Krystal CMO Dominic Losacco on restaurants’ digital transformation

Restaurants are living in a very different world than they were just 10—even five—years ago. According to the NPD Group, the use of mobile apps, text messages and the internet to order food grew by 18 percent from 2016 to 2017 and accounts for 1.9 billion foodservice visits.

What’s more, our research with Nation’s Restaurant News shows that only 18 percent of restaurant operators are confident in their understanding of who their customers are after they leave the restaurant.

This need to live and operate in the digital landscape while simultaneously understanding customers more is a challenge for many restaurant brands—who might already feel behind in the digital space compared to other industries like retail.

To provide more guidance on evolving your marketing strategy for a digital approach, we sat down with Dominic Losacco, CMO of Krystal, a southeast-based QSR restaurant chain, who has been instrumental in bringing Krystal and other restaurant brands through a digital transformation.

Here, we talk about how the media landscape has shifted since he started in the industry almost 30 years ago, what restaurants looking to make a change really need to focus on and why fear is restaurant marketers’ own worst enemy.

How have restaurants needed to change or evolve the way they connect with consumers over the past 3-5 years? 

Dominic Losacco: I started my career in 1991 on the account side for McDonald’s, and the media landscape back then was different than the one 10 years ago, which is different than what it is now. It just continues to change at an exponentially fast pace.

Restaurant marketers need to evolve in every way because the customer is constantly changing the way they consume media. Just look at Twitter—it was invented in 2006, but it still took a few years for it to be a mainstream channel that people regularly use and requires brand support from marketing. It took time to gain steam to be what it is now, and even with that, how people use Twitter is still changing over time.

"The biggest thing holding restaurants back is fear. There are so many options out there, where do they even begin? Where do they start?"

You have to constantly evolve and throw out the old truisms. My philosophy is that you should start from scratch each year—just because you did something last year doesn’t mean that you need to do it again this year. The digital space has been both a blessing and a curse—there is a lot of opportunity to experiment, but it also means that you need to constantly be rethinking how you want to market and what you’re experimenting with. Restaurants need to change in every single way and make their programs based on how they want to and can connect with customers.

Moving to a more data-driven, digital approach isn’t easy. What is the biggest thing holding restaurants back from making the shift?

Losacco: The biggest thing holding restaurants back is fear. There are so many options out there, where do they even begin? Where do they start? The answer is that you have to start with the consumer first and really know who that consumer is.

When I started at Krystal, the brand didn’t have a good idea of who their customers were. They built all marketing strategy based off of a specific persona, but when you went into the restaurant, you didn’t see those people. You need to have a good handle on who your guests actually are, and then you can plan out the media component. 

When it comes to digital planning, there are a lot of options out there that you can start to dabble in a little bit, but it depends on the restaurant brand as well as the leadership’s “client” to know what really makes the most sense. In a past role, the franchisees at my brand were very interested in how we spent their national fund contribution. When I suggested we move it to digital instead of TV, they were very supportive because they knew TV wasn’t working for them. And then when I started getting the data back on the digital performance, they were really impressed.

What does that digital transformation really look like in practice?

Losacco: Again, it’s about knowing your customer. If you’re a restaurant that has a lot of millennials in your target audience, then your digital transformation is going to look a little bit different than mine because my customer is a bit older and doesn’t use digital channels as much.

At Krystal, our customer is typically a blue-collar customer, and they’re out driving around for a good part of their day. Our digital strategy focuses on digital radio, like Pandora, because the customer is streaming that while they’re driving around.

"The days of putting a media plan in place and letting it run are gone—you have the ability to make changes, analyze that change and then make more updates while the campaign is active."

That is the right approach for us, but it doesn’t mean that is the right approach for every brand. The transformation is going to look different based on the different restaurants and what their specific customer interacts with.

If you understand your customers, it’s easier to make that transition from traditional to digital. Experimenting and shifting in real time is key—you have to be able to change quickly based on the data you’re getting back. But that’s the great part of a digital strategy—you know what’s working and what’s not working in real time and can start or stop tactics based on performance.

With any larger change in marketing strategy, there is where you want to go and where you are now, which means increasing shifts over time because you can’t do everything at once. As a CMO, how do you plan for that gradual change process? What do you prioritize? What do you wait on?

Losacco: It’s all related to sales and traffic. You can’t do everything at once, and you eventually need to prioritize—where can you get the biggest bang for your buck?

I’m managing 15-20 different markets that have different media strategies based on the need in that market. In Atlanta, I’d like to be on TV every week at huge point levels, but that’s a major buy and we simply don’t have the budget, so that tactic isn’t even on the table. Instead, we have a strong digital plan in that market that is more targeted and focused on performance because every dollar matters.

With all of our media plans, we meet on a weekly basis to review and make adjustments. The days of putting a media plan in place and letting it run are gone—you have the ability to make changes, analyze that change and then make more updates while the campaign is active.

As a CMO, I need to prioritize how each market is performing and how the media is performing as much as we know.

As far as what to wait on, marketers need to know what’s working and focus on those tactics. When I started at Krystal, we had way too many things going on. When I dug in, we found that several of these channels and tactics simply weren’t providing returns, so we cut back and focused on just three channels that we knew were working for us and invested more in those.

My advice would be to experiment at the beginning to know what doesn’t work, which can be different based on the brand. The ultimate goal is to be able to show that any individual effort is causing someone to change their behavior to come to your restaurant.

Want to learn more about restaurants’ digital transformation? Download our research, in partnership with Nation’s Restaurant News, How restaurants fare in the digital age. 

Bio: Dominic Losacco is a family man, golfer and self-proclaimed foodie. Dominic brings a wealth of marketing experience to the Krystal team after serving in marketing leadership roles with Moe’s Southwest Grill, Sonny’s BBQ and more than 12 years with Sonic Industries, Inc. It’s not unusual to see him jamming out to Foo Fighters as he develops and executes dynamic marketing campaigns and positions the brand for growth. He’ll cook you up a mean bowl of his famous spaghetti and meatballs, but don’t ask him to cook you anything else…