In an aggressive bid to rebuild its brand, Arby's is parting with Doner, its agency of 17 years, ending one of the longest-running agency relationships in the fickle fast-food category.
The Fort Lauderdale, Fla.-based chain wants to reposition itself and has put the branding portion of its $95 million advertising account into review, tapping Wanamaker Associates, Atlanta, to handle the pitch. A poor 2003 sales performance at the Triarc Cos. chain prompted the sweeping changes as same-store sales fell 2.3%, its worst performance in five years.
A January shake-up at Arby's franchiser Triarc Restaurant Group included the appointment of Doug Benham as president-CEO, from chief financial officer at franchisee RTM Restaurant Group. The company also installed a new marketing team, naming Debbie Pike as president-chief marketing officer of its marketing arm, Arby's Franchise Association Service Corp.
Besides restructuring marketing operations, the chain tapped Siegel & Gale, New York, to conduct a brand positioning study and will reveal results this fall to franchisees.
"We have transformed the company and we have transformed the management team," said Debra Mager, senior VP-brand for Arby's. "We're at a critical point in the brand's history where we just want to make sure we've got the best possible fresh perspective on this new positioning we've got going, so it seemed like good time to reach out," she said. "Doner's done a terrific job for us and some of work they did ... contributed to our success this year."
Southfield, Mich.-based Doner continues to handles advertising for 30 Arby's co-ops, but declined to participate in the review. "We love the brand and we're proud of the work," said Doner CEO Alan Kalter. "I'm happy we're going out on an upswing."
No plans to change
Most of Arby's 3,450 units are franchised. About $15 million of the total media spending is allocated to the national brand, according to Mr. Kalter, and local co-ops control the remaining ad budget. Ms. Mager said there are no plans to change co-op agencies or the media buying and planning assignment, handled by Interpublic Group of Cos.' Initiative Media Worldwide, New York.
At the time of his December resignation, Mr. Benham's predecessor, Michael Howe, had championed a brand overhaul to make the chain more like a fast-casual concept, with new interiors and upscale salads and sandwiches.
Ignited by the national launch of Market Fresh salads and low-carb wraps called Low Carby's, first-quarter same-store sales were flat. Second-quarter results are expected to be better, with June sales up 4%, according to Doner. New management in January vowed to get sales back to historical levels and forecast a positive 2004.
Until last year, Arby's boasted a 17-quarter streak of same-store sales gains. Then McDonald's came on strong and Arby's domestic systemwide sales of $2.7 billion in 2002 went flat. Dennis Lombardi, exec VP at consultant Technomic, sees Arby's making progress and cautioned not to underestimate the impact the Golden Arches has had on the entire fast-food category.
"McDonald's ability to come roaring back the way it did has an impact on a lot of other brands because McDonald's once again became a tougher competitor," he said. "The fact that any brand where [comparable store sales] may not be as high as people think they ought to be has to be put into context of what McDonald's took back."
It's unclear whether Arby's will shelve its Oven Mitt character created by Doner. The scrappy kitchen tool has become increasingly popular and even has two pages of merchandise on the chain's Web site. "We'd like to give our new agency the benefit of their opinion on that," said Ms. Mager. "Everything is up for revision and revitalizing."