Company continues prosperous expansion in 2013
“Marketing in the traditional sense no longer works in the competitive restaurant industry,” says Greg Creed, CEO, Taco Bell.
Creed’s statement, in an address to the Summer Brand Camp in Dallas earlier this month, explains why Vic Macchio founded Dinova LLC, to provide a potent and decidedly non-traditional marketing boost through the business-to-business (B2B) channel, i.e., corporate dining.
Dinova, whose first full year of operation was 2010, achieved a breakthrough in 2012 and continues to expand and prosper in 2013.
“Restaurants have traditionally had a real estate strategy, word-of-mouth strategy, coupons, advertising, events, and, more recently, social media – all aimed at the consumer, individual and family diners,” says Vic Macchio, founder/CEO of Dinova. “Now, we offer them a B2B strategy at the enterprise level of major, national corporations with substantial business dining spends,” Macchio says.
“We offer corporation-wide access to restaurants ranging from some of the largest national chains to small, individual bistros.”
“Corporate diners typically spend more than consumers,” Macchio says. “They tend to order appetizers and desserts, and generate large groups, where restaurants earn much of their margin. We direct business diners from our corporate clients to our preferred restaurants during the Monday – Thursday time frame, precisely when restaurants most profit from incremental business.”
This is why Dinova has nearly tripled the size of its restaurant network from 2011 to more than 11,000 locations. By simultaneously adding such major corporate clients as SalesForce, Nielsen, and Advance Auto Parts, Dinova doubled the number of corporate customers patronizing its preferred restaurants, and they are now spending at an annual rate of $800 million.
How the system works
The Dinova system increases restaurant business while saving corporations money. By visiting the Dinova website, the employees of network corporations identify preferred restaurants nearby, whether at their own offices or on business trips. They can also use a proprietary app on their smart phones that locates preferred restaurants, with price and cuisine profiles, and walking and driving directions. In addition, each Dinova corporate client designs and conducts its own employee communications program to direct its employees to restaurants in the Dinova network.
There are no upfront fees, and Dinova performs all the administrative work. There are no new processes or procedures for the restaurants, and no cards or coupons for corporate employees to carry.
Acceptance by Restaurant Industry Strengthens
“When we introduced this truly unique system, we were considered disruptive,” Macchio says, “because it had never been done before. Now our system is embraced by both restaurants seeking corporate diners and corporations seeking ways to save money on their travel spend.”
Macchio began his management career with American Express, where he progressed over 17 years in consumer marketing, supplier relations, corporate services, and general management. He founded a consulting practice in 1997, Windward Marketing Group, which served a wide array of clients in the travel and other industries. He developed Dinova in the course of his consulting work, helping large corporations tackle undermanaged categories of travel and entertainment (T&E) spending.
Macchio says that corporations have had preferred-supplier agreements with hotel chains, car rental companies, and airlines for decades, but that no one had cracked the restaurant code. Corporations have tried different approaches to leveraging their dining spending, but this has proved extremely difficult.
“The restaurant industry is so large that no given company, regardless of size, can be a significant customer to any one brand. Even if you spend $20 million annually on business dining, it is insignificant in a $660 billion industry, because that spend is fragmented over nearly one million restaurants. We are opening the doors to new customers for restaurants – for catering and meetings, in addition to transient dining.
“Now, Dinova can offer a restaurant chain or single establishment preferred access to hundreds of thousands of employees who spend $800 million on corporate dining annually.”
Restaurants squeezed from all sides
Macchio says his company funnels profitable corporate diners to restaurants at a time when they are facing rising food and labor costs, demographic food-consumption shifts, and intensifying government regulatory pressure.
“Although restaurants have largely recovered from the recession, according to Nation’s Restaurant News’ annual assessment, that does not mean that they are having an easy time, with no significant challenges,” Macchio says.
He points out that Richard Volpe, a research economist for the Food Economics Division of the U.S. Department of Agriculture, predicts rising prices – drought-related and for other reasons – for beef, veal, pork, poultry, and dairy products.
Adding to the pressure of rising food prices is a demographic shift by millennials to less restaurant dining. According to recent research from the NPD Group, restaurant visits among millennials have fallen 16% over the last four years.
Labor costs are also pressuring restaurant owners and operators. The minimum wage rose in 10 states in 2013 and President Obama has called for an increase in the federal minimum wage to $9 per hour, including an increase for employees who receive tips.
Governmental regulation is becoming a larger cost factor as well. The Governor of Nevada has vetoed legislation requiring some chains to post nutritional information and calorie counts, but restaurant industry members expect the issue to resurface. And of course New York Mayor Michael Bloomberg tried to ban drink containers larger than 16 ounces, opining, “We have an obligation to warn you when things are not good for your health.”
Facing these multiple threats, Dinova’s preferred restaurants have welcomed the infusion of corporate dining spending that teaming with Dinova earns.
Consumers are barraged with restaurant promotions, discounts, social-media enticements, apps, and all manner of incentives, Macchio points out. Restaurants that seek to increase their corporate patronage must make themselves heard above this noise, and Dinova offers a unique B2B marketing channel to the senior travel and procurement executives at companies with substantial T&E budgets.
“Our model for driving up restaurant corporate patronage and driving down corporate T&E spending has enabled us to create a successful and rapidly growing business,” Macchio said. “As the nation recovers from the recession, restaurants will still need to increase patronage, and corporations will not relax their focus on reducing their T&E expenditures. Building on our strong foundation, Dinova will continue to offer an important program for both constituencies.
”It’s a win-win proposition.”