But digital innovation powers new initiatives
Fast food brands returned to basics, improving taste and experience. In a shift in focus, brands aimed to please their core customers rather than try to attract consumers from the more upmarket casual dining segment. Fast food companies also initiated brand-building and digital innovations and expanded franchise networks.
Growing competition from smaller burger chains and changing consumer expectations. KFC upgraded its kitchens and returned to its original recipe for fried chicken. Starbucks went back to basics in a different way, taking its core product, coffee, to another level—premium.
McDonald’s first back-to-basics step, switching from frozen to fresh meat for its Quarter Pounders, also reflected the larger trend of upgrading to fresher and healthier ingredients. KFC joined other fast food brands, including McDonald’s and Subway, in eliminating the use of chickens raised with certain antibiotics.
Burger King revised its franchise system, remodeled locations, expanded internationally, and devoted more attention to advertising and marketing. The changes reflect the influence of 3G Capital, the Brazilian investment company that acquired the chain in 2010 and later merged it with Tim Hortons to create Restaurant Brands International.
Burger King rose 39 percent in value, more than any other brand in the BrandZÔ Fast Food Top 10. Tim Horton’s rose 26 percent. McDonald’s improved 10 percent. Domino’s Pizza increased 29 percent, as it implemented and communicated digital innovations. Taco Bell appeared in the ranking for the first time.
Along with KFC and Pizza Hut, Taco Bell is owned by Yum! Brands, which last year spun off its China business. With the China business separated, Yum! Brands intends to accelerate the international franchising of its three fast food brands.
Ironically, as many traditional fast food brands improved food freshness and increased in value, Chipotle, the chain that became the fast food symbol of fresh and healthy ingredients, declined in value. Consumer trust still lagged, despite many safeguards implemented since supply chain problems caused a food poisoning outbreak in 2015. The BrandZÔ Fast Food Top 10 rose 7 percent in value, compared with an 11 percent rise a year ago.
Healthy and fresh
Chipotle continued to make changes in its operations to protect food security. It reduced the number of ingredients, removed preservatives, and even altered its kitchen ventilation systems to keep food fresh. To communicate its menu and operations overhaul, Chipotle introduced an ad campaign called “As Real as it Gets.” It features a variety of actors who enter a giant burrito and encounter an omniscient voice asking probing personal questions that forces them to “get real.”
Subway, the category’s largest chain in number of outlets (44,000 worldwide), attempted to reset and improve all aspects of the brand experience. It also established a digital team. And it introduced a new store format and logo, and an ad campaign that continued to promote price and items, but also noted food quality improvements, including the lack of artificial ingredients.
In a program called “Experience of the Future,” McDonald’s planned to include self-order kiosks and table service in about 2,500 locations by the end of 2017. It also planned to introduce mobile ordering and payment to 20,000 of its 36,000 locations. To address people’s desire to order in rather than eat out, McDonald’s partnered with Uber in the US to offer delivery, a service already available in some of its restaurants in Asia.
The McDonald’s initiatives followed the CEO change made two years ago, and began with simplifying the menu to make fast food faster and bring the chain closer to its roots and core customers. Along with retaining existing customers and regaining lost customers, the chain hoped to attract new customers with its offerings of coffee and snacks.
Brand experience and digital
To expand its food business, Starbucks experimented with an expanded lunch offering of fresh salads and sandwiches. Called “Mercato,” the experiment began in around 100 Chicago locations. Starbucks is also developing a more premium experience. After overseeing the 25-year growth of Starbucks, founder Howard Shultz assumed the post of executive chairman and planned to expand the Starbucks Reserve Roastery, initially opening in New York, Shanghai, and Tokyo.
The Starbucks Reserve Roastery prototype in Seattle is an experiential center, a kind of coffee museum and gift shop, where customers can become immersed in details of coffee harvesting and production and buy Starbucks branded merchandise. Starbucks also plans to open smaller premium locations called Starbucks Reserve.
A pioneer in retail digital applications, Starbucks expanded its mobile order and payment platform, integrating it with Amazon Alexa and Ford vehicles. It also began rolling out a voice-ordering function for its mobile app. In China, Starbucks partnered with Tencent, the giant internet platform, on a social gifting initiative that enables users of the WeChat/Weixin messaging service to easily gift a Starbucks beverage or gift card.
Domino’s Pizza has transformed its business with digital. In fast food, as in most businesses, success starts with the product. After Domino’s Pizza improved the taste of its pizza several years ago, the brand began implementing digital innovations to improve customer experience. Same-stores sales have improved steadily since 2009.
Today, most customers order from Domino’s Pizza using an app, sometimes with a voice command, or even by sending a pizza emoji. And Domino’s Pizza continues to innovate. Because pizza comes with so many topping variations, digital ordering can be complicated. Domino’s Pizza introduced Easy Order to simplify and speed the ordering process. With one click, customers can reorder their favorite menu items.
Domino’s Pizza communicates its digital leadership to differentiate the brand. A recent commercial parodies the movie Ferris Bueller’s Day Off, with a young man racing through suburban backyards, tracking his pizza delivery on his smartwatch, and reaching his front door just as the Domino’s Pizza delivery car pulls into the driveway. Although not obvious in the ad, the delivery car is an innovation. It contains a warming oven.
Brand-building Action Points
1. Get the basics right
When brands expand rapidly to reach new customer groups, it is easy to forget the essential ingredients of the brand’s initial success. Going back to basics can help revitalize the brand and propel it forward.
2. Update the basics
Reclaiming the basics will not be enough. The business has become more complicated. And brands need to address overlapping issues. Sustained brand success requires outstanding systems that consistently deliver tasty food that is healthy and fresh, whether the customer is in the restaurant, at home, at work, or somewhere else.
3. Examine expansion
In saturated markets, growth through penetration may shift to a contest for share, which could require building dayparts, focusing on positioning or, when possible, moving to premium.