Leader Spotlight: Managing a portfolio of unique brands, with Kevin Nemeth

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Kevin Nemeth is Chief Digital Officer at Authentic Restaurant Brands. He has over 20 years of experience in digital roles across a variety of verticals. Prior to Authentic Restaurant Brands, Kevin was Head of Digital for Popeyes at Restaurant Brands International, where he created and launched the company’s first loyalty program and spearheaded all things digital. Before that, Kevin held senior roles at companies such as TD Bank, L’Oreal, and The Home Shopping Network (“HSN”).

In our conversation, Kevin talks about maintaining the unique identity of each brand within Authentic Restaurant Brands’ portfolio, while also sharing resources and strategies among them. He discusses how his team leverages different tools and tricks to increase AOV based on the vertical. Kevin also shares how his team is working to close the gap between in-restaurant and digital experiences.

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Maintaining brands with loyal followings

To start, could you introduce Authentic Restaurant Brands and the specific brands under it?

Authentic Restaurant Brands is a two-year-old holding company of four restaurant chains: Mambo Seafood, P.J. Whelihan’s, Primanti Bros, and Pollo Tropical. Each of our restaurant brands has a loyal following in their region. Our ethos is very simple — “do no harm.” We grow in concentric circles and nurture the brands through strategy, digital, and technology. We heavily leverage data and analytics to nurture the brands and provide capital to spark both brick-and-mortar and digital growth.

You mentioned that each brand has a loyal following in its respective regions. Could you elaborate on that?

Sure. Mambo Seafood operates out of Texas and focuses on Latin flavors. Then we have P.J. Whelihan’s — a sports bar chain — in eastern Pennsylvania and South Jersey. We also own Primanti Bros. in Western Pennsylvania and Maryland, a 91-year-old sandwich chain that’s synonymous with Pittsburgh. This is a great example of the “do no harm” that I mentioned. We’re not taking Primanti Bros. and putting it in LA — we’re keeping it where it belongs.

Pollo Tropical is the newest addition to our portfolio — it has 125 units across the entire state of Florida. Even though we’re only two years old, we have four core companies and are looking aggressively to further expand our portfolio.

Increasing AOV based on the vertical

You’ve worked in several industries, including beauty, banking, and restaurants. How does the customer journey differ between all of those verticals?

When you compare banking with food or beauty, for example, the main difference is the lead time to make decisions. The decision process on a mortgage, choosing a credit card, or a checking account is much longer. When was the last time you changed your checking account? Likely, it’s been a pretty long time. In fact, up until I started working at TD, I had been with the same bank since college. That journey and nurture are different. There’s a lot more top and mid-funnel consideration messaging, and then under that, you get into more conversion-based efforts.

Beauty and food are a little more instant. Decisions around food occur very much within a certain timeframe. Beauty has a little bit of a longer lead time, but it’s still significantly less than banking.

Ultimately, it doesn’t really differ outside of that. Customers want to be spoken to like they’re human and like the brands know them personally. They want to gain value, see relevant content, etc. Regardless of the vertical, that won’t change. They’re in your ecosystem and you can look at them individually to market options to them. The goal is to speak to people like we’re having a conversation or in a one-to-one manner like we understand each other.

How do you adapt your digital strategies to fit the unique needs and consumer behaviors of each industry?

Each industry is different, but the reality is that each brand is different. Lifecycle times and expectations are different, technology needs are different, and innovation is even different.

Using VR/ML/AI was prevalent in the try-on tools that I’ve helped build at L’Oreal, and that’s not as relevant in the restaurant industry, but things like loyalty/gamification are much more. Banking is its own beast because there are so many regulations that restrict how you approach guests and what strategies are deployed.

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What about the amount of friction needed to increase average order value? Do you find that varies by vertical?

Yes, and we leverage different tools and tricks depending on the vertical. For the restaurant space, suggestive selling is a critical part of how we operate. At a restaurant, we can get you to add a dessert, an appetizer, an extra drink, etc., and that increases the check size.

When you look at banking or beauty, it’s not always easy to get that because there’s more of a burden in a trial. As a consumer, if I open up a credit card, that’s a commitment. Beauty products don’t tend to be cheap, so buying a makeup piece I’m not familiar with takes a lot more consideration. There’s a difference in commitment between getting a consumer on an app or a site and being informational versus upselling.

In food, almost everything operates in the moment. In beauty and some of my other verticals, including the Home Shopping Network, it was more about education. We wanted customers to keep us top of mind. There are some stickiness differences, and what comes into play, especially in the restaurant industry now, is macroeconomic impacts. Getting somebody to get that extra drink or appetizer is incredibly difficult because of macroeconomic impacts today. People are reducing check sizes and keeping their wallets in check. Every little nuance makes a difference, and if we can get somebody via suggestive selling or convince them to get that additional add-on, that’s critical.

Maintaining each brand’s unique identity

In your role, you manage each of the 4 brands’ digital strategies. Can you talk a bit about that?

What’s so appealing about each of our four brands is their unique identities — each one of them has its own story. Primanti, for example, might be something as “simple” as putting french fries and coleslaw on a sandwich, but it has a cultural phenomenon to it. What we bring to these brands is data, in addition to everything else. The machine learning and data science we’ve built into our business help us analyze results and deliver strategies.

We’re about to analyze each brand and we look at impacts of, say, weather and sports on them. For example, Mambo is a Latin seafood chain in Houston, so it isn’t impacted by the sports calendar in Philadelphia. But, if the Eagles have a bad season or if the Sixers had eight playoff games last year but only four this year, that’ll impact the business massively.

Or, for example, the weather in Houston hasn’t been great the past couple of years. They’ve had cold freezes and three weeks over 110 degrees. By looking at these data points and building automation, we can understand the impacts on the business and truly look at individual strategies for the brands. If the weather is going to be poor outside, we may increase delivery promotions because we know people don’t really want to leave the house. Or, if it’s going to be 75 and sunny in Philadelphia, we can use promotions to entice people to eat at P.J. Whelihan’s and enjoy the patios versus ordering takeout. The weather data in our warehouse enables us to be proactive in marketing the appeal of the patio on a beautiful, sunny day or delivery on a rainy one.

Though different strategies look to put in a place with all of these different brands, we have four very different concepts with very different guests. We know that there are some similar customer makeups, however. For instance, we know that Primanti and Mambo both have blue-collar customers with low-to-moderate incomes. We try to cater to guests in the best way we can, so strategies vary based on whether we acquired them via our loyalty program, media channels, or the technology we implement. Data and analytics help us to make all of these decisions, which adds to each brand’s uniqueness.

We tend to think of growth as moving into new markets, but with Authentic Restaurant Brands, you focus on growing in concentric circles. Could you elaborate on that?

The local element is critical to what we do. I think it’s what differentiates Authentic Restaurant Brands from so many other players. We’re not looking to go national with any of these brands — the idea is to grow in areas where people have been to one of our restaurants before or have heard people talk about them. We do a ton of market research and spend time using demographic tools.

Pollo Tropical is a great example because we took them from public to private. Pollo previously tried to go into Texas, New York, and New Jersey, but they didn’t do well there. Now we have 125 locations in Florida. By strategically deciding where to open more restaurants, we’re able to make our brands more accessible to guests.

Is there an example you could share of a time when customer insights led to a new strategy or a pivot in strategy?

Yes, this happens frequently, especially in today’s environment. In the restaurant industry, we know that a lot of people are getting more conservative with their money. A lot of people are going from casual dining to quick service and cheaper options. McDonald’s, Wendy’s, and Burger King have all released $5 meals, and Taco Bell actually just came out with a $5 box as well. However, we are not interested in a race to the bottom.

We understand there is value in giving value to our guests, but we do that on an individualized basis, and that’s where the data comes in. We’ve built loyalty programs at most of the brands using a dollars-for-points method. But when we looked at that as we built the P.J.’s program, we wanted more of a hook.

Pre-COVID, we did Wing Night, which was half-priced wings every Tuesday. It had a cult-like following. After COVID, the industry changed, and we brought something similar back. Now, loyalty members get access to Tuesday’s half-price Wing Night, and it’s been incredibly successful. We have roughly 70,000 members across a 22-unit sports bar, and since this loyalty program is only nine months old, it still has lots of momentum.

Closing the gap between in-restaurant and digital experiences

In terms of omnichannel, have you run into any challenges or complexities while trying to provide a unified experience for people ordering through the app, website, and in person?

COVID was a catalyst for differentiation in the restaurant industry for differentiating as it relates to restaurants on-premise, which is eating in the restaurant, versus off-premise, which is taking it out, getting delivered, etc. They are very different. For a long time, restaurants really honed in on that in-restaurant guest and saw almost the off-premise guest as a nuisance or a distraction. On-premise, restaurants can focus on that guest in the chair.

You can upsell them more easily and more clearly. You already have them there, and you can provide them with a great guest experience. Once you put that in the hands of a delivery driver and you’re driving somewhere, that changes. For a long time, restaurants honed in on in-restaurant guests. They almost saw off-premise guests as a nuisance or a distraction. You can upsell in-restaurant guests and provide them with a great guest experience, but once delivery orders are in the hands of delivery drivers, that changes. The food might not retain its quality or the customer might not get what they ordered.

We believe every customer deserves an A-plus experience, regardless of channel. The evolution post-COVID is focusing on our guest experience going through all channels, whether they’re sitting in a restaurant or ordering from our website for delivery. We’ve done that through partnerships and technology. We’ve simplified how easy orders are to get from the kitchen to the host to the deliverer to the guest and simplified our back-of-the-house technology.

Can you give an example of how technology has helped unify that experience?

QR codes have helped close the gap between traditional in-restaurant ordering and digital ordering. The technology is incredibly simple and besides ordering it can also help drive things like loyalty program subscriptions. It provides some immediate gratification as well.

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This technology also saves restaurants from having to print and clean menus. On the other hand, some people are put off by QR codes because they prefer a physical menu to having to scroll on their phones. Or, if they’re in a group, maybe they don’t want to take out their phones at all because they want to focus on being present. This tends to be generational, and it’s something that we’ll test and learn from. It’s an example of something that makes this space so enticing to be in right now.

Tying existing systems together

Realizing that digital transformation can mean many different things, can you talk about the digital transformation you led at Authentic Restaurant Brands and the challenges you experienced?

I don’t love the term digital transformation because it’s more buzzy than practical. In reality, this space moves so fast. We’re always transforming. You have to be consistently transforming to be impactful. That said, one of the best challenges in my role is that I get to look at each of the brands in total, but also individually. They have different levels of revenue, spending, and maturity. Working to prioritize impact and looking at the data again and again is key for us.

Another advantage of being part of a fast-growing company is that we get to look at economies of scale. Our four brands combined have around 200 units, and this enables us to transform faster at an affordable cost.

There are also challenges that can be frustrating. We want to move fast and we typically do, but there are times when we’re limited by the existing infrastructure, we have to wait out contracts, or we have to determine if lifting out a system is worth the squeeze. It’s a really fun challenge, though, and I’m lucky to have amazing partners across Authentic Restaurant Brands — in each of our portfolio brands within our PE company. I have nothing but support and full alignment, and that’s so critical.

As you acquire a new brand for your portfolio, how do you evaluate the technologies and see how they can be integrated together?

On our team, we have a wonderful gentleman in business development who has a massive pipeline of brands that we stay engaged with. When we look at new brands, we consider technology integrations, contracts, POS systems, back-of-the-house operations, brand marketing, digital marketing, operations, and more — we do a deep dive into everything.

There are some critical questions that we need to ask, such as, “Do their systems tie in with our existing systems?”

We also ask, “What are the contract lengths?” “What are the rates of things like contracts with Uber Eats or DoorDash?” and, “Can we get rate concessions for a bigger portfolio?”

There’s a lot to consider. Sometimes, we can create some amazing synergies, whereas other times, there’s an upheaval. We often have to weigh whether it’s worth the squeeze or if we should, perhaps, operate certain levels independently. The beauty of what we do is that we don’t need to put everybody on the same tech stack if we don’t want to.

We have that flexibility, and it’s a great benefit to our business.