Restaurants, Fast-food

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In the U.S., restaurants, and especially purveyors of fast-food, have long been among the largest spenders on advertising campaigns. White Castle is credited with being the first restaurant to implement a "carryout" style of service. In 1933, White Castle ran a coupon ad in city newspapers in each market where it had a restaurant, offering five hamburgers, carryout only, for just 10¢. Millions of newspaper readers—many of whom had never tried a hamburger before—clipped the coupons during the week of the sale and lined up for blocks to redeem them. As a follow-up, White Castle ran a stream of non-coupon ads to keep demand steady.

In the 1950s, as the number of U.S. households with TV sets increased, many hamburger chains began to test advertising on the new medium, some spending a great deal in TV, especially in local markets. White Castle focused on attracting children to its outlets; it also helped develop the use of premiums, including fold-up castles and collectible trading cards, to win consumers.

National ad strategies

McDonald's Corp., which by the late 1950s was already an industry force, developed its first TV campaign in 1963. Ray Kroc, McDonald's leader during its years of great expansion, believed strongly in the value of advertising.

In 1966, McDonald's hired its first ad agency, D'Arcy Advertising. That year the company sponsored its first Super Bowl; the following year, it started its Operators National Advertising Fund, asking its franchisees to contribute 1% of sales for national advertising.

The fund allowed the company to launch a national TV campaign for the first time, making Ronald McDonald and taglines such as "Two-all-beef-patties-special-sauce-lettuce-cheese-pickles-onions-on-a-sesame-seed-bun" part of the national consciousness in the U.S.

By the mid-1960s, Kentucky Fried Chicken (established in the 1930s) had expanded to 300 outlets throughout the country and was well-advertised, associating itself with the likeness of founder Colonel Harland Sanders and the phrase "finger-lickin' good."

Although it had been advertising for four decades, White Castle did not create its first systematic ad strategy until the 1970s, when it developed consumer profiles based on surveys of potential customers. Working with Warner Simpson Advertising, it joined its rivals on national TV, running ads with the tagline, "The White Castle hamburger. Without it, all hamburgers would taste the same."

The company also tried to differentiate itself by poking fun at its reputation and its small square hamburgers, marking the first time a restaurant chain had undertaken such a comedic tactic.

Marketing played a role in Domino's early development in the late 1960s and early 1970s. The pizza chain's decision to locate its outlets near college campuses and not in residential areas was based largely on advertising efficiency: The company could reach college students effectively and inexpensively through their college newspapers, while targeting the general public required more expensive and less targeted general-interest advertising.

In 1971, one Domino's outlet ran a newspaper promotion offering a pizza for $1 on Super Bowl Sunday, which produced an unexpectedly large response and led to subsequent annual promotions. It was the beginning of many sports-related marketing efforts for the company. In the 1980s, it began sponsoring a race car and, later, an entire race, the Domino's 500.

Entertainment tie-ins

Even more prevalent than sports sponsorships by restaurant companies, particularly the leading quick-service restaurants, are entertainment tie-ins. Almost every chain rotates entertainment promotions on a four-to-six-week basis; often the central focus of these promotions is a children's-meal toy premium. Most such promotions involve collectible premiums that change periodically, thereby encouraging consumers to return to an outlet several times over the course of a monthlong promotion.

McDonald's is the industry leader in high-profile entertainment tie-ins. In 1997, McDonald's shook the industry by linking with the Walt Disney Co. in an exclusive 10-year partnership that encompassed all Disney's entertainment properties and theme parks. In 1997, McDonald's executed 400 tie-in programs in conjunction with Disney films and other properties around the world, including seven in the U.S. Frankel & Co., McDonald's promotion agency, handled the campaigns.

Meanwhile, McDonald's rivals aligned with other films, most of which did not meet box office expectations: seafood chain Long John Silver's developed a tie-in with "Lost in Space"; Burger King chose "Small Soldiers"; and Taco Bell tied in with "Godzilla," which did well at the box office but, owing to too-high expectations, was a disappointment. Still, Taco Bell's "Godzilla" promotion proved somewhat more successful, as it was linked to the chain's talking Chihuahua (created by ad agency TBWA/Chiat/Day). The dog, which uttered the tagline, "Yo quiero Taco Bell," became a pop-culture icon. Sales of a $2.99 plush puppy Chihuahua represented the company's best promotion ever.

The Taco Bell chihuahua is one of many restaurant ad hooks that have become a part of the social consciousness in the U.S. Wendy's hamburger chain spawned a popular fad in 1983 with its "Where's the beef?" campaign, which featured elderly actress Clara Peller. Pizza chain Little Caesar's spokescharacter is an animated cartoon Caesar. Jack in the Box has a long-running campaign featuring Jack's giant head on top of a human body. Cliff Freeman & Partners became something of a specialist in these types of campaigns, creating "Where's the beef" campaign, Little Caesar, Jack in the Box and an animated Old South colonel for KFC Corp.

Restaurant executives have also become treasured icons, including the real "Colonel" Sanders and Wendy's founder Dave Thomas, whose deadpan delivery made him a favorite until his death in January 2002.

The industry in the 21st century

At the end of the 20th century, growth in the fast-food category had slowed, and chains fought each other for share of market rather than growing the category. Many observers believe that the brands with the greatest ad presence and recall draw the most traffic, making advertising key to sales.

Fast-food restaurants also turn to advertising to repair their images when something goes wrong. A notable example occurred in the early 1990s, when Denny's was sued for allegedly discriminating against black customers. In the aftermath, its ads, in addition to touting its food, talked about Denny's desire to be inclusive.

Within the hamburger segment, where, by 2000, McDonald's held more than a 40% share of the U.S. market, followed by Burger King, Wendy's, Hardee's and Jack in the Box, the two leading chains were maintaining or increasing spending; smaller chains such as Carl's Jr. were also increasing media spending and seeking entertainment tie-ins.

The same was true in the pizza segment, where market leaders Pizza Hut, Domino's, Little Caesar's and Papa John's—respectively the category's top four—were waging aggressive campaigns as part of what they referred to as the "pizza wars."

By 2001, a new category, fast casual, was quickly becoming an influence in the restaurant market. Fast casual, a hybrid of quick service and casual dining, included restaurants with limited service or self-service formats, check averages between $6 and $9, made-to-order food, sophisticated menus and upscale decor. The leader in this new category in 2001 was McDonald's-owned Boston Market with 18.6% of the market, followed by Panera Bread/St. Louis Bread with 15.7%; McDonald's-owned Fazoli's, 12%; Fuddrucker's, 7.8%; and AuBon Pain, 6.1%. (In 2003, McDonald's ended its Fazoli’s venture.)

Following the lead of Wendy’s, which launched entrée salads in 2002, other chains quickly began adding their own nutritional lines as obesity became a national obsession. By the end of 2003, burger chains, including CKE Restaurants’ Carls Jr. and independent In-n-Out, were launching low-carb meals and bunless burgers to capitalize on the Atkins diet craze.

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