CMO Churn Sweeps Restaurant Business

Cosi Announces New Marketing Chief; Applebee's Resigns

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CHICAGO ( -- Rising competition and financial pressure in the restaurant industry is fueling churn among top-level marketers, with two bold-faced names the most recent movers: Chris Carroll, former Subway Restaurants marketing chief, this week joins emerging fast-casual chain Cosi, while John Cywinski, exec VP-chief marketing officer, is resigning from Applebee's.
Cosi is one of a slew of restaurant chains that have recently changed CMOs.
Cosi is one of a slew of restaurant chains that have recently changed CMOs.

Growing trend
The pair joins a slew of CMOs switching allegiances in the restaurant category. Bob Evans snagged the CMO from Long John Silver's; Triarc Cos.' Arby's has tapped recruiter Elliott Group to find a CMO to succeed Debbie Pike, 46, who plans to retire later this summer. The parent of Outback Steakhouse, OSI Restaurant Partners, is seeking a chief brand officer to oversee its eight concepts.

Dick Wray, president-founder of restaurant recruiter Dick Wray & Consultants, said the banking industry and competition are driving the changes. He reeled off top marketer shifts at Rubio's, Del Taco, Captain D's, Chevy's and Benihana within the past year.

"Banks are driving everything right now," he said. "They get multiples out of restaurants faster than any other product, they get better drive for their dollar than any other industry. People are repositioning concepts to get more advantageous positioning."

Cosi expansion plans
At Cosi, Mr. Carroll will be responsible for marketing, advertising, media, concept design and development and R&D for the 100-plus-unit chain. While Cosi's $5 million ad budget is a fraction of Subway's more than $400 million, Cosi plans an aggressive expansion to 800 units by the end of 2010.

Mr. Cywinski's tenure as chief marketer is more than double the industry average of 24 months, perhaps because of his close relationship to Chairman-CEO Lloyd Hill. With Mr. Hill's already-identified successor likely to be in place for several years, Mr. Cywinski said the timing was right for him to look at his own situation. "I would prefer to be Chicago-based and in a role that allows for president-CEO progression." (Mr. Hill is stepping down as CEO but will retain the chairman post.)

Casual-dining-segment leader Applebee's ended fiscal 2005 with same-store sales up 1.8%, compared to 4.8% in fiscal 2004. To improve sales and traffic, Mr. Cywinski and his team refocused the menu and ushered in the "Applebee's Guys" singing duo in advertising.

Slower growth rate
Same-store sales at casual-dining and quick-service restaurants are growing at a far slower rate than in the prior two years due to pressure from rising gas prices and interest rates, though the industry is still red hot from a private equity view as a "growth staple," according to analysts.

"The simple fact that the sales trends that a lot of companies are experiencing, especially in casual dining, are viewed as not acceptable," said Allan Hickok, co-founder of Hickok McMillan Strategic Advisors. "Notwithstanding a tough operating environment, perhaps change is required to get a new look or a fresh look at what needs to be done."
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