After several years with QSR chain Church’s and contributing as CMO to five consecutive years of same-store-sales growth leading to the company’s profitable sale in 2009, followed by her taking a bit of time off for world travel and reflection, Farnaz Wallace has embarked on a bold new endeavor: Farnaz Global.
Farnaz is speaking, writing, and advising others about how multiculturalism is changing the population and how businesses can most profitably serve these new customers. Farnaz calls it the New World Marketplace, and here’s what she had to say about it:
What is the biggest news that restaurant and foodservice companies need to be aware of with the 2010 Census Data?
The biggest news is that it’s now quantified: one in six Americans and one in four of all newborns are Hispanics. Also multi-racial growth: 9 million Americans check more than one race category, which is something that has not been seen before. Asian population growth is surpassing African American growth, and African Americans are migrating into the suburbs. These changes speak to how the American landscape is changing and how Americans feel about themselves and what they think their racial composition currently is.
What inspired you to create your business around multicultural marketing?
Church’s had a lot to do with how I chose this path. Church’s general market audience was multicultural. Not necessarily by choice, but by distribution, because Church’s restaurants are primarily located in areas where they had a high concentration of Latinos and African Americans, so their core target was multi-cultural, lower income. That turned out to be a huge strategic advantage because that’s where the population growth was, so it was definitely a recipe for success: a growing target and good differentiating products.
My philosophy in business and strategic branding is that you are going to have to spend days and nights in the life of the customer. The 16 years that I was there, I was completely immersed in the customer culture and lifestyle. I loved it. I was very passionate about it. I’m an immigrant myself, so I’m very multiculti to begin with. Working with incredible researchers and agencies to better understand the cultures, motivators, and needs of the consumers, I realized that there is a lot to be learned in that area that no one is talking about. So when I exited Church’s I took about 9 months off to quiet my mind, and I did a lot of research, from March of last year to August when I planned and launched my business and my website, all I did was reading, research and writing. The more research I did, the more I realized that people out there are not really talking about this stuff. No one is really talking about the myths, biases, and prejudices that stop corporations from tapping into this incredibly profitable growth market.
It was definitely a niche that wasn’t tapped. I was already very, very passionate about it, and I already had 16 years of experience, so I was like well, this is what I need to get into. Have you ever heard of the 10/ 20 rule where if you only had 10 years to live, are you doing whatever you want to do in 20 years from now? When I had to answer both those questions, I saw this is exactly what I do and where I need to be.
What are some of the lessons you learned at Church’s about what works or doesn’t work with multicultural marketing?
My experience at Church’s coupled with what I’m doing now is proved that you really need to understand the customer from an emotional standpoint, and how they laugh, love, play, and what they fear or resent because it really boils down to values, causes and beliefs… and unless you truly spends days and nights in the life of your customers and understand them, you’re not going to get it. You end up doing these event sponsorships for Cinco de Mayo and African American History month. Quite frankly it comes across as a bit insulting, as if African Americans only live 28 days out of the year.
People still look at it as segmentation, that this is the percent of the population that we are going to allocate this percent of the ad budget to, and what they are missing out on is that this is the new normal. This is the new world marketplace. This is your new general market, and you are going to have to treat the multicultural and the multiracial market completely as the rule and not the exception. Until people really embrace that paradigm, I don’t think they are going to have a profitable value proposition in the next three to five years.
How do restaurant companies know where their core target is? Is it drawing a circle on the map around where they are located?
As far as restaurants, for QSR, yes, it’s all about convenience and their immediate trade area. They can look at the demographic in a two-mile radius. Even companies with a small ad budget will have demographic information based on the 2010 census. Number one, make sure that you update your demographic information in your trade area based on the 2010 census data because what a lot of companies are looking at is still old data. You’ve seen some of the stats in my blog. There is a significant difference. People have this misconception that African Americans live in the inner cities. You will see in the 2010 census data that there is a big huge migration of African Americans to the suburbs. For a lot of full service or casual dining, your trade area is a lot larger because you are not just about convenience. So they are going to have to have different methods to find out about who is coming in and who are the potential customers. In fine dining restaurants in, say, Lower Greenville [Dallas], they are drawing customers from say 10 to 15 miles out, so they may have a different strategy about who they want to go after… restaurants particularly have an advantage over other industries in terms of trade area knowledge. If you look at c-stores where they get a lot of commuter traffic and drive by traffic, then you really have to get into check imaging and capturing credit card usage to see who is coming in and who is not.
What are some examples of companies who have done a good job with understanding the customer?
Southwest Airline. Enterprise Car Rental. Apple. Google. Honda. How did Southwest Airlines succeed? The CEO of Southwest airlines, literally for five plus years, became the customer and traveled and traveled and came up with a value proposition that I’m going to be the fastest and cheapest on short haul, door-to-door flights, but it’s going to have some tradeoffs and the tradeoffs will be I’m not going to check bags, and I’m not going to give you seating assignments, but I will give you these benefits. I think taking that strategy a little bit broader and talking to restaurants, you have to figure out what differentiating benefits you can give the multicultural customers, including the tradeoffs because you are not going to able to give them everything. You have to ask what are they willing to give up to get the benefits… your differentiating value proposition… in the case of Church’s, they were willing to give up playgrounds or toys in the kids meals, since kids ate from the same family box. If we wanted to provide high quality, low price, there were certain tradeoffs we had to make, since more than two-thirds of products were commodity. And we wouldn’t have known all that if we weren’t willing to spend days and nights in the life of the customer, doing the type of qualitative research that supports that, including ethnography research, where they actually go into people’s home and spend hours with them and dig deep into the values, needs, causes… benefits and trade-off analysis. Those things are really important for restaurant companies to consider.
How did you get to know your customer at Church’s?
I spent days and nights in the life of them, whether it was ethnography research or whether it was parking the car at 8 pm on a Friday night in front of the busy store. I spent time in their neighborhoods. I shopped at places where they shopped. I actually made my entire marketing team become a customer profile and character, and I had them spend the weekend in the life of that customer for several weekends in a row, to shop where they shop, go to the clubs that they go to, listen to the music that they listen to, eat the food they eat, and completely immerse in their life. How can you possibly market to the customer if you have no idea who they are and how they live? Otherwise you are making all these decisions in a vacuum from your own lens and your own perception and your taste buds.
How do you think that the new world marketplace impacts executive recruiting in the restaurant and food service industry?
I think the current market faces big ramifications with lack of multicultural representation in their senior executive team. That’s why we end up with most companies translating their general market advertising in Spanish, versus truly understanding the cultural frameworks with this profitable growth target.
The challenge most organizations face is in finding, recruiting and placing multicultural talent. Yes, of course, the recruiting side of the business plays a huge role in this new game. Restaurant and food service industry have a good representation of the new world marketplace at the restaurant level, but they truly lack this inclusion in their senior Ops team….sadly, almost non-existent in their senior executive team. And where do you think decisions are being made?
Here’s the brutal fact: people see what they want to see, and people believe and hear what they want to. Companies can design and implement research that will support their own hypothesis… it all depends on which customers they ask, and what questions they ask. Do they really want to know the answers, if it negates their old strategies? Can they forsake their old orthodoxies, myths and biases? Unfortunately, they will continue to do so until they become irrelevant in the new world marketplace and start losing profit share.
The corporate culture in the US needs to change. I think the recent 2010 census data has certainly peeked corporate attention (yesterday I received advertising for cosmetic lines referencing the new census data and their new lines for Latinas and multiculti customers… ha ha)…. But, I think it will take all of us, specially media and executive recruiting firms, to truly push the issue. Not just from a social standpoint, but from a sales and profit standpoint. Even more so, I think the corporate culture in the restaurant industry needs to change. As long as CEOs and C-suite team continue to believe that lack of multi-and-cross-cultural leadership is irrelevant in connecting with this future profitable growth, the chains will continue their desperate price tactics to swap shares from one another….and struggle with their long-term sustainability and relevancy.
Bottom line: It’s a business imperative. Why would you want to ignore this profitable growth market?
If you want to dig into a whole smorgasbord of interviews with interesting, game-changing restaurant executives, check out the archive of Executive Chats on my blog Rebecca’s Café. If you have something you want to chat about, email Rebecca.firstname.lastname@example.org. If you want to assemble a team of restaurant executives whose prospects for world domination are on par with the 2011 Philadelphia Phillies pitching staff, email Rebecca.email@example.com.