If classic rock were a restaurant, it might well be Max & Erma’s.
This middle American restaurant has achieved growth and profitability with several strategies found in these pages including transgenerational appeal. Described in food books as the inventor of the gourmet hamburger, Max & Erma’s goal is to serve the best gourmet hamburgers in America and help guests enjoy their dining experience so much they can’t wait to come back. The functional element of the brand-its outstanding hamburgers and other great food items-is complemented by its personality of being “the Hometown Favorite.” Breaking through any negative images chain restaurants might carry with them, Max & Erma’s decorates each store differently, featuring local artwork and pictures of local sports and community heroes, and in some stores local menu favorites. The personality of the firm, however, is derived from innovative local promotions directed by Bonnie Brannigan, vice president of marketing for Max & Erma’s. Some stores open to the fanfare of the local high school band marching through the streets, sometimes stopping traffic, on its way to the store’s ribbon cutting ceremony-generating television and newspaper coverage more effectively and less expensively than through media advertising.
What happens inside the store makes Max & Erma’s a favorite among boomers. The music, a boomer friendly selection, plays throughout, but at levels over which people can talk rather than yell.
It also offers an eclectic food selection-one that cuts across tastes and themes-that allows children, teens, parents, and grandparents to find something they like. Because the food doesn’t fall under the category of just Italian or Mexican, for example, people can eat there more often, which explains why Max & Erma’s boasts twice as many frequent customers as its competitors, with lower advertising expenses. Just like the Rolling Stones, Max & Erma’s figured out that it’s more profitable to serve existing customers more frequently than to acquire new ones. In fact, it calculates that the lifetime value of a customer reaches over $25,000. (Unfortunately, we don’t know the lifetime value of the typical Rolling Stones fan.) Whether they’re soccer moms with minivans full of eager athletes, students on a date, or baby boomers who dine out frequently in a causal atmosphere, Max & Erma’s creates Elton John
Local Promoters, Steel Wheels
September 22nd, 2009 — Investment Strategies
Corporate Sponsorship Mick Jagger and the Rolling Stones have never been shy about corporate sponsorships. In the early years, the band made little money from its touring activities because there really was no proven model of how to generate profits. The structure consisted of a hired tour manager, who would contact local promoters in each tour city to plan each show, then collect varying amounts of money from them afterward. Jagger got firsthand experience with this side of the business, personally negotiating with some of the local promoters in specific markets and countries.
Canadian rock promoter Michael Cohl began managing the band’s shows with Steel Wheels and created the structure that would allow the band to recognize the real money making potential of this side of the business. The Rolling Stone’s tour model would consist of Cohl working directly with local venues and booking the entire tour without the use of local promoters. He generated additional revenue with skyboxes, bus tours, television appearances, and expanded merchandising efforts. Corporate sponsors-from Volkswagen and Tommy Hilfiger to Anheuser Busch and E*Trade-were added to the formula along with a heavy dose of cross promotion between all of the elements to integrate all of the marketing activities. The Steel Wheels tour earned $260 million worldwide, which was a record at the time for any rock concert tour.
Since Steel Wheels, the band has grossed over $1 billion on the road with the same basic formula-although it continues to tweak the operations side of the equation. It is the biggest revenue generator of the Rolling Stones organization.