Schnitz turns to tiered pricing to combat cost pressures, reach valuable Gen Z
In his first interview with QSR Media, CEO Brenton Howie details the chain’s customer satisfaction play and why he believes in “doing the basics well.”
Price tiering will be a key component for Schnitz this year, part of a larger focus to elevate operational standards, driving “consistency and outstanding guest experiences” over the next 12 months, its chief executive officer said.
“At the moment, we've got a really great range of wraps and burgers but we're pretty light on that entry-level [range],” Brenton Howie told QSR Media. “We're certainly working away to try and develop some more affordable options so that people can see how our product is, and see how amazing schnitzels are, see how awesome our chips are to attract new guests that then drive our transaction counts up.”
A majority of the fast casual brand’s base fall under Generation X and Y that consist of families with about two children, Howie said, citing data from their loyalty programme.
“But if we can give affordable options for those Gen X's or Gen Y's kids to try our product and really enjoy and see how good our product is then that starts to hand the baton down to the next generation in the sense of building more raving fans,” he said.
“Value isn't just about price. It is also about the quality of the food you get so if we can give really great quality which we know we have at a really affordable price, I think that's a really, really positive place to be in in the market.”
“Multi-pronged attack” vs cost pressures
Prices will also be reviewed quarterly, citing inflation, as part of a “multi-pronged attack” against cost pressures.
“It doesn't mean prices go up, it just means [that] we review to see what their cost pressures are, what our margins look like and looking for efficiencies in our back-of-house, how can we streamline [and] how can we get the labor to be more efficient so you offset some of the cost pressures,” he clarified. “More transactions ultimately overcome all of the sins of…cost pressures.”
The chain is also rolling out a table ordering option as a response to staffing challenges.
“The biggest challenge that we're going to have from a service perspective is actually nothing revolutionary — it's actually about doing the basics well,” he said.
“What we want to do is when we go to market, we give people a good experience…things like split bills or a group comes in and you're going to pick up the tab…We're talking to some partners in that space at the moment.”
“We have a belief that if we just do the basics really well, people will come back because it's very difficult to just do the basic stuff given the environment of staff shortages,” he added.
Schnitz has also invested in an online platform that consolidates reviews from Google, TripAdvisor and their Facebook pages and gives them the sentiments for individual locations. This, Howie says, holds their franchise network accountable.
“We're actually addressing the real needs that we are seeing from our guests, we also, we're also using that tool to where we can use that tool to actually ask specific questions for feedback.”
A number of stores documented “well above” double-digit growth for the last two years, Howie said, as a result of delivering.
Howie, approaching his third year with the chain, expects 10 to 15% in “modest” growth over the next 12 months — expecting a majority of that in their home state of Victoria. The brand will also be building brand awareness in New South Wales and Queensland.
Driving delivery prices to encourage in-store experiences
Deliveries via third-party platforms, meanwhile, make up about 20% of sales on average, but “vary significantly” from store to store, Howie stressed, noting high street location even reaching as high as 50 to 55%.
“We have worked on our pricing strategy to drive a gap between the in-store price and the delivery price so they realize that if you [customers] want a better experience for less money, come out and enjoy it with us. But if you really do love sitting at home watching Netflix on a Friday night with your family, then that's okay too. But you'll pay for that privilege,” he said.
At the moment, he said, it’s a matter of balancing both transactions. In the context of stores, this means establishing separate waiting areas for delivery riders for new builds or windows for existing ones. For products, it’s a matter of meticulous timing — including the order when chips are placed in their packaging.
The next 12 months will also be devoted to how “real” their products are, citing radio and digital as two key channels they are targeting for that messaging. An internal marketing team is working through that messaging and how that “education piece” would appear, he added.