Fast Food

With Traffic Flat, Brands Improve Hospitality, Locations and Menus

Snacks become a meal option

The brand value of the fast food category increased last year, but only by 5 percent compared with 15 percent a year ago.

The Quick Service Restaurant (QSR) business felt the effects of flat traffic in the US and economic sluggishness in Europe, without a boost from the fast growing markets, particularly China, which dependably drove sales even during the recession.

Brands continued to rely on promotional tactics to drive short-term gains with valueoriented options, tempting customers items. They also implemented strategic improvements to meet changing consumer expectations for the restaurant experience.

Snacking became an important "day part." Snacks produce strong margins and leverage locations during the underused afternoon hours after lunch and before dinner. Brands experimented with ways to offer traditional items in smaller and less expensive portions. They marketed specialty beverages, like coffees and fruit drinks, as snacks. Brands also took these initiatives:


Many brands expanded baked goods as part of the snacking focus and to drive and complement profitable coffee sales.

Social Media

Most brands engaged heavily in social media both to drive traffic and strengthen brands.


International brands accelerated expansion, with several brands entering or adding outlets in India.

Broadening appeal

The presence of Panera Bread in the BrandZ™ fast food ranking for the first time this year illustrated the shift in consumer expectations. Considered part of the fast-casual restaurant sector, Panera's 1,600+ outlets in the US and Canada emphasize fresh ingredients and onsite baking in a hospitable environment.

In an attempt to project similar appeal, McDonald's tested all-day sale of baked goods and remodeled certain units to resemble cafes, attempting to create a space for community interaction similar to what Starbucks has accomplished.

Starbucks announced plans to acquire the French pastry bakery brand La Boulange. The company expects the acquisition to help drive food sales and grow another brand. Starbucks continued the rollout of its updated logo that retains the familiar Siren but removes the word coffee to broaden brand appeal.

Dunkin' Donuts expanded its sandwich menu with items intended to grow the breakfast and lunch business. Tim Hortons, the large Canadian chain known for its coffee and donuts, remodeled locations.

Burger King also invested in a multi-year remodeling rollout. It's part of a brand growth strategy that includes menu improvements, marketing changes and operational efficiencies to attract more women and older customers. During the recession, Burger King suffered from its relatively narrow core customer base of young men.

Burger King is in the midst of an effort to infuse the brand with entrepreneurial zeal by shifting from corporate control to a 100 percent franchise model. The brand returned to the BrandZ fast food category ranking in 2013.

Brands promoted value to drive traffic

Location upgrades and menu expansions challenged the QSRs to stretch their brands without losing the price message that attracts core customers. The brands attempted to accomplish this feat by promoting value options.

Subway continued to position the brand as a healthy option in the QSR space. McDonald's addressed the ongoing concern with healthy eating with menu options that included vegetables, fruit and grain. The brand actively interacted with mothers on social media sites.

In an index that tracks brand presence on Facebook, Twitter and YouTube, the industry publication Nation's Restaurant News (NRN) ranked Starbucks number one, with Panera and McDonald's also listed as leaders in driving the most engagement on these social media platforms.

Taco Bell achieved a high social media standing following a promotion for its Doritos Locos Tacos with taco shells made of Nacho Cheese Doritos. The Mexican food brand Chipotle also ranked high in the NRN list.

Chipotle appeared for the first time in the BrandZ fast food category ranking. Celebrating its 20th anniversary in 2013, Chipotle operates around 1,400 Mexican grill restaurants in the US and Canada, and is gradually expanding into European markets like London and Paris.

Expansion focused on fast growing markets

The major brands continued global expansion, especially in fast growing markets. Under the leadership of a new CEO, McDonald's increased its presence in China, ending 2012 with 1,705 Chinese units compared with 1,500 a year earlier.

Yum! Brands, parent of KFC, Pizza Hut and Taco Bell, generated almost half of its 72 BrandZ Top 100 Most Valuable Global Brands 2013 Part 3 | The Categories Food & Drink | Fast Food operating profits from China in 2012. It operates more than 5,700 restaurants in China, of which 4,260 are KFC branded and 987 Pizza Hut branded. However, sales growth softened after media in China reported that KFC's chicken contained excessive amounts of antibiotics. KFC responded by strengthening its oversight of suppliers.

Yum! Brands is accelerating efforts in India where it operates 280 KFCs and 310 Pizza Hut locations and has traded for almost 20 years. Yum! Brands plans to expand into India's smaller cities with a total of 1,000 Indian outlets by 2015. The company just introduced Taco Bell to India.

Dunkin' Donuts and Starbucks entered India in 2012. McDonald's, with around 270 restaurants in India, announced plans to open its first vegetarian units. Subway operates about 300 outlets in India, including three that serve only vegetarian food.

Burger King again became a publicly traded company in 2012. In a complex deal, 3G Capital, which acquired the chain in late 2010, retained a majority stake. Burger King is accelerating its international expansion, establishing joint ventures with strong local partners, keeping a minority interest but investing no capital. Transactions in 2012 included China, Russia, South Africa and Central America.

3G Capital, founded by Brazilian financier Jorge Paulo Lemann, was earlier involved in combining Belgium's InBev and Anheuser-Busch into AB InBev, the world's largest brewer. Early in 2013, 3G Capital teamed with Warren Buffett's Berkshire Hathaway to buy global food producer H.J. Heinz.

Burger King operates around 13,000 restaurants in 86 countries, with almost 7,200 locations in the US. McDonald's operates close to 35,000 locations in 119 countries, including around 14,160 in the US. Subway opened around 1,700 restaurants last year. It operates the greatest number of outlets worldwide, over 39,000 in 101 countries.

Insights BrandZ BigData™

Serving up personality

McDonald’s has owned “fun” and “playfulness” and exported its brand personality with consistency and great clarity across the globe. Its brand value exceeds by one and a half times, the brand value of all the other brands in the BrandZ™ fast food category Top 10.

This dominance in brand value means that differentiation by personality is one route to survival and potential growth for its competitors, which have various advantages, according to analysis based on BrandZ personality archetypes.

Long-established Tim Hortons owns “trust” because of its caring and kindly image. Subway scores on “creativity” and Taco Bell is relatively “rebellious.” Notably, two successful newcomers to the ranking are also distinctive: Chipotle, a Mexican grill, is “adventurous.” Known for fresh ingredients, Panera is rated high in “idealism.”

Action Points

1 .Take leadership

Concern about healthy eating is a long-term trend that will accelerate. Staying in front of the trend makes better business sense than trying to catch up. Health conscious eaters may be relatively marginal today, but they're the core customers of tomorrow.

2. Update value

Value always draws the attention of individuals and families, and especially during difficult economic times with unemployment high. Keep reframing—and updating—value.

3. Cut calories

Customers expect food that tastes good. Continue to deliver good taste, naturally, but reduce the calories and fat contained in menu options and provide taste in healthier ways.

4. Broaden appeal

Customers looking for value and taste come from all income levels. That makes QSR the most democratic of meal options. It suggests that while respecting and fulfilling the needs of core customers it's possible to broaden appeal.

Fast Food Up 5%

The fast food category includes Quick Service Restaurant (QSR) and casual dining brands, which vary in customer and menu focus, but mostly compete for the same day parts.

BrandZ Top 100 2013

BrandZ Global 2013 Report Top 100 Report

Top 100 Chart

2013 BrandZ Top 100 Infographic

BrandZ 2013 Infographic

Methodology and valuation by Kantar Millward Brown

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