UPFRONT 1997: Fast Food

Strong media buys in this super-competitive category will land many restaurant chains on the Top 10 ad-spenders list-again

Look for extra sizzle in the fast-food wars as McDonald’s scrambles to lift store-level profits next year while Burger King and Wendy’s pile on promotions to steal market share by attracting more families with young kids. That’s likely to continue the trend toward strong media buys from these restaurant players who, along with Taco Bell, KFC, Pizza Hut and others, were among the nine restaurant operations to have dominated the list of top-20 network ad spenders for 1996, according to Competitive Media Reporting.

Price plays will remain a key lever in burger chains’ strategies, though consumers aren’t likely to see a return to the price wars of the early ’90s. The reason? Price has fallen behind quality and convenience as customer-drivers, which bodes well for brands that offer superior tastes or more variety under one roof.

McDonald’s, whose ad expenses rose 12 percent last year, is likely to propel spending as high as $625 million next year as it moves forward with its “Campaign 55” national value initiative, rotating different sandwich specials each month into the program. At the same time, Big Mac is launching a top-down focus on improving food quality and service. Industry observers expect fast-food giants to place a heightened emphasis on quick-hit deals or events to make up for an expected decrease in profit margins. Local ad spending will also increase as store operators tailor national programs to individual markets. “You don’t get far with trinkets, trash and games, but you need to get traffic back while you think of something more effective, long-term,” says Rich Biederman, a Dallas consultant and former chief concept officer at Pizza Hut.

Likewise, Burger King and Wendy’s will devote a hefty portion of their ad messages to promotions and product news, including BK’s expected fall campaign touting its enhanced french fries. Wendy’s, long a specialty-sandwich purveyor, is expected to get more active in entertainment circles, as it seeks to draw more families with ties to movies and TV shows. Still unclear is whether struggling Hardee’s will see any appreciable jump in ad spending following its takeover by acquisition-hungry CKE Restaurants for $327 million.

Pizza Hut, KFC and Taco Bell, which will be spun off by parent PepsiCo as a separate company by December, are expected to fuel growth by refocusing on store operations and providing consumers with a steady diet of new products. Pizza Hut, which will boost ad spending this year to $200 million to promote a total menu upgrade, is likely to draw responses from Domino’s and Little Caesars. Up-and-comer Papa John’s, with 1,260 units in 37 states, is also seeking a higher brand profile by launching its first network TV ads this spring.

With the exception of Boston Market, Starbucks and a few bagel players, burgeoning home-meal replacement and coffee concepts do not yet have the scale to make efficient use of national media, relying instead on spot TV buys, in-store efforts and coupons. Spending is also likely to remain static for the near term among casual-dining players, as the industry tries to emerge from a recent slump.

-Karen Benezra


* Burger/pizza players spend more to win customers

* Take-out and home meal replacement concepts soar

* Taste for upper-end casual catches on

OVERALL: Spending heads higher

DARK HORSE: Will Taco Bell (stiff neck and all) rise again?

Copyright ASM Communications, Inc. (1997) ALL RIGHTS RESERVED