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Marketing

2014 chain restaurants' highs & lows

Ask any number of restaurant executives for a peek at their New Year’s resolutions and, chances are, finding a way to give a much-needed jolt to traffic will top most lists. That was the same force behind many of the plays drawn up this year by several industry all-stars. Their wins and losses offer a starting point for next year’s game plans. 


Chick-fil-A

HIGH - Chick-fil-A talks chicken, not politics. Even before the death of its outspoken founder, CEO Dan Cathy said the chain would step out of the discourse about gay marriage that was alienating market segments and concentrate on customer service.


Chipotle

HIGH - Focus on efficiency. Chipotle doubled down on its quality message and put effort into throughput, resulting in a 17 percent gain in same-store sales through the first three quarters of 2014.

LOW - Unaddressed labor policies. Chipotle touts its “people culture” but, in September, five staffers at its Penn State store walked off the job, citing “borderline sweatshop conditions,” and causing a one-day closure. In Colorado and Minnesota, employees filed a class-action lawsuits claiming the chain requires staff to work extended hours “off the clock” without pay.


McDonald's

HIGH -Tweaking breakfast. 2014 saw the QSR breakfast leader test Petite Pastries ($1.99 a pair), let free coffee flow, announce it’ll peddle a McCafe blend in supermarkets next year and trademark “McBrunch,” for reasons still unknown.

HIGH - Coming soon: simpler, local menus. After years of criticism by analysts and franchisees that its menu had become too big and unwieldy, McDonald’s is trimming back. At the same time, it’s beefing up customization with a you-top-it burger option and regional menus.

LOW - Mascot makeovers. A new Happy Meal mascot aimed to drum up “fun and excitement” for the chain’s healthier items for kids, but some in social media found it “creepy.” Ronald McDonald also got a makeover and a new outfit that was deemed dated and desperate.

LOW - Meat scare shows up on bottom line. At first, McDonald’s stood by its supplier in China when it was accused of selling expired meat. Same-store sales there fell 22.7 percent in Q3; a drop CEO Don Thompson says could take six to nine more months to normalize.

LOW - Message missteps. A new video campaign designed to address rumors about how its food is made may do little, watchers warn. Reactions in social media to things as innocuous as a 60-second-service pledge tend to descend into debates over its labor practices and food quality.

LOW - Mighty Wings fall. Execs blamed the $1-per-wing price, the too-spicy flavor and consumers’ failure to see the value, for the flap—er, flop—that left the chain holding 10 million pounds of unsold chicken wings eight weeks into its LTO. By March, franchisees were offering the not-so-mighty wings at a deep discount to unload their inventory.


Olive Garden

HIGH - Shareholder-led revamp. Starboard Value, the activist investor that managed to unseat Darden’s board with its own picks, dedicated 60 pages of its “Transforming Darden Restaurants” manifesto to Olive Garden. Analysts say its demands—improving service and quality and focusing on authentic Italian—could pay off long term at Darden’s only concept with declining sales.

LOW - A stale refresh. Olive Garden promised a “brand renaissance” led by a “clean, fresh” new logo. But it was dinged for being “generic,” and shares dipped 5 percent upon its unveiling. While analysts call its 75-store remodel “promising,” some criticize its slow rollout.

LOW - Olive Garden issued 1,000 Never Ending Pasta Passes, granting holders unlimited pasta, salad, breadsticks and soda for seven weeks. Passes sold out in 45 minutes, but tough margins and shutout customers may mean they did more harm than good.


Yum Brands

HIGH - Yum Brands “tastes” fast casual. Its fast-casual test concepts in Dallas—Banh Shop and Super Chix—may look minor next to its dealings in China, but it bodes well for Yum’s vision, say watchers.


Banh Shop

LOW - Banh Shop shoots its star.Yum’s sparkle was dimmed slightly when it had to change the original red-star logo on its test concept after some members of the Vietnamese community launched a petition calling it offensive. It got the group’s sign off on the new, tamer logo, averting a larger crisis.


Taco Bell

HIGH - Going dark to announce its app. Creating buzz for its new smartphone app that added mobile ordering and payment, Taco Bell signed off of social media for a day. The result: 75 percent of stores processed a mobile order within 24 hours of the roll out.

HIGH - Breakfast wakes up sales. Taco Bell got a 3 percent bump in same-store sales on the back of its new breakfast menu. Even after the media blitz died down, a.m. sales were holding at 6 percent of the daypart mix.


Starbucks

HIGH - Desk delivery. During its third quarter earnings call, Starbucks announced food and beverage delivery to its 8 million loyalty-program members—a development it’s dubbing “e-commerce on steroids.” It’s the next step in the evolution of customer services via its mobile app that also includes …

HIGH - 4,000 staffers applied for the Starbucks’ College Achievement Plan through ASU Online within three months of its launch. It covers full tuition for upperclassmen; partial for the rest.

HIGH - ... mobile pay and ordering. Starbucks calls this “the single most important technology innovation we will introduce this year.” Tests begin in Portland, Ore., and go national in 2015. It’s an investment to speed service, especially in urban areas.

LOW - Scheduling in the spotlight. After an article shined light on its scheduling practices, Starbuck’s vowed to make workers’ hours more predicable and less taxing. Many saw it as a positve step, but some workers and lawmakers are demanding more.

LOW - Dress-code drama. Overshadowing news of a pay bump and free snacks for workers was word that Starbucks’ new dress code would bar baristas from donning rings and other jewelry. Loosened policies on nose studs, untucked shirts and tattoos did not stop some employees from voicing their complaints online.


Bob Evans

LOW - Bob Evans committed $5.5M (or 18 percent of profits) to defending itself, its CEO and its operations against activist shareholder Sandell Asset Management.


Burger King

HIGH - Doing more with less. BK’s strategy of launching “fewer and more impactful products” and revisiting proven favorites, such as Chicken Fries, contributed to a 3.6 percent quarterly sales jump in North America, its biggest in two years.

HIGH - Buying up market share. BK’s $11 million takeover of Canadian coffee chain Tim Horton’s has drawn criticism for moving its headquarters north of the border, effectively cutting its tax bill. But industry experts say it’s a good business play that will expand Horton’s global presence and grow BK’s stake in the breakfast and coffee wars.

LOW - Dis-satisfried. After less than a year, BK conceded in August that its lower-calorie Satisfries, which it originally heralded as “one of the biggest fast-food launches,” were a dud.

LOW - 35 percent of franchisees ranked their “field coaches,” corporate-dispatched franchise consultants, “poor” in a recent survey. Burger King is nearly 100 percent franchised.


Panera Bread

HIGH - Panera 2.0 - Insiders agree that Panera Bread’s tech investment that will incorporate digital ordering and fast-lane pickup in 100 stores by the end of 2014 will drive greater sales over the next couple years. It’s a move squarely aimed at millennials desiring less interaction, and it has buy-in from 100 percent of the chain’s franchisees, the corporate parent reports.


Pizza Hut

LOW - Will customization sell at Pizza Hut? It’s still early days for Pizza Hut’s menu upheaval, which goes all in on customization, allowing guests to mix and match 10 crusts, six sauces and a ton of toppings. Some warn it’s doing too much too fast. Others say it had to do something. For now, the pizzamaker’s move is a toss up.

 

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