FAST FOOD REBRANDING: A MARKET STUDY

Rebranding in fast food. Catching up to McDonalds.

“Ask yourself: Is your brand different and better? Is it emotional? Does it capture the self-reflection of the customer we want to take from your competitors? Do you fulfill that promise? If not, what changes have to be made?”

Fast Food Rebranding. What does the category look like?

Consider fast food rebranding. The business world is fair. There are clear winners and losers. While outside forces, such as the economy, influence who wins and who loses, the smartest and savviest usually come out on top.

fast food rebranding

McDonalds seems to always win

Nowhere is that more apparent than the world of fast food. McDonalds has remained the top dog in terms of market share for decades, having seen a profit every year since 1954. That’s 63 years of unparalleled success.

It has earned it. It has constantly moved the needle among the large burger chains (Wendys and Burger King are constantly playing catch up) and it has the most consistent brand in the market.

Its “I’m lovin’ it” brand perfectly encapsulates its brand of fun, allowing it to dominate the market more than $24 billion of revenue last year and a 46% jump in earnings per share – largely attributed to its all-day breakfast.

Sure, it has more restaurants than anyone other than Subway (double the number of McDonalds), but it has the same number as Wendys and Burger King combined – and McDonalds is out performing its burger competitors in same-store sales.

It has consistently added items to its menu, was one of the first to provide healthier options (while still offering up the 540-calorie Big Mac, mind you) and is meaningful to most audiences. But there are signs of trouble. To stay ahead, McDonalds is trying everything from ordering kiosks to tiny versions of the Big Mac.

 

Most recently, McDonalds introduced crafted versions of its hamburgers.

 

 So what’s going on here? Is McDonalds continuing to be on the forefront of industry? 

Why can McDonald’s do it, but others can’t? What to consider in fast food rebranding.

Simple. Because McDonald’s has a brand. By the way, the reason for fast food rebranding is to BEAT McDonald’s.

QSR Market

It rarely positions itself on the table stakes of the market – the things you have to have (good price, good taste, friendly service, etc.) to be in the fast food market – because its fun brand has been imbedded with consumers so powerfully that it is always included in the considered set. (Read about brand positioning here)

Even when McDonalds markets table stakes, it wins – especially when the rest of the market does the same. That’s because the market leader always wins when all things are perceived to be equal. So far, all the fast food rebranding has been copycat.

Here’s the funny thing, though. The market share McDonalds owns can be stolen. It will probably always remain on top for several more years. But its market share could erode if the competitors – not just Wendy’s and Burger King, but all of them – become different and better.

The wide net of competition in fast food rebranding

QSR MarketTo take on McDonalds, you don’t need to be just a burger restaurant. All fast food chains are in the consumer’s considered set. That is, Pizza Hut doesn’t just compete with Papa John’s and Domino’s. KFC doesn’t just compete with Chick-fil-A and Popeye’s. They all compete with each other, so share can be stolen from anybody. Not just those in your food sector.

The definition of your competition is what your target audience does that takes the place of what you offer. That means the competition of a fast food chain and any subsequent rebranding also includes choosing to eat at home or at a nice restaurant. (Read about brand audits to better understand opportunities here) 

However, most advertising of fast food plays later in the decision tree, when consumers have already decided to eat at a fast food restaurant (or have it delivered). It’s all about what they offer, occasionally positioned against someone else in their market. (Taco Bell’s “Think Outside the Bun,” Chick-fil-A’s “Eat More Chikin.”) The most powerful brands play as early in the decision tree as possible, and few in the market play effectively at the point of decision. To be earlier in the decision tree, like a meaningful brand of Chick-fil-A, fast food rebranding might be in order.

Kentucky Fried Chicken

KFC QSR MarketKFC used to play well in this area, often promoting a parent bringing home a bucket of chicken. It was a representation of a decision being made early. The suggestion was that the decision was between KFC and eating what’s in the fridge.

KFC, though, is losing market share like water running through your hands. It closes 121 stores in 2016, making only $1,000 per store. Comparatively, other chicken outlets do much better. Popeye’s, Bojangles, Zaxby’s and Chick-fil-A all do much better. (Chick-fil-A, in fact, makes more cash per store than any other fast food chain, reporting an average of nearly $4K per store.

KFC is simply a brand that’s lost.

 

 

Yes, KFC is taking a stab of relevance by having a revolving door of actors play a version of Colonel Sanders that’s just plain weird. How to consumers see any difference in the KFC brand, especially when the messages are simply about…chicken.

What KFC must realize, even though it makes chicken, it is a competitor of McDonald’s, Taco Bell, Dunkin’ Donuts and even your local grocery store. They are all fighting for the same share.

Once that competitive set has been established, now begins the process of creating preference – and eating into McDonald’s’ gigantic market share.

In the fast food market, those closest to McDonalds

UnknownAlthough Subway is actually the second largest fast food chain, Wendy’s and Burger King have been jockeying with each other for position under the McLeader in the burger category with BK currently holding a slight edge. After the Jared issues, no one needed a fast food rebranding more than Subway.

Both Burger King and Wendy’s have been spinning their wheels. In just about every way, they have been chasing McDonald’s by basically aping it. When McDonald’s makes a menu change, so do they. Their only response to McDonald’s brand is to advertise taste and cost, which will not get those choosing McDonald’s to switch. (For taste to work, the McDonald’s eaters would have to believe the hamburgers they are eating are awful. If that’s believed, then why are they choosing McDonald’s in the first place?)

No one changes out its menu more often than Burger King.

Out-menuing the competition is not a long-term, share-stealing strategy. It’s a short-term fix. Even McDonalds introducing crafted hamburgers is a temporary tactic. In essence, McDonalds is playing defense because it’s the market leader. Therefore, its sales ebb and flow depending on the rise and fall of the entire market. Because the rest of them simply copy McDonalds’ strategy, they are unable to steal market share from the market leader. If you’re wobbling in that mire, it might be time for fast food rebranding.

What has happened is twofold:

  1. Fast food chains are scrambling for any advantage for growth and believe it’s about process (meaning, “if we could only grow our menu to reach a wider audience, we’d grow our share). But REAL fast food rebranding does not seem to happen among those chains
  2. Neither Wendy’s nor BK has captured the highest emotional intensity in the market. Think about it this way. Wendy’s has often promoted “Now that’s better.” For that to work, it must believed. It doesn’t suggest that Wend’s is better (which Wendy’s wants it to suggest). But just that Wendy’s has improved. With the competition also touting healthier fare, it becomes an inside-out promise, not one that doesn’t truly differentiate it from the competition on an emotional level.

 

 

 

Who are you?

Most fast food chains identify themselves as the type of food they offer, which leaves audiences without a reason to choose between those in the same food category beyond location…and cost.

The Pizza Category

The pizza brands are the worst of these. They all headline as needing a serious fast food rebrand. The top three – Pizza Hut, Domino’s and Papa John’s, in that order in terms of revenues – are currently battling on price. Little Caesars, the fourth-place pizza joint that’s been dying a slow death for years, has seen a mild rebound after offering a $5 pizza.

But it’s a false positive because the top three are also pitching price, and battling hard.

 

 

Pizza Hut

Pizza-Hut-logoThe meaning of that ad is that we, Pizza Hut, can cram as much pizza into a box for only $7.99. That’s it.

The other two main players are interesting, but for different reasons. Papa John’s is basically pitching a model, built on the personality of its founder, being generally about delivery instead of sit-in and going all-in with sports partnerships (having acquired the “Official Pizza of the NFL” label).

The problem with having John Schnatter front and center is that you are tied to a personality with all its strengths and weaknesses. If that personality doesn’t resonate or some scandal negatively affects it, you are tied to that personality because it is your brand.

Papa Johns

selector_logoOther than that, Papa John’s – even as it promotes “Better Ingredients, Better Pizza” – is also about, you guessed it, price. In this case, it’s two toppings on two medium pizzas for $6.99!

 

  

Domino’s

Dominos_Pizza_Logo14Dominos has been a fascinating test case. You might remember it copping to bad pizzas a few years ago, a tactic that drew some derision from those within the pizza market but was actually a brave and sneaky smart strategy.

 

Few actually think the big three make great pizza. It’s comfort food, and honesty – especially couched within a promise to do better – was refreshing. Inherent in the message was that the competitors don’t really try to improve their pizzas.

What developed was a sort of “pizza of the people.”

 

 

The result has been an increase in same-store sales and a gain in market share. For the other two, they’ve stood still, with Papa John’s losing some share. When most of the media blitz is about price – each trying to undercut the other – the market became relatively static. In addition, when you market on price that means you must market all the time, because you’re constantly playing catch-up. That’s why you see so many pizza commercials. And why no segment of this industry is in more need of fast food rebranding.

Who’s Moving Up and Who’s Moving Down

Interestingly, the fast food chains that are moving up are the ones being themselves, comfortable in their own skin. The current darling of the market is Five Guys Burgers & Fries, which started as a family-owned shop in Virginia and has become the fastest riser in the fast food market 15 years later. It took $1.3 billion in sales last year, added more than 50 new restaurants with its westward expansion, taking on local favorite In-and-Out Burger. In fact, according to a brand new Harris poll, Five Guys is America’s favorite burger chain.

Five Guys

Five Guys feels new to those markets. But its practice has remained the same since inception. Its menu has remained exactly the same since then. Its in-store model is messy in the right way, with peanut shells on the floor and a scribbled sign that shows exactly where its potatoes were grown.

five-guys-logoEven without a marketing campaign, Five Guys sports a brand with meaning in the market. How can you have a brand without marketing? Those asking the question misunderstand the meaning of brand. Many people think brand is a logo and maybe a theme line. That’s part of it, but they are only the visual representations of that brand.

Your brand is who you are, whom you are for and who you are not for. It’s a position that guides everything you do, from look and feel and message to operations, business model and the many other ways you fulfill your brand promise.

Five Guys developed organically, which meant they were true to their brand of “authentic” and “comfort” from the very start – and never wavered.

You will never find Five Guys including salads on its menu. If it does, the brand would become less believable and something crucial to their brand will be lost.

At some point, as Five Guys grows, it will have to advertise in order to tell a wider population what it stands for. That will be a difficult transition, as businesses such as these inherently know what their brand means but have difficulty expressing it without sounding mundane and clichéd.

Checkers

Consider Checkers. It merged with Rally’s in 1999 and was known for a double drive-thru. And a look nearly identical as Five Guys. It aims for a small-town, 50’s feel.

checkers-burgers-logoSince the merger, however, the company has been struggling as it tries to take on bigger game. Only recently has it been opening new stores, but trails Five Guys in market share  closed 18 stores in 2011, was passed by Five Guys in market share and now has the lowest per-store sales of the top 13 burger chains.

What happened?

Answer: It didn’t have a brand message. It has changed slogans like most of us change light bulbs, using three different ones in the last five years, an absurd number for a brand that advertises so little in comparison to the Big Three.

Currently, they are using “Epic Meals, Epic Deals,” which just says it has cheap food. 

 

Checkers/Rally’s is simply teaching audiences to shop on price. That’s not a long-term strategy. The only self-reflection of the customer is “I eat cheap burgers.”

There is a sense of desperation here, especially as Checkers has discarded the second drive-thru window for walk-up window and added room inside. It is a brand at sea.

Fast Food Rebranding Summary

How do you eat into McDonald’s market share? The easy answer is to be different and better, but doing that is hard work and demands fast food chains to be courageous. It must slay any sacred cows that need slaying and not look back.

Speaking of cows. We haven’t addressed the recent same-sex marriage issue that was the center of Chick-fil-A news. From a purely brand standpoint, it wasn’t the smartest thing for Chick-fil-A CEO Dan Cathy to say, but it’s far from a deathblow. Chick-fil-A never makes it conservative leanings a secret. (It closes on Sundays.) Still carving out a loyal following with memorable advertising (cows who can’t spell).

QSR Market ChartOther fast food brands have far worse problems: Lost brands with no to little idea of what their brands should mean.

Among the lost (like Checker’s): Sonic (reverting back to the two guys in the car while it re-groups under a new CEO), Arby’s, Dairy Queen, Long John Silvers,  Boston Market and Quiznos.

All have the same problem. They go round and round with the same, tired messages that are currently table stakes and, therefore, have no meaning. Quiznos once thrived because it was the only shop with toasted sandwiches. Now Subway, the second largest QSR in the US with more stores than even McDonald’s, has toasted sandwiches as does Boston Market and even Blimpie.

When you hitch your ride to a product benefit (Mmm…toasty”), you lose instant meaning when everyone else catches up.

Quiznos

 

 

By defining yourself with a product benefit, you can’t create preference. It’s like saying, “Buy this car. It has wheels and a steering wheel.”

Dairy Queen

 

The way to beat McDonald’s is define yourself differently from McDonald’s emotionally, strategically and tactically. That means you must find the highest emotional intensity in the market (how fast food customers define themselves), claim it and fulfill it.

QSR MarketThink outside the fast food category. In the beer category, Budweiser is nearly a monopoly, and Miller is fading fast. Why is that? If you see a Miller ad, wait five minutes, then ask yourself which brand of beer that ad was for. Most times you would say, “Budweiser.”

That’s because when all things are equal – from the point of view of the target audience – the market leader wins.

Therefore, if price, taste and “fun” are front and center of your brand – internally and externally – you will lose. “Good Mood Food” (Arby’s) isn’t that far way from “I’ve Lovin’ It.” Neither is “The Unofficial Sponsor of Summer” (Boston Market) or “So Good its RiDQulous.”

Ask yourself: Is your brand different and better? Is it emotional? Does it capture the self-reflection of the customer we want to take from your competitors? Do you fulfill that promise? What changes have to be made, if not?

Answer those questions correctly, put them into action, and steal market share from McDonald’s.

Read some more:

The Stealing Share process

Developing an understanding of precepts 

Read about market research here

How to know it is time to rebrand

Stealing Share branding nonprofits

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