Assignment
When Luke Holden decided to open up a restaurant in 2009, using social media to promote it seemed like a no-brainer. "Word-of-mouth from friends is stronger than any other form of advertising in my opinion," says the 27-year-old. Holden didn't start out in the restaurant business, though. After graduating from Georgetown University, he went to work on Wall Street as a financial analyst. A couple of years later, the banking crisis hit. When many of his coworkers started getting laid off, he began thinking about a backup plan for himself. One thing Holden had noticed about New York City was that there were no restaurants serving good lobster rolls for a decent price: "They were all selling for $24, but you got only a little lobster, a lot of mayo, and more filler," he says.
The Maine native sensed an opportunity. Plus, he knew where to find a good lobster supplier: his dad, Jeff Holden, who owns a seafood processing company in Portland, Maine. Luke had worked for his father when he was younger. If he purchased seafood directly from his father, rather than through a wholesaler, he figured he could offer a big lobster roll for a small price. Because the restaurant business in New York City is very competitive, Holden figured he better not quit his day job right away. Instead, he posted an ad on Craigslist to find a partner who could help him get the business up and running. That's how he came across Ben Conniff. Conniff was fresh out of Yale and looking to get into the restaurant business, too.
After coming up with a business plan and raising some money, he and Holden hired some employees and opened Luke's Lobster, a tiny eatery in New York City's East Village. Conniff worked the day shift. Holden worked nights and weekends. Fortunately, Luke's Lobster quickly found a following. Better yet, customers got online to rave about the restaurant's generously portioned rolls as well as their $15 price. Health- and environmentally-conscious diners who want to know where their food is coming from were also attracted to the eatery. "We know the exact source of all our food," Holden says. "We can trace it from the bottom of the ocean to the East Village." To further spread the word out about the restaurant, Holden and Conniff signed up with the social networking site Foursquare. Foursquare has a GPS-enabled, mobile-phone app that recommends businesses in the area where you're located based on what you and your friends in your network have said they like. People with the app can automatically "check in" with a business on Foursquare. They can let their friends know where they are and comment on their experience.
When customers accumulate enough check-ins, they qualify for discounts and freebies. "Forget about loyalty cards and coupons. This makes it so it's more digital and virtual," Holden says about Foursquare. "It's a digital wallet that you can carry around, and it's constantly rewarding you." In addition to using Foursquare to get customers in the door, Holden and Conniff use it to help manage Luke's. The data they get from Foursquare allows them to categorize their customers by gender, age, and arrival time. Analyzing the arrival times of customers helps the restaurant ramp up for busy periods and offer specials when business is slow. The entrepreneurs didn't limit their social networking to Foursquare, however. They use a combination of Facebook, Twitter, Tumblr, Pinterest, and Vimeo to post photos and videos about Luke's, make announcements about specials and contests, and provide links to the restaurant's Web site and blog. The crew at Luke's also "listens" to what people on the Web are saying about the restaurant and replies to them. "Responding to folks who mention us is our way of bringing them into the family and incorporating their feedback into our business," Holden says.
Six months after setting up shop in the East Village, business was so good that Holden and Conniff were able to open up a second location. At that point, Holden felt comfortable enough to leave the banking business. Since then, the men have opened up two more Luke's Lobster restaurants in New York City, and one in Washington, D.C., which Holden's brother, Bryan, operates. In 2011, the Luke's chain rolled out a food truck in the New York area. The employees who work the truck use Twitter to update customers on its whereabouts. Thanks to a good product and social networking strategy, New York City has been awash with information about Luke's Lobster. HauteLiving.com even named it the city's best lobster restaurant. What's interesting is that without doing any traditional advertising whatsoever, Holden and Conniff have achieved so much success-including landing a spot on the Today Show with Kathie Lee Gifford. With a little more angling, it's looking like they could net some cookbook or reality TV offers.
Questions
1. What factors have contributed to the success of Luke's Lobster?
2. Why have Holden and Conniff shunned traditional advertising? Is that a good idea? Why or why not?
3. Pick another type of business and describe how it could use social media networking to promote its products or services?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.