Ever take a side road out of town and stop for a bite at a truly charming restaurant and wonder how it stays in business? How it competes with the chains? The answer may lie with a rewards program run by Original Restaurants. Just two years old, it aims, “to promote unique, local restaurants,” a mission increasingly embraced by customers and small restaurant owners across the United States.
Entrepreneur Kermit Austin witnessed firsthand the struggles independent restaurant owners faced; he worked his way through college as a busboy, waiter, and bartender. He hunted for local restaurant specials – trying to save a buck in the Tuscon restaurant scene. With a Management Information System’s degree from the University of Arizona, Austin developed expertise in web design. The relationships he developed landed him website projects, work that helped pay for his degree, and paved the foundation for future successful businesses.
Austin’s effort to track restaurant sales led to DoTuscon, a website devoted to local deals and the first in the DoNetwork; his vision was a site for every city. The company grew quickly to 25 employees but the DoNetwork was a business model fighting and loosing out to an early iteration of CitySearch. Though he could demonstrate the requisite hits a month, the DoNetwork lacked the metrics to show local businesses that the site led to new customers.
Austin sold the company in 2002 and continued to chew over the business model’s shortcomings. He maintained the good relationships he had with local restaurant owners, and soon connected with PowerCard. Intended to generate profit through a complicated pyramid structure, PowerCard was a technology that sold point cards to restaurant customers. Austin seized the technology, took over the company’s debt, and set out to grow his second business.
“Developers,” says Austin, “see something that works and set out to replicate it. For that reason, you can have a decent meal at a chain restaurant. They’re consistent. But with the independents, you have a chance at something truly spectacular.” The Kansas City Originals, a group of individual restaurant owners that had banded together to support one another, approached Austin intrigued by the PowerCard model, and the Originals Restaurant group program was born. The Original Restaurant company is presently phasing out the PowerCard name.
Unlike other reward programs that are generally just transaction processors where the rewards business will sell the plastic point cards and charge restaurants 10 to 30 cents a transaction, Original Restaurants provides data and marketing services to participants. A local restaurant affiliated with an Original Restaurants group will manage a restaurants’ customer data entry, mining, reporting, conduct customer surveys, and create customizable marketing templates. The Originals technology is fully integrated with the most popular point of sales software including Aloha and Micros, streamlining the rewards system for independent restaurants. The software took four years to develop, and is constantly updated; Austin emphasizes its centrality to his success.
The Originals e-commerce revenue model entails quarterly auctions of web (gift) certificates donated by each restaurant. Regional restaurant groups, for example the St. Louis Originals, profit from the auction and dedicate the funds to marketing. The profits pay for the Original Restaurants program as well as other marketing. One group used a fraction of the proceeds to hold a holiday party for the region’s top 500 customers. According to Austin, most groups find that the Original Restaurants affiliation brings in a steady stream of new customers without the traditional costs of media advertising.
Today, there are approximately 450,000 customer participants that generate over $4MM each month in affiliated Original Restaurants. Nationally over 365 restaurants are aligned with the program. Austin’s kept busy recruiting new members and maintaining the standard of the program.
When asked what criteria a restaurant must meet, Austin explained that the regional groups are largely autonomous in their decision-making. Original Restaurants intends to serve as a third-party conduit of information. Tayst, a participant in the Nashville group, recently received its Green Restaurant Certification by the non-profit the Green Restaurant Association. It is the first and only restaurant in Nashville to be certified.
While Original Restaurants has no plan to set environmental standards for its participants, it is eager to share the lessons Tayst owners learned as they completed the process and connect those interested in sustainable practices. Austin sees himself as a green entrepreneur; the Original Restaurants headquarters are being redesigned with environmental impact in mind, wired for solar panels. Still, the business model does not address environmental impact head on, and as the company continues to grow, Triple Pundit will be watching for a greater emphasis on green.
What sustainable practices have you noticed in local restaurants in your area? What environmental standards do you look for when dining out?