The Keg repositions

Richmond, b.c.-based Keg Restaurants has returned to its steakhouse roots with a repositioning of The Keg brand that is the culmination of a broader strategic repositioning that began three years ago.Some of the more visible signs of the changes taking place...

Richmond, b.c.-based Keg Restaurants has returned to its steakhouse roots with a repositioning of The Keg brand that is the culmination of a broader strategic repositioning that began three years ago.

Some of the more visible signs of the changes taking place are the rebranding of the restaurants as The Keg Steakhouse & Bar and a major renovation of the chain that will see about 75% of its locations with an updated look in the next year.

It has been a long trip back to the steakhouse for The Keg since the first restaurant opened in Richmond 25 years ago.

Today, the company operates 58 corporate restaurants and 14 franchised locations in Canada, in addition to 22 corporate restaurants in Seattle, and Portland, Ore.

Michael Graydon, vice-president of marketing and business development, says from its inception The Keg was successful but began to falter in the early 1980s because it did not keep pace with changing attitudes and trends.

At that time, The Keg also went through a period of acquisition.

‘We bought Crock n’ Block and Controlled Foods, and the financial strain of the company because of those two acquisitions took away some of the momentum we were experiencing,’ Graydon says.

‘And then the recession came, interest rates went through the roof, and the company had a very difficult time,’ he says

The Keg found a savior in British brewer Whitbread, which bought the company in 1987.

Graydon says Whitbread put a significant amount of capital into The Keg, as well as ideas.

Whitbread believed the equity of The Keg could be translated across a spectrum of menu items to make it a good full-service restaurant.

Graydon says the menu and type of food products were expanded and service was systematized to a point that the whole core value and differentiation of The Keg had disappeared.

In spite of that, from 1987-89 when the economy improved, the company built more stores and experienced a big increase in sales.

‘But, they were very fragile,’ Graydon says.

‘When economic times changed again, attitudes towards quality diminished within the company and [sales of entrees] began to dip,’ he says. ‘The biggest drop was in Ontario.

‘We lost a ton of money, and a ton of marketshare.

‘Fundamentally it was flawed – the concept and the brand – in regards to its relationship to the guests.’

Three years ago, Graydon, who has been with The Keg for six years, got together with a group of key executives and conducted research to try to understand the values of the brand that existed and was inherent in The Keg.

‘One of the things our research told us all the way through was that `You’re a steakhouse,’ ‘ he says.

‘Consumers said they were confused because we didn’t act like a steakhouse, and almost seem embarrassed by it.

‘We realized we have to be a steakhouse, get back to our basics, to the roots of our business.’

Whitbread bought into the plan and the strategic repositioning began.

The menu now focuses on steak, which has been upgraded a full grade to Canada AAA and USDA Choice, but prices have remained the same.

‘The steak got bigger, the quality of the steak got better, the potato on the plate got bigger, and the service style improved,’ Graydon says.

‘We’ve reduced our table sections down to four so the server has time to make sure the guests are looked after,’ he says.

‘Since then, the percentage of gratuity has gone up and guests are ordering more extras.’

Graydon says a system-wide, top-to-bottom makeover was needed to alter The Keg’s damaged image and to position it as today’s concept.

One facet of the new concept is under way now, the gradual elimination of the salad bar in all locations because it was a point of differentiation that reminded diners of the past.

The strategy has been successful.

Graydon says in Ontario, one of its key target areas, sales growth is up 15% over last year, which again was 20% higher than the year before.

The Keg has been reinforcing its brand image with advertising from Campbell & Partners of Toronto.

In March, the third phase of its television campaign gets under way with a new 30-second commercial.

The Keg advertises on television about 18 weeks per year, flighted through different seasons, and Graydon says without exception, sales go up 10% every time.

Print is used locally on a tactical basis, while radio is used tactically and seasonally, to sell gift certificates at Christmas and for a summer brand campaign.

Graydon says The Keg is also doing some targeted direct mail to encourage return visits to the restaurants.

Another new area for The Keg is joint promotions.

An eight-week promotion, its second national promotional with The Sports Network, launched late last month with a specially created tv spot and point-of-sale material.

Diners have a chance to win a trip to a Stanley Cup hockey game and also get scratch and win cards for other prizes while in the restaurant.

Graydon says its first tsn promotion, the TSN/Keg Class Car Promotion, last summer resulted in almost 500,000 ballots from across Canada in a six-week period.

Because January and February are traditionally slower dining-out months, the timing was right for a winter promotion.

Graydon is planning another promotion in the summer, which may involve giving away motorcyles.

‘I’m also having discussions with car companies about new cars as well,’ he says.

‘After they heard about the success of last year’s promotion, they want in on the action because of the value of the database alone.’ PS