Dynamic Marketing Communiqué

Can’t get enough of this FAMOUS hotdog? This brand will offer you more―anytime, anywhere, and through any platform! [Monday: Marketing Marvels]

April 19, 2021

Calling the attention of all hotdog lovers!

How many hotdogs can you eat in 10 minutes?

5?

20?

59?

You might want to know more about this company because we’ll be talking about a FAMOUS restaurant that is known for its annual hotdog eating contests.

That company is…

Nathan’s Famous, Inc.!

―an American company that operates a chain of fast-food restaurants specializing in hotdogs. Established by Nathan Handwerker in 1916, the brand started as a small nickel hotdog stand in Coney Island.

Through the years, Nathan’s Famous expanded and put up several branches across the US. Eventually, it ventured outside the US, and now has more than 300 restaurants all over the world.

What strategies does the company use to further expand its reach in the food and restaurant industry?

Geotargeting and Digital Ordering!

In 2020, Nathan’s Famous overhauled its digital technology systems and partnered with ad agencies to optimize advertising and build loyalty among customers.

Partnership #1: Targetable

Targetable is a virtual ad agency that uses AI and automation to create and distribute ads for clients, including Nathan’s Famous.

The AI tool produces creative ads by pulling in content that is popular across Nathan’s Famous’ online channels and showing them to consumers within a certain radius from the restaurants’ locations. Hence the term, “geotargeting.”

For example: If the restaurant’s Angus beef burgers are a hit among customers, Targetable will create ads about the product and show them to online users who are near the vicinity of Nathan’s Famous restaurants.

Geotargeted customers are identified based on their online activities and recent transactions with Nathan’s Famous’ online channels.

Does this strategy yield great results for the brand?

After a month of testing, Nathan’s Famous reported that over 100,000 consumers within a 4-mile radius of 3 test locations saw the ads.

That’s an awesome start!

Aside from that, Targetable’s ads tracked a lower cost-per-click and 10 times more efficiency than Nathan’s Famous’ typical digital ads.

Partnership #2: Brink POS, Toast, and Restaurant Magic

Brink POS – A comprehensive restaurant management platform that offers cloud software, POS (point of sale) services, and durable hardware.

Toast – A POS and management system that helps restaurants improve their operations, increase sales, and create better customer experiences.

(Note: Nathan’s Famous partnered with Brink POS and Toast in fall 2019.)

Restaurant Magic – Operates Data Central, a suite of back-office applications to help restaurant managers achieve operational and financial goals.

According to the Business Insider, mobile ordering became a USD 38 billion industry and grew 300 times faster than dine-in traffic due to the onset of the COVID-19 pandemic in 2020.

… this is a booming space where Nathan’s Famous seems to be wedging into.

So… what did the company do to enhance its digital ordering strategy?

With the help of Brink POS and Toast, Nathan’s Famous set up self-ordering kiosks at different franchise locations across the US!

This made the ordering process easier for customers because they wouldn’t have to speak to the restaurant staff at the counter to place their orders. All they had to do was present the printed stub from the kiosk and ta-da! Nathan’s Famous would start making the food.

Thanks to the invention of these kiosks, customers had a better experience whenever they dined at Nathan’s Famous… and where there is better experience, there’s also a higher chance to win consumers’ trust and loyalty!

Then, when the COVID-19 pandemic hit, the company had to adapt to changes in the restaurant industry.

Since a lot of consumers became less likely to dine in due to fear of contracting the virus, Nathan’s Famous shifted its focus to online ordering in April 2020.

The brand partnered with Restaurant Magic to develop its online ordering system and enhance user experience.

The software also helped Nathan’s Famous in inventory and food management, labor and scheduling, and reporting and analytics.

According to James Walker, Senior Vice President of Nathan’s Famous Restaurants:

“These changes allow the consumer to experience the brand in a way they want to experience it. So if that means on their mobile device, so be it… if that means they want to come into the restaurant and order, or use a kiosk, that works too. We’re not pushing the guest in one way or the other to say, ‘This is the way we want you to go, as a guest of Nathan’s Famous.’ We’re saying, ‘You choose what’s right for you, and we’ll allow you to use the best way to experience the brand in that way.’”

What else is Nathan’s Famous doing to market its products and reach its target market?

Selling its signature products such as hotdogs, buns, fries, and more within supermarkets and club stores!

By selling these products on grocery shelves or as frozen food, Nathan’s Famous encourages consumers to cook these goodies in any way they want.

It is also noteworthy to mention that during the pre-pandemic times, the company enjoys exposure and awareness from its annual hotdog eating contests.

In 2019, Nathan’s Famous held regional hotdog contests in several Major Baseball League stadiums such as Marlins Park, Miami, Coors Field, Denver, The Great American Ballpark, Cincinnati, Ohio, Busch Stadium, St. Louis, and in different theme parks and fairs.

What a really fun way to bond with its target market―eating as many hotdogs as they can!

Prior to the COVID-19 pandemic, Nathan’s Famous also takes advantage of sports sponsorships as a strategic marketing opportunity to enhance brand recognition.

How?

By selling the World Famous Beef Hotdog and crinkle-cut French fries at concession stands and as menu items served throughout premium seating areas in sports stadiums.

Nathan’s Famous’ sports sponsorships include the Professional Baseball League at the Yankee Stadium, Professional Basketball and Hockey Leagues at The Barclays Center, and Professional Football League at the AT&T Stadium.

These venues have an average seating capacity of 100,000. If all these seats are filled and those people are exposed to the brand’s products and other marketing collaterals, just imagine how big that reach will be!

Lastly, the company’s marketing efforts also include the use of free-standing inserts (FSIs) and money-saving coupons.

[FSIs: An advertisement piece that is added separately to a newspaper or magazine. According to the company’s 2020 annual report, these materials target nearly 6 million US households per drop, immediately generating traffic in Nathan’s Famous restaurants.]

This 2021, Nathan’s Famous is working to expand its sales incentive programs. The company is also in the process of upgrading its social media platforms and enhancing its corporate website.

In the past five years, Nathan’s Famous, Inc. has recorded revenues of:

  • USD 100.9 million in 2016
  • USD 96.3 million in 2017
  • USD 104.2 million in 2018
  • USD 101.8 million in 2019
  • USD 103.3 million in 2020

Clearly, the company’s marketing efforts paid off and helped Nathan’s Famous generate a higher revenue in 2020 despite the pandemic.

Nathan’s Famous, Inc.’s Earning Power: Valens Research vs. As-reported numbers

Nathan’s Famous, Inc. (NATH:USA) makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a better earning power generator than investors might think.

So, how well has NATH been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results higher on average than what traditional databases show.

The blue bars in the chart above represent NATH’s earning power (Uniform Return On Assets). NATH has seen generally improving profitability. Its Uniform ROA ranged from 6% to 98% in the past sixteen years, or an average of 52%. Uniform ROA is at 94% in 2020.

The global ROA is just 6%.

The orange bars are the company’s as-reported financial information. If you relied on these numbers, you will see a company with understated profitability. As-reported ROA (return on assets, a measure of earning power) only ranged from 7% to 22% in the past sixteen years. Its ROA in 2020 was only at 18%, far lower than its Uniform ROA in 2020.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Its returns have been well above the market.

The numbers show that NATH has been doing well and making a profit.

Look how far the company has come!

From its humble beginnings as a simple nickel hotdog stand in 1916…

… Nathan’s Famous is now one of the much-loved “New York Institutions” that has evolved into a highly recognized brand across the globe.

With a wide variety of distribution channels, the company will work around the clock to provide new and exciting growth opportunities to both employees and customers.

By doing so, Nathan’s Famous will constantly serve the “flavor of New York” to consumers―anytime, anywhere, and through any platform.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
Powered by Valens Research
www.valens-research.com