunities to enhance attractiveness. Even those with little digital experience can use photo-editing software for simple touch-ups, like erasing skin blemishes, and those with advanced graphic skills can transform personal appearance better than a plastic surgeon.

This ability to digitally alter can be especially enticing to marketers whose success depends on the attractiveness of the people promoting their products. Most of us would be amazed to learn how many advertising images we see daily, including those of people, that have been digitally enhanced. While most of that retouching is imperceptible to all but those who do it, sometimes the alterations are not only obvious but obnoxious.

For instance, the actress, singer, and dancer Zendaya recently criticized the digital fashion magazine Modeliste for slimming her legs and torso in images the publication used. Similarly, some perceptive people noticed that an advertisement for Huggies’ Little Movers Slip-On Diapers contained a picture of a toddler whose legs appeared to have been airbrushed in order to create a thigh gap!

Such digital manipulation is disturbing to many, particularly to those who lament the unrealistic standards that our society often places on people to look a certain way. It can be refreshing, therefore, to hear of opposite occurrences, i.e., instances in which the temptation to photo-retouch is rebuffed: case in point, Kate Winslet.

Winslet is the English actress who gained international fame for her starring role in the 1997 epic film Titanic. She’s also received accolades for a variety of other dramatic and comedic work, which resulted in Academy and Emmy Awards. Like many other celebrities, Winslet also earns income as a commercial spokesperson. More specifically, she’s become the face of Lancôme, the French luxury perfume and cosmetics maker.

The market for cosmetics is a large and competitive one, with major global players like L'Oréal (Lancôme’s parent), Procter & Gamble, and Unilever posturing for a bigger piece of world-wide revenues estimated at over $260 billion and growing. Of course, in an industry based on beauty, looks really matter, hence the desire to gain endorsements from some of the world’s most recognizable and attractive faces, like Winslet's.

Some firms, however, have felt that extraordinary natural beauty and carefully applied cosmetics aren’t enough for their ads, so they’ve digitally enhanced their endorsers, sometimes to the chagrin of their customers and others. One such controversial case involved actress Julia Roberts, whose naturally pretty face was graphically enhanced in an ad for, of all things, Lancôme cosmetics.

It’s especially interesting, therefore, that Winslet has declined digital alteration of her own Lancôme ads. In fact, no photo-retouching is reportedly a clause in her contract with the cosmetics company. Why does Winslet take this surprising stance? She feels an obligation to the generation of younger women to be a transparent and truthful role model: “We're all responsible for raising strong young women, so these are things that are important to me.”

Winslet’s principled approach is likely a function of her own unfortunate experience: As a young girl she was teased about being overweight. As a result, she realizes how important it is for others to be accepted for how they look. Of course, some may argue that make-up is itself a way of artificially altering appearance. There seems to be a difference, however, between using cosmetics to accentuate ones natural features and using digital technology to significantly alter them.

Winslet’s rejection of photo-retouching seems to support societal values such as honesty in communication and respect of personal differences, but is her choice effective marketing? Since 2011, revenues at L'Oréal (Lancôme’s parent) have risen by 10.7%, while gross profit has experienced a very similar increase—10.6%. Of course, Winslet’s impact on these numbers may be minimal; still, the corporation’s success is one positive sign.

Meanwhile, revenues for Mattel’s iconic and unrealistically beautiful Barbie doll have declined: “sales dropped 16% in 2014, marking Barbie’s third consecutive year of falling earnings”—results that some attribute to society’s appetite for more authentic and real role models.

In short, Winslet’s approach to marketing make-up seems to be both effective and ethical, making it a cosmetics case of “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix and Mindful Meter.
Check out Mindful Marketing Ads and Vote your Mind!

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Open for Giving

No Tip for You!

Christmas Cup Controversy

Deciding Not to Photoshop

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