Top 2012 (non-menu) stories for the QSR segment

Dec. 11, 2012 | by Alicia Kelso

The biggest (non-food) story from the QSR segment in 2012 was the intensified competition, mostly from comprehensive rebranding efforts.

Many of these efforts have started to pay off. After struggling with sales (and messaging) in 2011, 2012 could be chalked up as a turnaround year for brands such as Burger King, Taco Bell, Krispy Kreme, Wendy's, Arby's and Captain D's. Church's Chicken and Quiznos are also undergoing leadership and branding transformations after a few rocky years.

There are many components behind these straightened ships. For example, Burger King launched its most comprehensive menu ever and is modernizing its restaurants. The brand also shifted its messaging to hit a broader demographic. Wendy's is also focused on new restaurant designs and is doubling up on its marketing campaigns.

In addition to introducing new taglines, Taco Bell and Arby's both directly targeted fast casual competition and stepped up their innovation game. Krispy Kreme shifted its spotlight to "doughnut occasions" and international expansion and also added a new coffee line. Captain D's and Church's put new CEOs into place.

As this competition intensifies, companies are trying to differentiate their operations more — adding double drive-thru lanes; staying open 24/7; serving breakfast to the late-night crowd; adding WiFi, lounge seating and flatscreen TVs; experimenting with table service (e.g. Taco Cabana); and even adding delivery, a la Burger King.

Other top QSR stories from 2012 include:

Mobile breaks into the mainstream.
After a few years of experimentation, brands are finally focused on mobile initiatives. A KFC/Taco Bell franchisee in the Los Angeles area just deployed a mobile payment solution.Tim Hortons hosted its first mobile payment transaction in November, and more than 3,000 are expected to be on the platform by year's end.

In June, Burger King launched its BK Mobile Crown Card pilot program. Subway units in California and McDonald's units in France also tested m-commerce, while Dunkin' Donuts added payment and gifting components to its new app.

Some brands also got creative with QR Codes, including Taco Bell which ran a national print add featuring 2-D bar codes resembling avocados and lemons. The design connected mobile users to a landing page promoting the chain's new Cantina Bell menu. Church's Chicken's current partnership with Hasbro also includes a QR code directing customers to a holiday sweepstakes.

Carl's Jr. and Hardee's leveraged their promotional partnership with The Amazing Spider-Man to roll out an augmented reality campaign. Taco Bell also dabbled in augmented reality with its PlayStation promotion.

In addition to payments and marketing, several brands unveiled new or updated apps, with features such as games (Carl's Jr. and Bojangles), meal-builders (Wendy's), delivery information (Subway), group purchasing (Tim Horton's), new location alerts (Krispy Kreme) and more.

Social gets more social.
It seems like a short time ago when brands were just starting to figure out how to effectively use Facebook and Twitter. Now there are product specific pages (Wendy's Baconator and McDonald's McRib, for example), and brands such as Taco Bell and Ben & Jerry's are expanding their presence to fledgling sites like Pinterest and Instagram.

Sports (and) marketing
It turns out, sports and fast food aren't strange bedfellows. This year, Burger King teamed up with USA Basketball, while McDonald's touted its Olympics sponsorship. Dunkin' Donuts signed Lebron James to promote the brand in China, and Eli Manning to do the same stateside. Meanwhile, Troy Aikmen and Colt McCoy signed on as franchisees. NASCAR got promotional nods from Krispy Kreme, Burger King and Bojangles. McDonald's and Tim Hortons worked sponsorships with the NHL. Gold Star Chili touted its hometown with a Cincinnati Bengals promotion. Subway expanded its "Famous Fan" line with Robert Griffin III. And Jersey Mike's added soccer play Christie Rampone to its campaign.

International growth
After dominating the QSR segment's international expansion plans for the past few years, China and India are no longer the only story.

Just this year, Dunkin' Donuts grew in Germany; Wendy's jumped into Eastern Europe; Cinnabon became the first American QSR in Libya; Cold Stone developed in Nigera; Carl's Jr. grew its Bahamas presence; Quiznos headed to the Philippines; Subway opened in Estonia and Romania; McDonald's and Burger King eyed Siberia; Auntie Anne's opened in Jamaica; Baskin-Robbins is on a growth path in Vietnam; Rita's has Canadian markets in sight; and Krispy Kreme added Singapore to its portfolio.

Domestic growth
While embarking upon these development plans, QSRs didn't shun their domestic presence. Dunkin' Donuts is attempting to double its footprint in the U.S. throughout the next 20 years, and has debuted west of the Mississippi as part of that plan. Del Taco, Culver's, Bojangles, Jersey Mike's and TCBY are also working on aggressive domestic expansion strategies.

Franchising growth
A recent report by Technomic and Restaurant Finance Monitor found that restaurant franchising is a major growth avenue pursued by chains and, as credit markets continue to loosen up, more franchisees are expanding. Lending for the QSR segment specifically is up 28 percent since 2011.

Brands that took advantage of this trend include Burger King, CKE, Baskin-Robbins, Arby's, KFC, Wendy's, Popeyes, KFC, Taco Bell, Jack in the Box and more.

Cobranding is in ...
White Castle added a couple more co-branded units with Deckers, which sells sandwiches, The Laughing Noodle, or Blaze Modern BBQ. In Jackson, N.J., diners can chase a Whopper with an ice cream sundae thanks to a test between Burger King and Friendly's Ice Cream.

TCBY is eyeing the Seattle area as a priority market, along with its sister brand, Mrs. Fields Cookies. The Dairy Queen system has rolled out Orange Julius Premium Fresh Fruit Smoothies and Julius Originals throughout the U.S. and Canada.

In a September earnings call, CKE Restaurants' executives discussed the company's "big opportunity" to grow its dual-branded restaurants of Carl's Jr. and Hardees with Red Burrito and Green Burrito.

Tennessee owner/operators have expanded their portfolio to include a co-branded Tasti D-Lite and Planet Smoothie inside Walmart locations.

... Gestation crates are out.
Mcdonald's, Wendy's, Burger King, Subway, CKE Restaurants, Tim Horton's, Sonic, Jack in the Box and Dunkin' Donuts all made some level of commitment this year to phase out gestation crate use in the near future.

¿Habla Español?
The U.S. Census indicates that the Hispanic population is expected to grow 34 percent from 2010 to 2020, and restaurant chains are shifting their marketing techniques to appeal to the influential demographic.

The tagline for Dunkin' Donuts — "America Runs on Dunkin" — was translated this year for the Hispanic market. In February, Taco Bell introduced its new general market tagline, Live Más, a Spanish-language motto inspiring people to try new things.

Wendy's announced an initiative to increase the company's presence with the Hispanic market.

"It's an important sales opportunity," CEO Emil Brolick said in an August earnings call.

Sonic launched a new bicultural website, while McDonald's extended its national Hispanic education program with the launch of Latinos Rumbo al College, a free webinar series.

PR nightmares and controversy
The QSR segment had plenty of public relations nightmares during 2012, from McDonald's #McDStories Twitter campaign, to the pink slime controversy, to Chick-fil-A's anti-gay marriage boycott. Taco Bell and Burger King were under scrutiny for rogue employees who posted photos of themselves urinating on nachos and standing in tubs of lettuce, respectively.

Meanwhile, the segment's pay rates are in focus as QSR workers in New York City protest for higher wages after kicking off their efforts at the end of last month. And NYC is also in the spotlight as operators wait for the controversial soda ban to go into effect. The latter two issues could make for an interesting 2013 in the segment.

Up next: Predictions for 2013.

Read more about industry trends.

Topics: Customer Service / Experience , Franchising & Growth , Marketing / Branding / Promotion , Mobile Payments , Online / Mobile / Social , Operations Management , Restaurant Design / Layout , Staffing & Training , Systems / Technology , Trends / Statistics

Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with, and has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, and Franchise Asia magazine.
View Alicia Kelso's profile on LinkedIn

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