FAST FOOD: MCDONALD'S RESTORING BRAND

By Published on .

The battlefield is changing in the $110 billion fast-food business. Long-stumbling industry giant McDonald's Corp. has regained its footing while archrival Burger King Corp., the No. 2 chain behind McDonald's, has started to stumble after an impressive run.

Meanwhile, the third-largest U.S. restaurant chain, Taco Bell, has lost some bite.

SLOW GROWTH

Marketing executives at all three companies are looking for better ways to deploy their huge budgets -- they control a combined $1.2 billion in media funds -- in a time of slow growth.

Their challenge: to stand apart in a business where consumers expect not only a quick meal, but low prices, a nice atmosphere, good taste, new products and trendy toys to amuse the kids.

Adding to the task is a number of top-level power change at all three companies.

Larry Zwain has been at McDonald's USA for 10 months as senior VP-marketing. Mr. Zwain, a veteran of Pizza Hut and KFC -- and former president-CEO of Boston Market -- is one of several outsiders to join the notoriously insular McDonald's in the last few years.

Mr. Zwain, 47, whose background is in operations and marketing, rather than advertising, says TV commercials aren't enough to boost sales. "Brand brilliance," is his mantra. That means combining "creative excellence" with strong execution in restaurants. "When the customer opens the door to our restaurant, they enter our brand," he says.

A focus on customers is the "most critical component," of the company's marketing plan, says Mr. Zwain. The plan involves splitting McDonald's $570 million media budget between national and local events. "We make sure we are giving our customers what they want, whether it is the newest hottest toy in Happy Meals, or a connection with local sports teams."

LAYERED PRODUCTS

The days of big-splash product introductions like the ill-fated 1996 launch of the Arch Deluxe burger are over. Now there's long-term planning, so individual markets can layer local efforts on top of national advertising, Mr. Zwain says. "This is instead of doing something nationally and hoping and praying they'll do something local."

A diplomat who appears to relish his new role, Mr. Zwain was careful to say that all projects now grow out of a collaboration between corporate headquarters and franchisees. Before, critics said the company forced marketing initiatives on its restaurant operators.

Mr. Zwain wants McDonald's to make news with new products and toys, but with added excitement. "We've converted from simply great toys to more collectible toys and connectible toys," he says. For TV commercials, lead agency DDB Worldwide, Chicago, is cooking up new work that will pack more of an emotional wallop, Mr. Zwain says.

Burger King Corp., meanwhile, is also looking to add emotion to its advertising from Ammirati Puris Lintas, New York, and wants more new product news, says Paul Clayton, 41, president, Burger King North America. The chain is tweaking a new campaign that broke in August, and is looking to play up its heritage of made-to-order food.

"The best way to deploy resources is to make sure you're putting them behind messages that are relevant and newsworthy to consumers. I think the challenge for any brand is to stay relevant in evolving or changing times," he says.

REPLACING WATSON

Mr. Clayton, a 15-year company veteran, and highly regarded former marketing chief for the No. 2 U.S. burger chain, is overseeing marketing while a search continues for a successor to James Watkins. Mr. Watkins, senior VP-marketing, resigned in August after a two-year stint.

At a time of sales declines for the brand -- same-store sales dipped 5% through the first six months of 1999 -- Burger King is boosting local ad spending, and devoting resources to a sweeping revamp of its restaurants.

VALUE MESSAGE

At Taco Bell, Kip Knight, a veteran of sister chain KFC Corp., stepped in to his job as chief marketing officer in July. He replaced Vada Hill, who left the company to become senior VP-marketing for Fannie Mae, the government-chartered financing company for home mortgages.

Mr. Knight, 43, joins the Mexican chain as it returns to its value message. It now is spotlighting food that attracts so-called heavy fast-food users in ads from TBWA/Chiat/Day, Playa del Rey, Calif. The brand, a strong performer in recent years, showed signs of fading a bit this year, with same-store sales up just 1% for the second quarter ended June 12, compared with the same period last year.

It is too early in his tenure, a company spokeswoman says, to discuss Mr. Knight's marketing philosophy for the 6,700-unit chain. His challenge, observers say, will be to keep Taco Bell's popular TV campaign featuring a feisty

In this article:
Most Popular