Is CART taking a page from the Amazon playbook?
A Potential New Horizon in Data-Driven Programmatic Advertising for CART and its CPG Customers
In CART's S1, there is no mention of "programmatic advertising." If you Google "programmatic advertising," the first thing that comes up is a link to Amazon Ads and a definition of what it is and how it works, which we have summarized below.
Programmatic advertising utilizes technology for automated buying and selling of digital ads, swiftly serving relevant ad impressions based on advertisers' predefined parameters. Enhanced by machine learning, this automation efficiently purchases ad inventory across various digital platforms, considering factors like user behavior. When a consumer clicks on a website, the ad impression is auctioned to multiple bidders via automated processes. The highest bidder wins the impression, with the ad immediately displayed on the website, optimizing ad delivery and budget expenditure for advertisers.
Yesterday, Instacart and The Trade Desk have partnered to aid CART's CPG customers in enhancing their programmatic campaigns using retail media, leveraging Instacart's consumer behavior and purchase data. This initiative reflects CART's growing importance of data-driven strategies in reaching high-intent consumers, potentially leading to better campaign performances and returns on advertising investment—importantly, a more significant ad business.
Initial Thoughts:
The CART and TTD partnership will enable the utilization of Instacart's consumer behavior and purchase data to reach consumers via The Trade Desk. Pilot partners, including Beam Suntory and GroupM, will benefit by building and activating Instacart-informed audiences across omnichannel media buys. Instacart will provide category-based purchase data, aiding brands in building larger, high-intent audiences reflecting consumer shopping behaviors. The collaboration enables the layering of programmatic campaigns on The Trade Desk with exclusive Instacart data to build category-based audience segments.
Implications:
As we said in our pre-IPO deck, CART's AD business is potentially a $2.0 billion business versus about $800 million in 2023. In order to maximize return on investment, this partnership emphasizes data-driven advertising solutions. The collaboration potentially offers a significant advancement in targeting high-intent consumers by utilizing verified purchase data. It allows brands to expand their reach beyond Instacart's platform, allowing them to connect with consumers ahead of their shopping activities across different channels. The partnership signifies Instacart's ongoing investment in off-platform solutions for advertisers following its launch of off-platform measurement capabilities earlier in April.
Chipotle's Midnight Haunt
Boorito Event Extends Hours to Woo Gen Z with Late-Night Bites
Chipotle is venturing into late-night operations, extending its hours till midnight in select college towns during its annual "Boorito" Halloween event this year. Besides the traditional discount, this move highlights a shift towards catering to Gen Z customers by focusing on digital orders. This change comes as late-night is a popular daypart among restaurants, with others like Pizza Hut, Jack in the Box, and Wendy's also extending their hours to cater to late-night customers. Chipotle's annual Boorito Halloween event on Oct. 31 will see extended operating hours until midnight in select college towns. A traditional discount is being offered where Chipotle Rewards members can get a $6 digital entrée from 3 p.m. to close using the promo code: BOORITO. This year marks a shift as Chipotle aims to resonate with Gen Z by extending hours and emphasizing digital orders. Unlike previous years, where discounts were given to costumed guests, the promotion has now moved to a digital platform. Only 53 restaurants, among Chipotle's highest-volume outlets, participate in this extended-hours event. The first 100 digital orders placed between 10 p.m. and midnight will receive an exclusive bottle of Tabasco Scorpion Sauce.
Implications we see for 2024: Chipotle's extension of operating hours aligns with a growing trend among restaurants to cater to late-night customers, especially in college towns. The focus on digital orders and the tailored promotion seek to engage Gen Z customers, reflecting the company's focus and a broader industry adaptation to that cohort. If sales slow in 2024, this move could potentially open avenues for Chipotle to explore late-night operations beyond special events, especially if it resonates well with the target demographic and yields positive outcomes. We believe there will be significant pushback from employees with a move like this.
Brewing Conflict: Starbucks vs. Workers United Over Controversial Social Media Post
Starbucks and the Workers United Union have engaged in legal battles due to a social media post regarding the Israel-Hamas war. These lawsuits depict a complex corporate, legal, and social scenario intertwined with international geopolitical events.
Legal Actions Initiated: Starbucks filed a lawsuit against Workers United in a federal court in Iowa, asserting that a pro-Palestinian social media post by the union amidst the Israel-Hamas conflict harmed its reputation and incited anger among customers. The lawsuit also accuses Workers United of trademark infringement, mainly objecting to using the name "Starbucks Workers United" and a circular green logo resembling Starbucks' logo. It seeks to prevent the union from using the name and logo. In retaliation, Workers United filed a lawsuit in a federal court in Pennsylvania, requesting permission to continue using Starbucks' name and a similar logo. The union also accused Starbucks of defamation by implying support for terrorism and violence.
Social Media Post & Reactions: The dispute was triggered by a post on social media platform X by Starbucks Workers United, displaying solidarity with Palestine, particularly following a militant action by Hamas. The union stated that this post was made without the approval of union leaders and was later deleted. However, other posts and retweets condemning Israel remained visible. Starbucks received over 1,000 complaints regarding the union's post, leading to hostile interactions with customers and even vandalism at a store in Rhode Island. Some lawmakers also called for boycotts of Starbucks, further escalating the situation.
Broader Context: This legal struggle unfolds against rising tension between Starbucks and its unionized workers. Starbucks, which does not support unionization, has yet to reach a labor agreement with its unionized stores. The name "Starbucks Workers United" has been used since August 2021, with at least 366 U.S. Starbucks stores having voted to unionize since then.
SBUX Traffic Trends: For Calendar 3Q23 (FY4Q2323), traffic growth remained constant at 6.4% versus 6.6% for FY3Q23; the 2-year slowed 210 bps. For the first two weeks of October, traffic has slowed to 4.5%, and the 2-year average was 0.92%, down 345 bps from September.
