The Chipotle brand needs help for customers to return

Woe is the Chipotle brand. Its third-quarter results showed net income plummeting nearly 95% versus last year and same store sales declining more than 20%. The food safety issues that plagued the chain last year continue to haunt it as once loyal customers are fearful of coming back.

Chipotle brand
The Chipotle brand is in need of serious repair.

Publicly, Chipotle continues to laud its industry leading food safety program and praising store efforts to create an excellent guest experience. Chipotle has also doubled its marketing efforts and is running its first television ads since 2012.

However, I don’t think Chipotle has fully grasped that its failure is not a business one but a brand one.

How the Chipotle brand can fix itself.

Prior to its very public food safety catastrophe, Chipotle was a Wall Street darling. It touted fresh and sustainable menu offerings, made to order for each customer. The Chipotle brand was so tightly tied with the freshness of its food that it was positioned as the anti-fast food establishment.

So what did it expect when people got sick from its food? Any connection that Chipotle made with the customer quickly vaporized. The expectation with food being fresh is that it is safer than at other places. Being non-processed gave consumers a certain security blanket.

Jump ahead a year later and consumers still feel like they were lied to.

The Chipotle brand is in serious need of repair. Shortly after the food safety incidents, it launched the before mentioned industry leading food safety program. If your brand is supposed to be about fresh and non-processed, why didn’t Chipotle have such a program in place already? The simple answer is that Chipotle never placed the bar high enough to fulfill its brand promise. Food safety to them was non-processed.

This is the rub. It is facing an almost insurmountable climb to get consumers to come back based on the laurels of its past. Chipotle appears to be simply telling consumers, “Come back to Chipotle, this time we mean it!” Customers are wisely not buying it.

As painful as it may be, Chipotle needs to revaluate its brand in an effort to reconnect to its lost customer base. They’re not just going to come back to the brand that has already failed them with a safety program. Consumers need an emotional reason to return.

McDonalds fails to be believable

McDonalds fails. Brand problems.

McDonalds Fails
McDonalds Fails is a statement no one believed could happen

McDonalds seems to be losing share to other fast food and casual restaurants. Not too surprising from my perspective because the amount of competition has increased beyond belief. The choices for quick and other poor food choices has exploded.

There is even a new major player in a gas station (Sheetz). The category is rife with new entries and new day parts. It seems that everyone has entered the breakfast category.

One chain tried to create a Fourth Meal category, hoping to attract the morbidly obese. Some chains are now available 24 hours a day for the sudden need to get a burger and a thick and frosty drink after you unexpectedly wake up to pee at 3:30 am.

So what is the news for today? McDonalds fails is the news. McDonalds is repositioning itself as vegan. You think I am kidding? Well, actually I am because it would be absurd for McDonalds to claim such a position. They are actually moving into a position of quality ingredients.

To my thinking, it might just as well say it is vegan. But the truth about how McDonalds fails is almost as absurd. (Read another recent blog on McDonald’s here)

The art of branding with importance is a subtle formula. What you claim must be of highest emotional intensity to the target audience you wish to influence and you brand has to have an innate permission to claim it as true. I’m not sure of the validity of either support points for McDonald’s new position de jour.

McDonalds Fails Again

McDonalds fails. Ronald McDonaldRemember when McDonalds was about herd mentality? When the golden arches told us how many millions of our fellow foodies had been server?

How about when McDonalds was all about kids? Ronald McDonald and the Hamburgler all got their start here.

Hamburgler. McDonalds fails
The Hamburgler is trying to grow up

(Read an interesting update on the Hamburgler here). Happy Meals replaced the Big Mac as the signature dish. Playgrounds sprung up at the front of nearly every store.

Then McDonalds decided to try a dual strategy and excite adults with its Arch Deluxe burger.

McDonalds Fails Arch Deluxe
The Arch Deluxe was a monumental failure

In the past, a statement like McDonalds fails would have been absurd in itself.  No one REALY paid attention to the changes because McDonalds was the 800-pound gorilla who, it seemed, could do no wrong. It just ate everyone else’s lunch (pun intended).

But more scrutiny is on the aging chain now as its market share continues to slip. Operations and process improvements won’t save it this time. Possibly all McDonalds has going for it is a menu like everyone else but better locations.

McDonalds fails and Papa JohnsHopefully, McDonalds has great research indicating that better ingredients is the highest emotional intensity in the category.

I doubt that it is.

After all, The forgettable Papa John’s brand has been claiming the same thing for years with a massive TV spend that has the founder and owner in our face repeating the inane line at every turn.

Papa John’s spends more than any other pizza chain and yet it has never been able to get out of the less than $10 pizza wars. In other words, Papa John’s still competes on price. That is all it has going for it.

McDonalds Fails— Unbelievable Claims

mcDonalds failsThe problem for Mickey Ds is that the claim is unbelievable in its current brand’s permissions. No one thinks it has better ingredients and quality food.

We all believe it is mass produced hockey puck-like food. What’s in those shakes (that they can’t call milk shakes)? How many beaks and chicken feet are ground up and reformed into nuggets? What’s a McRib? What part of the sow does that come from? The ribless part?

Once you lose the brand myth from those that identify with you… well you have lost all of your equity. McDonald’s needs a brand makeover and not the costume festooned Halloween-like change it is proposing now.

Denny’s to open up The Den

We all love breakfast. There’s no getting around it that eggs, coffee and whatever else you want to include in that category is like nectar of the gods to many of us.

That’s why I lament that there’s not a Denny’s restaurant in town. That’s hard to believe in a city with a population of more than 270,000 people. I mean, Denny’s has more than 1,500 locations in the US. You’d think it could find a place in Greensboro, NC. (It did have one, out in the outskirts, but it closed.)

But maybe there’s one hidden here because the restaurant chain is taking advantage of the newest trend in the industry: Fast casual.

Denny’s is coming from the other direction from the fast food restaurants that are moving up from fast to casual. Denny’s is coming down to fast from casual with its new concept called The Den.

Please come to Greensboro.
Please come to Greensboro.

These fast-casual spots have been developed for college campuses and contract service providers (such as those in a large company’s cafeteria) but Denny’s plans on opening off-campus locations in the future. (It opened its first in San Diego recently.)

Denny’s is actually doing well, with same-store sales increasing nearly 5% for the fourth quarter, but opportunities in this category are few. In the fast food industry, chains have been aggressively attacking the breakfast daypart because lunch, dinner and late night are maxed out. (That’s why you see Taco Bell entering breakfast, for example.)

Denny’s has the permission to enter this fray because its bailiwick is breakfast. The Den will serve breakfast all day, something I’m sure is a hit on college campuses.

I’ve spoken a lot about brand permissions, what categories brands have permission to play in based on their equities. Denny’s has permission to play in this space because, even though it might claim otherwise, it is not so high class that consumers won’t see the transition as an emotional problem.

The issue is that the breakfast category is crowded. Everybody had entered that daypart or is planning on it. That means someone is going to lose and wonder where its next opportunity lies.

That’s the reason why fast food chains have gone fast casual, trying to make a better in-store experience rather than consumers just zipping through the drive-thru. (Studies have shown that you spend more if you go inside.)

My guess is that the Den, if properly marketed, will be a success but force out others entering the market. Now, if it can just enter the Greensboro market, I’ll be happy.

Buffalo Wild Wings expands – for the right reasons

Buffalo Wild Wings is shaking things up. If you’ve missed the news, the chain is taking on the small, Dallas-based, Rusty Taco (known for street style tacos). Plus, it’s joined forces with PizzaRev, a health conscious pizza shop primarily located in California. Not bad.

Buffalo Wild Wings is a place where you can take your entire family for a fun and satisfying meal. It doesn’t break the bank or take forever to hit your table. It’s a place where you can roll up your sleeves and eat good comfort food. In fact, this type of dining (“fast casual”) is exploding. Technomic, a food industry consulting firm, reported that, in 2013 alone, fast casual grew 11% (faster than any other dining segment).

Buffalo Wild WingsAnd, as I wrote yesterday, it’s part of the reason why Burger King is merging with Tim Hortons. The same holds true for Buffalo Wild Wings as it expands its base.

Kathy Bennings, Buffalo Wild Wings’ executive vice president and chief strategy officer, had this to say about the merger: “Buffalo Wild Wings’ investment is part of our strategy to partner with emerging restaurant concepts that have the potential for significant growth, can work throughout the country and have a highly engaged management team with a passion to grow the business.”

Unlike Burger King’s grab, Buffalo Wild Wings doesn’t seem to be acting in desperation. It’s simply expanding on what it already has.

Pizza Huts Tuscani Ad

Pizza Huts Tuscani Ad was More Clever Than You Thought

By Tom Dougherty

You’ve probably remember the ad. It opened with 50 New Yorkers tasting pasta at what appears to be a swanky Manhattan restaurant called Tuscani.

The Alfredo is Great!

Pizza Huts Tuscani AdThe New Yorkers exclaim over the dishes.  “The alfredo is great!” says one trendy-looking, young man. Then comes the clincher: The cook comes out and says he didn’t even cook it. Instead, the crowd is told that Pizza Hut made the pasta.

The taste testers are shocked – and somehow giddy by the notion that Pizza Hut, of all places, made pasta great enough to fool them. Here’s the dirty, little secret, though: It’s not that hard to fool them. You could have put any kind of decent pasta out there and the tasters would have given it a thumbs-up.

 

It Wasn’t Pizza Hut

It wasn’t the food they were reacting to. It was brand – and not Pizza Hut’s, by the way. It was the brand of “Tuscani” the Italian restaurant in Manhattan where this pasta was served. That’s especially true when you consider that, as the New York Times recently reported, the respondents were eating at a restaurant called Provence, a well-known Italian restaurant in SoHo, not Tuscani as the ad would leave you to believe. (There is no restaurant in NYC called Tuscani and is instead the name of Pizza Hut’s new line of pasta.)The folks that made the Pizza Huts Tuscani Ad never seemed to notice.

The Diners Saw Themselves

However, the important revelation for marketers is that the taste testers were responding to the brand of where they were because they saw themselves in it. They are well-to-do, handsome and pretty, young New Yorkers who, they believed, can appreciate the fine things in life, including recognizing a quality SoHo restaurant.

The Pepsi Challenge

Pizza Huts Tuscani AdThere are numerous other examples of taste testers responding to the power of brand. Many years ago, Coca-Cola realized that Pepsi was seriously cutting into its market share and became alarmed. Coca-Cola couldn’t believe that customers were actually choosing Pepsi and were even more alarmed when Pepsi started winning blind-taste tests by a significant margin. (Remember the Pepsi Challenge?)

However, someone at Coca-Cola got smart and did the taste tests over. Only this time, the tests were not conducted blind. Taste testers could actually see the brand they were drinking, see the cans themselves, and amazingly Coke handily won the taste tests by an even more significant margin.

The Coke Brand

Why? Because there was something about the Coke brand that spoke to the respondents so powerfully that they now believed Coke tasted better. Most of us, if not all, don’t like to hear those kinds of stories because it proves we make purchasing decisions for reasons that aren’t the considered, knowledgeable reasons we think they are. But the truth is that we all make purchasing decisions every day based on brand and only backfill those decisions with seemingly more thoughtful reasons.

Is it the Taste?

Ask a beer drinker why they are loyal to market leader Budweiser and they will tell you it’s about the taste. Yet Budweiser rarely wins the taste tests. What Budweiser has understood for a long time is that the power of brands ends up determining market share and preference. The companies that understand that are the most successful.

What you do as a business is the business of your business. But what determines your ultimate success is the business of your brand, what you mean to customers. In some fashion, the most successful businesses consider themselves marketers first. Does Nike really make the best running shoe?

Pizza Huts Tuscani AdThose loyal to Nike will tell you they do, but have those joggers really done research and compared shoes? In most cases, probably not. Instead, they responded to Nike’s brand about no-nonsense achievement – “Just Do It” – and backfilled other reasons such as comfort to justify the choice. No running shoe company could exist if its shoes weren’t comfortable. No beer could exist if it didn’t have good taste.

Pizza Hut branding strategy seeks to understand that but they seem a bit lost.  This has been the brand of Crunchy Cheesy Crust Pizza and Dippin’ Strips, which doesn’t exactly scream trendy SoHo. Pizza Hut understood that, to convince those who wouldn’t be caught dead seeing themselves in the Pizza Hut brand, it had to align itself with another brand that spoke to them. Clever.

And very effective. It really doesn’t matter that there is no restaurant called Tuscani in New York City. Pizza Hut branding build a physical brand that reflected who the taste testers were (it’s unclear whether they knew it was Provence, but most likely they did) and turned the tables on them so they were forced to accept Pizza Hut as a brand. The true cleverness is now that the taste testers know it was Pizza Hut they can’t go back and say the food was bad. Otherwise, they would be admitting they responded to brand. And no likes to admit that. Right?