Turns out regional chains' expansion strategies aren't so different from the their larger counterparts. The secret formula is delivery, rewards, and franchising.
— Danni Santana
Off-premise sales growth is not only rampant at large restaurant chains; regional chains are reaping the benefits too.
Taziki’s Mediterranean Café, based in Birmingham, Ala., has seen delivery and takeout orders grow 200 percent over the last three years. Off-premise sales, including catering, now account for half of the chain’s total sales in 2018. By comparison, the business segment represented just 10 percent of revenue four years ago, according to CEO Dan Simpson.
The reason for this is two-fold: Taziki’s core customers, mothers aged 35-to-40 years old, are vastly involved in the workforce today compared to when the very first Taziki’s location opened in 1998. This has resulted in a spike in online ordering for families, Simpson said. Millennials are also coming of age––becoming parents themselves–– and tend to place more emphasis on the convenience of delivery than even their predecessors do.
“This is the first generation we’ve seen that has reprioritized what matters. It used to be that quality and price were the two biggest drivers,” said Simpson. “Convenience is now bigger, and customers will pay an extra $5 for it.”
Changes in consumer behavior led the chain of 88 stores across the Southeast and Midwest to revamp its basic ordering app launched in 2014. The newest version, available to both Apple and Android users, includes Facebook ordering, geolocaiton tagging to help customers find nearby restaurants, and a new loyalty program rolled out last week.
Taz Rewards offers customers one “star” for every $5 spent in-store or online. After 25 stars, diners will earn $10 discounts on meals, according to a company statement. Taziki’s began testing its rewards program nine months ago. The Greek-cuisine chain plans to study customer-ordering patterns to help guide promotions and limited time offers it runs in the future.
“That [LTOs] usually gets decided by R&D [research and development] teams and board members. But now we can include guests in the conversation through easy, instant feedback,” Simpson said.
A Whole New Look for Franchisees
About two-thirds of Taziki’s stores are franchised, and a large part of Taziki’s long-term growth strategy is to get that number up to 100 percent sooner rather than later.
The company will also grow to 100 units next year, planning new locations in cities like Chicago and Indianapolis.
By the end of 2020, all of Taziki’s stores will also don a brand new look, focused on playing up its Greek theme. Designs include a shift from current dark, olive tones to a bright white and blue color scheme. Stores will also be decorated with Terracotta potted plants, handcrafted hanging basket lights, and with mason jar glass lights.
Seven stores have undergone the transformation so far, according to Simpson. Combined, these locations have seen a five to 10 percent boost in sales, but a full 90 days have to pass for Taziki’s to know the exact impact of the new stores on customers, according to the company.
While Simpson would not comment on the total cost for franchisees, he did say Taziki’s is offering owners different options to remodeling that are largely dependent on the age and condition of their location.
“We have a requirement for them to remodel every five years in their franchise agreement,” he said “There is a bare minimum stores have to meet, but they are affordable upgrades.”
New Delivery Partnership
Taziki’s has offered customers delivery on catering since its inception, but recently began delivering food to customers to fulfill individual orders. Taziki’s also uses its own drivers, and will continue to do so until its unannounced delivery partnership with Waitr begins in the first quarter of 2019, according to Simpson.
The company has piloted Waitr’s delivery service in eight locations in the U.S. this year; including Chattanooga, Tenn., and Mobile, Ala. Since being purchased for $308 million by Landry’s back in May, Waitr has steadily entered new markets, many of which Taziki’s has a brick-and-mortar presence.