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Why Choose Kantar Media as Your Insight Partner? • Because you need deep industry expertise: We’re world leaders in marketing, media and advertising intelligence – #1 in news and advertising monitoring worldwide. • Because we offer best-in-class media coverage: We monitor 25 different traditional and digital media channels, including new platforms like online video, mobile web and mobile apps. Plus we offer broad geographic coverage, tracking advertising in hundreds of local markets nationwide. • Because we operate at the speed of business: Get fast access to new creatives and find out about changes in your competitors’ strategies within 24 hours or less for many media – so you can quickly adjust and optimize. • Because we know the QSR and casual dining sector: Kantar Media can deliver granular insights across both paid and earned media for restaurant advertisers, including deep insights into spending trends, messaging and promotions on both a national and local basis.

Discover how Kantar Media can help you succeed in a fast-paced multi-media world. We have the advertising intelligence you need to make informed decisions for your business – and thrive. Visit us at KantarMedia.com.

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5 Chain reaction 7

Ad spending: 25 largest restaurant chains

8

Ad spending: Largest chains by menu category

9

Restaurant ad spending by category

9

Restaurant ad spending by medium

10 What’s in store: Restaurant brands 11 Total free-standing inserts 11 FSI ad spending by chain

Fast-Food Marketing was produced by Ad Age Datacenter and published Oct. 12, 2015. Additional copies: Order print copies at [email protected] or 1-877-320-1721; for readers outside the U.S., 1-313-446-0450. Digital edition available free online at AdAge.com/trend-reports

11 Digital coupon spending by chain

To upgrade to Ad Age’s Premier Plus, and to get access to all reports go to: AdAge.com/membership

11 Total digital coupons

Email: [email protected]

12 Why restaurants have gone hog wild 13 Top 10 QSR bacon advertisers, first-half 2015

Send mail to: Advertising Age, 150 N. Michigan Ave., Ste. 1737, Chicago, IL 60601 Ad sales: Jackie Ramsey 1-212-210-0475, [email protected]

13 Top 10 QSR bacon advertisers in 2014

14 Making a run for the order online 14 Growth in online traffic 15 Taking orders: What chains are doing online and with apps

16 Searching for the right strategy 17 Top 20 QSR advertisers by paid search 17 Types of paid search keywords used by quick-service chains

This report was researched and written by Julie Liesse, a regular contributor to Advertising Age.

18 Breakfast 24/7 18 Top 10 QSR breakfast advertisers 18 Where quick-service restaurant chains focus their ad dollars

This document and information contained therein are the copyrighted property of Crain Communications Inc. and Advertising Age (Copyright 2015) and are for your personal, noncommercial use only. You may not reproduce, display on a website, distribute, sell or republish this document, or the information contained therein, without the prior written consent of Advertising Age. Copyright 2015 by Crain Communications Inc. All rights reserved.

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CHAIN REACTION By Julie Liesse

With American consumers feeling more confident, the overall economy up and key indicators like gas prices down, the restaurant industry is growing, and restaurant ad spending is outpacing the overall ad market. U.S. restaurant sales rose 3.8% in 2014 to a record $466 billion, says research firm Technomic, which forecasts 5.0% growth for 2015. The restaurant category accounts for an increasing portion of overall U.S. ad spending. “Despite indications that restaurant ad spending is down year to date in 2015, it’s not down as much as it is for the ad marketplace as a whole,” says Jon Swallen, chief research officer for Kantar Media. “That means restaurants’ share of the total ad economy is continuing to grow, although at a modest rate.” In 2014, restaurants’ share of the total U.S. ad economy was 4.6%, making it the seventh-largest category in terms of ad spending, Mr. Swallen says. A 10-year analysis of Kantar Media data shows that U.S. measured-media ad spending by the restaurant category as a whole was flat in 2007 and then up nearly 6% in 2008. It dropped 3.3% in 2009 (the end of the 2007-2009 Great Recession) and has increased every year since then. Quick-service restaurants—including pizza chains and coffee and donut shops— accounted for 60% of U.S. restaurant ad spending, or $4.56 billion, in 2014, according to Mr. Swallen, and tend to shape the ups and downs of yearly spending.

ILLUSTRATION BY ALEKSEI OSLOPOV/ISTOCK

WINNERS AND LOSERS Over the past decade, the names on Technomic’s list of the top 10 restaurant chains (measured in terms of U.S. sales) have changed only slightly: 2014’s list was identical to 2004’s list except for a little fowl play (Chick-fil-A joined the ranking; Yum Brands’ KFC dropped off ). But the rank order has changed, with gains for the coffee-and-donuts and sandwich menu categories. Starbucks vaulted to No. 2 in 2014

sales from eighth place in 2004. Subway and Dunkin’ Donuts moved up the ranking; Burger King and Wendy’s slipped. Yum Brands’ Pizza Hut was the only pizza chain in Technomic’s top 10 ranking based on 2014 estimated systemwide sales. But pizza is a hot spot of advertising, with measured-media spending for the pizza segment increasing about 66%

to $855.8 million in 2014 from $514.7 million in 2005. Last year, Domino’s Pizza increased measured-media spending 16.9%, edging past Pizza Hut to become the largest advertising spender among pizza chains. Also fueling the category’s overall growth were Papa John’s, with ad spending up 10.2%, and Little Caesars, up 9.6%.

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The coffee-and-donuts segment has nearly doubled its ad spending in the past decade to $232 million, with grande-sized spending increases of 13.8% in 2013 and 15.0% in 2014. That’s been powered by Starbucks and Dunkin’ Donuts, which each posted strong spending increases in 2014—16.6% and 9.0%, respectively. McDonald’s remains far and away the restaurant category’s largest ad spender, with $935 million in 2014 measuredmedia spending. That’s 76% more than the No. 2 spender, Subway. McDonald’s last year accounted for a 7.6% share of sales for the U.S. restaurant industry, nearly three times the share of Starbucks (2.7%), the secondlargest chain based on sales, according to data from Technomic. Mr. Swallen says McDonald’s has a more than 13% share of voice of the overall restaurant category’s $6.5 billion in measured-media spending.

MENU OF OPTIONS What do the top chains do with their ad dollars? For restaurants with diverse menus—whether that’s traditional QSR chains like McDonald’s or Wendy’s, or “QSR-plus” chains like Panera Bread with a more upscale menu and ambiance—

decisions need to be made about which parts of the menu to support, and when. “While ‘burger’ chains, for instance, may have similar menus and comparable products, they can be very different in how they allocate their advertising,” Mr. Swallen says. “New menu items always get attention,” he says, “and favoritism toward beverages and dessert items has been in place for several years.” According to a 2014 Technomic report, 21% of consumers say beverages play a very important role in deciding which restaurants to visit, up from 16% in 2012. Technomic points out that consumers aged 18 to 44 use beverages as reasons to drop by a restaurant for snacks and social visits. Whether it’s new coffee-based options at McDonald’s, Taco Bell Freezes or this summer’s featured Frosted Lemonade at Chick-fil-A, beverage items account for a substantial portion of the category’s advertising activity. Mr. Swallen says Sonic Drive-In, for example, featured desserts and cold beverages—slushes, shakes, Blasts, Splashes, Energy Drinks and the like—in 58% of its 2014 ad spending. That grew to 79.8% of Sonic’s spending in the first half of 2015. QSR chains also spend advertising dollars pushing breakfast and menu items

featuring bacon (see related stories on Pages 18 and 12, respectively). Restaurant chains continue to use price-point advertising including value meals, two-for-one deals and short-term price promotions. “Overall, we are consistently seeing that more than a third of ad spending for QSR restaurants contains price points,” Mr. Swallen says. “For some advertisers, when price is an emphasis on their marketing calendar, the portion of ad spending can be higher than 50%.” Looking at the big picture, Mr. Swallen notes a change in the number of menu items being advertised by QSR chains. In a typical week in 2010, he says, Wendy’s would feature an average of 4.2 different menu items in its TV advertising. For the first half of 2015, that average was down to 3.7 items. Similarly, Sonic in 2010 would feature 4.5 menu items on average. Now that figure is 3.8. For Arby’s, it was 7.8 items in 2010 and 5.0 in 2015. “Some of these advertisers have responded to the competition by hunkering down and concentrating their resources on few key menu items,” Mr. Swallen says. “If you look broadly, at any one moment in time the number of menu items being emphasized by QSR chains in their advertising seems to be trending downwards slightly.”

TV HITS THE SPOT

6 OCTOBER 12, 2015 | ADVERTISING AGE

SONIC DRIVE-IN: DANIEL ACKER/BLOOMBERG; SONIC BEVERAGES: BUSINESS WIRE

Slush fund: Sonic featured desserts and cold beverages—slushes, shakes, Blasts, Splashes and the like—in 58% of its 2014 ad spending.

In terms of media mix, the restaurant category is the most TV-centric of all the top ad categories, with 80% of dollars spent on TV in 2014, Mr. Swallen says. That compares to a TV allocation of 55% for the automotive category, 59% for packaged-food products, 70% for nonalcoholic beverages and 45%-50% for retailers. Restaurants last year represented the No. 4 advertiser category for cable TV networks. For the past decade, Kantar Media numbers show that restaurant spending on newspapers, magazines and radio has declined substantially while spending on outdoor advertising has increased 25.3% and measured internet spending is up nearly four-fold.

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AD SPENDING: 25 LARGEST RESTAURANT CHAINS 2014 U.S. measured-media ad spending. Dollars in thousands.

Rank

Chain (parent)

Headquarters

Measured-media ad spending 2014 2013 % change

1

McDonald’s (McDonald’s Corp.)

Oak Brook, Ill.

$935,096

$975,672

-4.2

2

Subway (Doctor’s Associates)

Milford, Conn.

532,554

513,587

3.7

3

Taco Bell (Yum Brands)

Irvine, Calif.

356,603

327,358

8.9

4

Wendy’s (Wendy’s Co.)

Dublin, Ohio

284,130

289,177

-1.7

5

KFC (Yum Brands)

Louisville, Ky.

251,913

283,889

-11.3

6

Domino’s Pizza (Domino’s Pizza)

Ann Arbor, Mich.

240,078

205,432

16.9

7

Burger King (Restaurant Brands International)

Miami

237,025

257,353

-7.9

8

Pizza Hut (Yum Brands)

Plano, Texas

232,901

247,351

-5.8

9

Sonic Drive-In (Sonic Corp.)

Oklahoma City

206,956

198,891

4.1

Kansas City, Mo.

165,438

176,113

-6.1

10

Applebee’s (DineEquity)

11

Olive Garden (Darden Restaurants)

Orlando, Fla.

155,115

172,771

-10.2

12

Papa John’s (Papa John’s International)

Louisville, Ky.

143,758

130,503

10.2

13

Dunkin’ Donuts (Dunkin’ Brands Group)

Canton, Mass.

131,641

120,788

9.0

14

Little Caesars (Ilitch Holdings)

Detroit

131,569

120,060

9.6

15

Red Lobster (Golden Gate Capital)

Orlando, Fla.

126,795

156,182

-18.8

16

Chili’s (Brinker International)

Dallas

120,879

113,870

6.2

17

Starbucks (Starbucks Corp.)

Seattle

103,486

88,787

16.6

18

Outback Steakhouse (Bloomin’ Brands)

Tampa, Fla.

100,946

99,285

1.7

19

Arby’s (Roark Capital Group)

Atlanta

99,170

93,870

5.6

20

Popeyes (Popeyes Louisiana Kitchen)

Atlanta

95,852

69,793

37.3

21

Dairy Queen (Berkshire Hathaway)

Edina, Minn.

86,579

75,949

14.0

22

Buffalo Wild Wings (Buffalo Wild Wings)

Minneapolis

82,317

69,493

18.5

23

IHOP (DineEquity)

Glendale, Calif.

77,285

57,080

35.4

24

Panera (Panera Bread Co.)

St. Louis

71,090

57,345

24.0

25

Jack in the Box (Jack in the Box)

San Diego

68,286

70,881

-3.7

Source: Kantar Media.

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AD SPENDING: LARGEST CHAINS BY MENU CATEGORY 2014 U.S. measured-media ad spending. Dollars in thousands.

Rank

Chain (parent)

Headquarters

Measured-media ad spending 2014 2013 % change

BURGER 1

McDonald’s (McDonald’s Corp.)

2

Wendy’s (Wendy’s Co.)

3

Burger King (Restaurant Brands International)

Oak Brook, Ill.

$935,096

$975,672

-4.2

Dublin, Ohio

284,130

289,177

-1.7

Miami

237,025

257,353

-7.9

Ann Arbor, Mich.

$240,078

$205,432

16.9

Plano, Texas

232,901

247,351

-5.8

Louisville, Ky.

143,758

130,503

10.2

Louisville, Ky.

$251,913

$283,889

-11.3

PIZZA 1

Domino’s Pizza (Domino’s Pizza)

2

Pizza Hut (Yum Brands)

3

Papa John’s (Papa John’s International)

CHICKEN 1

KFC (Yum Brands)

2

Popeyes (Popeyes Louisiana Kitchen)

Atlanta

95,852

69,793

37.3

3

Chick-fil-A (Chick-fil-A)

Atlanta

50,987

30,285

68.4

$131,641

$120,788

9.0

103,486

88,787

16.6

11,937

11,279

5.8

$356,603

$327,358

8.9

18,504

9,781

89.2

9,642

9,303

3.6

$532,554

$513,587

3.7

COFFEE AND DONUTS 1

Dunkin’ Donuts (Dunkin’ Brands Group)

2

Starbucks (Starbucks Corp.)

3

Tim Hortons (Restaurant Brands International)

Canton, Mass. Seattle Oakville, Ontario

MEXICAN 1

Taco Bell (Yum Brands)

2

Chipotle Mexican Grill (Chipotle Mexican Grill)

3

Del Taco (Sagittarius Brands)

Irvine, Calif. Denver Lake Forest, Calif.

OTHER SANDWICH 1

Subway (Doctor’s Associates)

2

Arby’s (Roark Capital Group)

Atlanta

99,170

93,870

5.6

3

Jimmy John’s (Jimmy John’s)

Champaign, Ill.

38,376

33,920

13.1

Source: Kantar Media. Menu categories based on data from Technomic.

8 OCTOBER 12, 2015 | ADVERTISING AGE

Milford, Conn.

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RESTAURANT AD SPENDING BY CATEGORY U.S. measured-media spending, 2014 vs. 2013. Dollars in millions.

Source: Kantar Media.

RESTAURANT AD SPENDING BY MEDIUM U.S. measured-media spending. Dollars in millions. Year

Total

Broadcast TV

Cable TV networks

Syndicated TV

Magazine

Newspaper

Radio

Internet

Outdoor

2005

$5,091

$3,011

$704

$210

$179

$184

$517

$47

$240

2006

5,327

3,113

811

228

139

189

548

52

247

2007

5,303

3,013

875

208

136

207

573

52

240

2008

5,619

3,023

1,146

234

148

222

532

68

245

2009

5,431

2,801

1,230

247

150

212

442

118

233

2010

5,549

2,955

1,248

237

99

202

427

132

249

2011

5,745

2,932

1,413

251

118

203

403

156

270

2012

6,027

3,030

1,609

294

102

184

387

139

282

2013

6,351

2,950

1,931

331

123

174

380

150

312

2014

6,412

2,825

2,145

362

114

154

336

176

301

Source: Kantar Media. Internet is display advertising only.

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WHAT’S IN STORE Restaurants and grocery stores have long considered themselves competitors for “share of stomach” among American consumers. But in many cases these days, says Kantar Media VP Dan Kitrell, you’ll find frenemies in the grocery aisles. The number of FSI events from restaurant brands was down “In the ’90s, food retailers were combatting the growth of restauslightly in 2014 to 207 events with an estimated $76.8 million in rants with their in-store delis and prepared foods; QSRs were comspending. But Kantar Media tallied a 53.1% increase in digital-coupon peting to attract customers to new meal occasions like dinner,” events among restaurant product brands in 2014, up to 418 events says Mr. Kitrell, VP-account solutions for Kantar Media. “But we’re from 273 events in 2013. Translating that into estimated spending on seeing now that there is more of that ‘frenemy’ look to it—that in digital coupons, Kantar Media estimated spending on those events some ways they are finding ways to co-exist and share ‘share of up 12.5%, to $10.0 million in 2014. stomach.’” Coupons remain a great way to secure initial distribution One of the places where restaurant chains can grow sales and for a product in retail stores, to maintain shelf space and brand awareness is by making their to encourage consumers to try a own signature branded products product. available in grocery stores: “There are many challenges in Starbucks whole-bean or refrigerattaking an on-premise restaurant ed coffees, Dunkin’ Donuts wholebusiness into new markets,” Mr. bean coffee, P.F. Chang’s frozen Kitrell says. “The logistics of franmeals, Olive Garden salad dresschising and advertising may be ings, Red Robin frozen fries. more intimidating than taking That translates into restaurantyour signature product and buildbrand activity in both newspaper ing distribution at retail—building and digital coupons. a business or building broader Through its Marx service, awareness of your brand.” Kantar Media monitors the freeAlthough it was only the No. 17 standing inserts distributed mainrestaurant advertiser overall in ly in Sunday papers, as well as dig2014, Starbucks was far and away ital coupon activity on more than the largest restaurant brand repre100 websites—sites like SmartSource sented in both FSI and digital coupons, and Coupons.com as well as individual with total coupon spending of $25.5 million. retailer sites. Restaurant brands Mr. Kitrell says the chain is not only selling prodMarketing observers for many years have predicted the from Dunkin’ Donuts whole-bean coffee and ucts in grocery stores—and adding to the number of demise of the Sunday FSI. But Mr. Kitrell says FSI coupons, P.F. Chang’s entrées coffee occasions where Starbucks is present—but also and particularly retailer events, experienced a resurgence to Red Robin fries reinforcing its brand name. “A lot of times people forwhen the U.S. economy fell apart in 2008 and have are available in get about the combined power of brand advertising remained strong through the economic recovery. “FSIs supermarkets. and the brand mentions within retailer ads as well,” remain so valuable as an ad medium because they delivhe says. er the advertising impact within the available creative Starbucks was one of the ad-spending leaders space, but shoppers also engage with the advertising while among several coffee chains whose brands are promoted in gromaking purchase decisions,” he says. “Shoppers who use FSI cery stores: Dunkin’ Donuts, Caribou Coffee, Seattle’s Best Coffee coupons seek out the advertising, and that’s very powerful.” (a brand owned by Starbucks Corp.) and Peet’s. Among the hundreds of restaurants and restaurant chains for Starbucks spent $84.8 million to advertise its stores across U.S. which Kantar Media reported 2014 advertising and promotion activmeasured media in 2014 and an incremental $18.7 million to adverity, 62 supported their retail brands with FSI coupons while 54 tise its retail-store packaged-goods. Adding in $25.5 million in distributed digital coupons, up from 56 and 47 respectively in 2013. coupon spending, the Starbucks brand last year was supported by While advertising helps build overall brand equity and awarea total of $129 million in measured-media ad spending. ness, FSI and digital coupons provide an incentive to make a trial As Mr. Kitrell says, “When consumers see the Starbucks name, purchase or to remain loyal to the restaurant brand outside of the they don’t think about whether it’s the CPG product or the store.” dine-in experience.

10 OCTOBER 12, 2015 | ADVERTISING AGE

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CLIPPING AND CLICKING ON COUPONS What was spent on free-standing inserts and digital coupons for restaurant brands, 2014 vs. 2013. Dollars in thousands.

Source: Kantar Media.

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WHY RESTAURANTS HAVE GONE HOG WILD Anything is better with bacon on it—or in it, or around it. That seems to be the mantra for the QSR restaurant business. In addition to offering traditional bacon platforms like burgers and breakfast sandwiches, chains have been adding bacon to French fries, donuts, Mexican food and even pizza crust—and turning the spotlight on those irresistible bacon products in their advertising. Bacon was featured in 10.1% or $227.5 million worth of QSR category ad spending during the first half of 2015, according to an analysis by Kantar Media. While that is down from 13.0%, or $307.9 million in the first half of 2014, it still represents a perhaps surprisingly big slice of ad spending. “There is no shortage of menu innovation where bacon is concerned,” says Jon Swallen, chief research officer for Kantar Media. “Even though there is a broad trend toward healthier eating in America, bacon continues to be something people are indulging themselves with.

Taco Bell Bacon Club Chalupa

$39.0 million in bacon-focused ad spending. “For restaurants, that’s a good thing,” Wendy’s has been a leader in promothe says. “Bacon works as a complement ing its bacon content. The Baconator for a lot of products, not just ground beef. menu made Wendy’s the No. 3 bacon Using bacon to innovate around new prodadvertiser with $35.1 million in first-half ucts also allows restaurants to justify and spending. In addition to the Baconator and get a premium price for their menu items.” Son of Baconator burgers—the former feaThe top QSR bacon advertiser in the turing six strips of bacon, the latter with first half of 2015, with $41.8 million in four—the chain introduced Baconator spending, was Little Caesars, which French fries, topped with cheese and rolled out its Hot-N-Ready Bacon pieces of smoked bacon. Wrapped Crust deep-dish pizza. That’s Dunkin’ Donuts is testing a baconnearly half—46.4%—of Little Caesars’ topped donut and has added a Bacon $90.1 million in overall U.S. measuredGuacamole Flatbread sandwich. media advertising spending from January Even Starbucks expanded its bacon through June. footprint with the Double-Smoked Bacon, Little Caesars led a group of pizza Cheddar & Egg breakfast sandwich. chains promoting bacon in advertising “Bacon is pervasive; everyone seems this year, including Papa John’s and CiCi’s. to have bacon on their menus, even The restaurant industry’s No. 2 bacon Taco Bell,” Mr. Swallen advertiser in the first six says. “It’s very marketable, months of 2015 was Taco Bell, Little Caesars and has a lot of traction for promoting the return of its Hot-N-Ready Bacon these chains.” Bacon Club Chalupa with Wrapped Crust deep-dish pizza

Wendy’s Baconator Starbucks Double-Smoked Bacon, Cheddar & Egg sandwich

12 OCTOBER 12, 2015 | ADVERTISING AGE

Dunkin’ Donuts Bacon Guacamole Flatbread

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TOP 10 QUICK-SERVICE RESTAURANT BACON ADVERTISERS, FIRST-HALF 2015 Dollars in thousands.

Source: Kantar Media.

TOP 10 QSR BACON ADVERTISERS IN 2014 Dollars in thousands.

Source: Kantar Media.

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MAKING A RUN FOR THE ORDER ONLINE As a growing number of Americans go online to shop, order and pay for everything from books to cars, restaurant chains are trying to figure out where they fit in the world of e-commerce. Millward Brown Digital examined consumer use of restaurant chain websites in six categories and found the highest engagement rates with the sites of pizza chains and the snack category, which includes coffee and donut stores. “Pizza chains like Pizza Hut and Domino’s were early adopters of online experiences and especially online ordering,” says Aaron Peterson, marketing manager for Millward Brown Digital. “They realized there was an opportunity that existed online to serve their customers, and they continue to reap the benefits.” Traffic to pizza chains’ websites via personal computer grew 31% from 2014 to 2015, led by strong gains for Domino’s, Papa John’s and Pizza Hut. Domino’s now offers ordering through its website, smart TVs, Twitter, smart watches and text message, in addition to its Piece of the Pie rewards program. Snack category traffic was up 28% in 2015, Millward Brown Digital found, and continues to be led by Starbucks. “They (Starbucks) are at the forefront of engaging customers the way they want to be engaged,” Mr. Peterson says—whether it’s checking the stars on a loyalty card, reloading a Starbucks card, sending e-gifts or paying in-store via the Starbucks app. Mr. Peterson, however, also applauds Starbucks for using its website to showcase its philanthropic side, offering visitors extensive content and opportunities to engage with each other and the company. “They understand who their customer is and what they care about,” he says. The highest traffic growth in 2015 among all six categories was posted by the Mexican restaurant category, with unique visitors up 120%. That surge was fueled by one of the country’s fastest-growing chains, Chipotle, whose traffic was up 180%, as well as Taco Bell, which nearly doubled

14 OCTOBER 12, 2015 | ADVERTISING AGE

ONLINE TRAFFIC Year-to-year growth in unique visitors to chain websites via desktop computer, 2015 vs. 2014. MEXICAN RESTAURANTS

+120%

Driven by growth of engagement with Chipotle (+180%) and Taco Bell (+97%)

PIZZA CHAINS

+31%

Driven by growth of engagement with Domino’s (+38%) and Papa John’s (+37%)

COFFEE, DONUT, SNACK STORES

+28%

Driven by growth of engagement with Starbucks (+40%) and Tim Hortons (+39%)

BURGER CHAINS

+11%

Driven by growth of engagement with Whataburger (+106%), In-N-Out (+90%) and Five Guys (+73%)

CHICKEN CHAINS

-10%

Chicken chains’ websites skew older vs. other chains; only 38% of unique visitors are age 18-34. Source: Millward Brown Digital’s Compete Clickstream panel, the largest passively collected online consumer behavioral panel of its kind in the U.S.

its online engagement. Chipotle already offers online ordering for fast pick-up. Five Guys Burgers and Fries, another fast-growing chain, also offers easy online ordering. That may be why it was one of the chains to drive the burger category’s 11% traffic growth. Millward Brown Digital found that in all these categories, more than 50% of personal-computer traffic came through Google searches, which includes organic as well as paid searches. “It’s important for the industry to realize that when [consumers] look for a website, people are not typing in the chain’s URL, but navigating through Google,” Mr. Peterson says. “That means these chains need to focus on search engine management and maximizing search engine optimization to get the most out of their websites.”

MOBILE APPS, LOYALTY PROGRAMS Restaurant-chain mobile apps, especially ones with built-in loyalty programs, are popular among Americans. In a 2015 Technomic Consumer Brand Metrics poll, nearly two in five people said loyalty and rewards programs were important or very important in the decision to visit a restaurant. That number rose to 50% of millennials, who also said they placed greater importance than their elders on online or mobile ordering and mobile-payment options. The only problem with relying on a mobile app to engage consumers, says Mr. Peterson, is that with the limited space available on a typical smartphone, owners need to prioritize which apps they download and keep. “Your brand might not make the cut when a customer runs out of space,” says Mr. Peterson.

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TAKING ORDERS What chains are doing online and with apps.

Five Guys Five Guys Burgers and Fries makes ordering easy online and with apps.

In-N-Out The West Coast burger chain provides its fans with apps, ringtones and phone/computer wallpaper.

Taco Bell Taco Bell’s apps feature online ordering and “VIP” rewards and offers.

Chicken chains Restaurants in this category offer less in terms of website engagement and ordering vs. other QSR categories.

Whataburger The chain’s mobile site provides a menu of options including food nutrition facts, a store locator and company information.

Tim Hortons Consumers can pay with the TimmyMe app. The chain’s website home page streams comments— both positive and negative—from Facebook and Twitter.

Chipotle The Mexican food chain offers ordering online and through mobile apps.

Pizza Hut The chain has apps for iPhone, iPad, Android, Windows Phone and Xbox 360.

Domino’s Domino’s takes orders by website, smart TV, Twitter, smart watch and text message.

Papa John’s The pizza chain gives consumers Papa Rewards points when they order online.

Starbucks The coffee chain lets consumers order and pay with its Apple iOS and Android apps.

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SEARCHING FOR THE RIGHT STRATEGY Paid search advertising is not a center-of-the-plate item for quick-service restaurants. Instead, many QSR chains use search primarily like a special ingredient, for tactical purposes.

Jimmy John’s has chain’s website. Overall, the QSR category used such search The QSR category’s use of spent only $18 million on deskkeywords as “delivery desktop search is also unusutop paid search in 2014, a tiny food near me” and al because, he says, “There’s amount compared to cate“restaurants that a huge disparity between the gories like retail, which spent deliver,” fitting in with the chain’s overall top 10 and everyone else in more than $3 billion. brand campaign for terms of their spending.” Kantar Media’s AdGooroo its “Freaky Fast!” Among the 20 biggest unit conducted an exclusive ordering and delivery. search advertisers in the QSR analysis of 2014 desktop category, the top 10 advertissearch spending within the ers spent an average of $1.7 QSR category. Richard Stokes, million on desktop search in 2014, with CEO of AdGooroo, says the relatively an average click-through rate of 15% and small amount of desktop search spendan average cost per click of 47 cents. ing—small compared to the overall marIn comparison, the chains ranked keting spending by these chains and this Nos. 11-20 spent just a fraction of that category—is not necessarily surprising. amount—averaging only $136,000 on “Paid search advertising,” Mr. Stokes search, or less than 10% of the top 10 says, “is transaction-focused—compelling spenders’ average. in-market consumers to click through to The top spenders on search include your site and make a purchase or take both some of the nation’s largest chains— another type of action”—things a cusMcDonald’s, Wendy’s and Subway— tomer frequently doesn’t do on a QSR

16 OCTOBER 12, 2015 | ADVERTISING AGE

as well as some of the fastest-growing chains, such as Panera Bread, Chipotle and Jimmy John’s. AdGooroo found the top keywords purchased by the 10 biggest QSR spenders reflected the types of predictable things consumers might access in searching for general information or to find the closest location of a restaurant chain. Keywords included brand names, websites and locations—search terms like “McDonald’s” or “PaneraBread.com.” In addition, top keywords included terms related to menu and nutrition— when customers want to check the calorie count on Panera’s Bacon Turkey Bravo or to find out whether a certain menu item is available for a picky child. Even though overall category search spending is relatively small, many of the nation’s top QSR chains employ search— both the keywords purchased and the creative messages in paid search ads—in a focused way. For instance, Taco Bell used the messaging in its 2014 search ads to support new menu items. When consumers searched for “taco bell” they would see ads for New Loaded Grillers and XXL Steak Nachos. The nation’s top taco chain also bought the keyword “slurpee”—the trademark frozen drink of 7-Eleven. Why? So it could promote its own Freezes frozen drink line. Taco Bell also bought “dr. pepper” to support its Dr Pepper Vanilla Float Freeze. And after launching its breakfast menu in 2014, Taco Bell bought “subway breakfast” to reach consumers looking for a fast morning meal. While Taco Bell was publicly competing with McDonald’s for breakfast customers and trying to poach Subway’s breakfast business, rival Burger King also used paid search to focus on breakfast. Messages in BK’s search advertising were almost exclusively focused on the breakfast

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menu: the Croissan’wich product line and coffee. Wendy’s used keywords to drive business to its menu. But rather than branded terms, Wendy’s top 20 keywords included 13 generic menu names, among them “baked potato,” “chili,” “chicken salad” and “Cobb salad.” At the same time, Wendy’s search ad messages emphasized food quality. Two sandwich chains used search ads not to promote products, but to support specific parts of their business models. Jimmy John’s activity was the closest to a traditional paid search campaign in the sense of driving immediate sales. Supporting the sandwich chain’s overall brand campaign for its “Freaky Fast!” ordering and delivery, nine of the chain’s top 20 keywords were things like “delivery food near me” and “restaurants that deliver.” Mr. Stokes points out that none of these keywords include the Jimmy John’s name, indicating that the chain used this effort for new-customer acquisition. Jimmy John’s search ads promoted

the “Freaky Fast! Freaky Good!” menu and encouraged browsers to “Order Jimmy John’s online.” Similarly, sandwich competitor Subway used part of its search efforts to drive catering business. “Subway catering,” “baby shower ideas” and “baby shower food ideas” were among Subway’s top 20 keywords in 2014. Subway’s search creative promoted “Subway Fresh Catering” and mentioned “platters, giant subs or meals to go.” Finally, No. 1 category advertiser McDonald’s used keywords like “mcdonalds careers,” “mcdonalds application,” “mcdonalds job application” and “mcdonalds jobs” to recruit employees. Mr. Stokes says the only other top 10 chain that had a job-connected keyword in its top terms was Panera Bread. McDonald’s has the budget to play a bigger game in search. McDonald’s last year spent more money on the search term “world cup 2014” than any other keyword as it used search spending to support its larger corporate marketing— in this case, its multifaceted worldwide sponsorship of 2014 World Cup soccer.

QSR SEARCH SPENDERS Top 20 by paid search spending on Google U.S. desktop search in 2014. Rank

Advertiser

1

panerabread.com

2

mcdonalds.com

3

tacobell.com

4

subway.com

5

wendys.com

6

kfc.com

7

jimmyjohns.com

8

chipotle.com

9

dunkindonuts.com

10

dairyqueen.com

11

qdoba.com

12

arbys.com

13

bostonmarket.com

14

quiznos.com

15

moes.com

16

cater.panerabread.com

17

jackinthebox.com

18

bk.com

19

bkdelivers.com

20

whataburger.com

Source: AdGooroo, a Kantar Media company.

TYPES OF PAID SEARCH KEYWORDS USED BY QUICK-SERVICE CHAINS Based on each brand’s top 20 keywords by Google U.S. desktop search impressions in 2014. Brand name/ website

Location/ hours

Menu

Nutrition

Food item/ type

Employee recruiting

Competitor brand

Panera Bread

9

1

2

2

5

0

0

0

0

1

McDonald’s

9

0

1

2

1

4

1

1

0

0

Taco Bell

5

1

2

3

4

1

2

1

1

0

Subway

6

2

2

2

3

0

0

2

0

3

Wendy’s

3

0

1

1

13

0

0

0

1

0

KFC

5

2

3

1

7

0

0

2

0

0

Jimmy John’s

7

1

1

1

1

0

0

0

9

0

Chipotle

8

1

1

1

2

0

1

0

4

2

Dunkin’ Donuts 10

1

1

1

4

0

2

1

0

0

6

1

2

0

11

0

0

0

0

0

Dairy Queen

Coupons/ Restaurants deals near me/delivery

Catering

Source: AdGooroo, a Kantar Media company.

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BREAKFAST 24/7

TOP 10 QSR BREAKFAST ADVERTISERS Full-year 2014. Measured-media ad spending, dollars in thousands.

Everyone loves breakfast. Especially QSR chains—and increasingly, any time of the day. McDonald’s, the biggest fast-food chain, this month will begin offering Egg McMuffins and other morning items all day long, joining other all-day breakfast chains like Sonic and Steak ’n Shake—in addition to breakfast specialists such as IHOP. Survey after survey indicates that Americans like to eat breakfast foods not just in the morning. When asked, consumers say fast-food chains should serve their breakfast menus all day long. Of 6,200 people who participated in a recent online survey by Instantly, 72% said fast-food restaurants should serve breakfast all day. McDonald’s move into all-day breakfasts comes after Taco Bell launched a breakfast menu in 2014. Taco Bell’s push into breakfast helped spur an increase in Americans visiting restaurants in the morning hours: While customer counts at lunch and dinner were flat, breakfast visits were up 4% for the year ended May 2015, according to the NPD Group. That reflects an ongoing trend in the restaurant industry— overall business flat but breakfast meal occasions growing. Breakfast ad spending for the QSR category totaled $548.4 million in 2014. The top 10 breakfast advertisers represented the vast majority of the total, $532 million. During the first half of 2014, when Taco Bell launched its breakfast offering, breakfast grew to 12.8% of all QSR ad spending, or $301.9 million, according to an analysis by Kantar Media. Taco Bell spent 32.4%, or $64.7 million, of its total ad spending on breakfast during the first half of 2014. It still is spending heavily on breakfast, which accounted for 32.9%, or $62.1 million, of its first-half 2015 spending. The chain now says breakfast makes up 6%-7% of its overall business. For the first half of 2015, breakfast spending for the category overall fell 28.8% to $215 million and accounted for 9.6% of all QSR ad spending. “Breakfast spending is down this year [in the first half ] after the big Taco Bell-McDonald’s competition last year, but spending is still significant,” says Jon Swallen, chief research officer for Kantar Media. “Although breakfast is still a secondary daypart for QSR restaurants, the number of chains competing at breakfast is growing larger.”

18 OCTOBER 12, 2015 | ADVERTISING AGE

First-half 2015. Measured-media ad spending, dollars in thousands.

Source: Kantar Media. U.S. ad spending.

WHERE QUICK-SERVICE RESTAURANT CHAINS FOCUS THEIR AD DOLLARS First-half 2014 vs. 2015.

Source: Kantar Media. Percent of U.S. QSR total category measured-media ad spending. Percentages do not add up to 100% because some advertising features multiple attributes.

Kantar Media: The total solution Kantar Media helps over 22,000 clients in 50 countries track their brands, measure their advertising investment and understand consumer behavior. We specialize in giving businesses the insights they need to prosper. Whether you need to monitor paid, owned or earned media; understand audience behavior.

Competitive Advertising Insights

Digital Intelligence

Libby MacDonald P: 404.801.3744 [email protected]

Aaron Peterson P: 617.933.5671 [email protected]

Search & Digital Marketing Research Amy Rux P: 312.725.1828 [email protected]

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22% more spent on burger ads vs. chicken Value meals promoted in 14% of QSR ads

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