In the world of burgers, fries, subs, and fried chicken, old reliable brands are getting bullied a bit by their competition. And, while McDonald’s isn’t in danger of being stuffed into anyone’s locker in the near future, there are more ups and downs than usual for the big brands on the block.
Subway got dinged when the FBI searched the home of their most famous customer and longtime promoter, Jared Fogel. Though he hasn’t been charged with a crime, Subway made the right move for their brand by “suspending “ their relationship with Fogel for the time being. Fortunately for Subway, Fogel hasn’t been their principal pitchman for some time, with numerous athletes seeing more airtime than Jared, so his troubles won’t likely be a major setback for the brand. Unfortunately, however, Subway has been seeing drops in same store sales estimated at 3 percent in recent months, perhaps owing to the discontinuation of the popular $5 footlong promotion. Upstart brands like Jimmy John’s and Shake Shack are growing rapidly and are chipping away at Subway’s sales. (By the way, Jimmy John’s actually requires its workers to sign a non-compete agreement not to divulge any sandwich-making secrets they learn there.)
Subway has gracefully stepped away from Jared, but KFC has revived Colonel Sanders as their spokesman. Reincarnated might be a better way of putting it, since the real Colonel died in 1980, although his image has been used off and on since that time as part of their brand’s trade dress. This Sanders is a little wacky, shown offering a bucket of chicken to commuters stuck in traffic and complaining that cargo pants “have too many pockets.” The campaign has also restarted the heartbeat of “It’s finger-lickin’ good!” as a tagline, which helps complete the retro feel of the whole effort. The return of the Colonel, however, seems like a bit of a Hail Mary reaction to being passed by Chick-fil-A in total sales. While Subway can shelve a familiar face, it’s almost as though KFC has no other choice for a spokesman, so strong is the connection to the original founder of the brand. Can the new Colonel outperform Chick-fil-A’s cows that can’t spell? If baby boomers who can remember the original Colonel are the target, maybe. Can KFC–with or without the Colonel–escape the health issues of their product that have dogged their brand for years? Maybe not.
McDonald’s is still the undisputed heavyweight champion of fast food with $35 billion in sales, which is about three times that of their nearest competitor, Subway, and four times those of Wendy’s or Burger King. But, since weathering the recession in exemplary fashion, McD’s has begun to struggle to maintain growth. Sales in 2014 saw declines in all four quarters, and U.S. sales were down 2.3 percent in the first quarter of 2015. Less than 3 percent may not sound like much for many businesses, but for the Golden Arches, it’s a travesty. Their CEO, Don Thompson, stepped down in late January and the company initiated a turnaround plan that, ironically, takes a hard look at the disadvantages of being big. Their new CEO, Steve Easterbrook, announced that the megabrand will reduce layers of management, focus more on listening to customers, and respond more quickly to consumers’ changing tastes. That may sound like business 101, but this statement doesn’t, “Our existing organization is inefficient and lacks clear accountability,” Easterbrook said. “We need to execute fewer things better.” Less is more? I like it. And it’s good advice for any brand, really.
In fact, archrival Burger King may have used some of those lessons themselves as they seek to regain the number-two burger and fries position they lost to Wendy’s in 2012. The Creepy King and the Subservient Chicken were creative blockbusters, but were woefully ineffective at actually sustaining sales increases. They’re gone now, and under new ownership, the brand is returning to its roots with increased emphasis on made-to-order and flame broiling. Sales at Burger King were up in North American stores by almost 7 percent in the first quarter of this year, which won’t be enough to catch Wendy’s, but it’s a great start.
So, while Mickey D’s is still the 800-pound gorilla of food served fast, there is plenty of shifting happening among the big brands. Some are running away from their roots and others toward them, but all of them want our lunch money. You want fries with that?
As published in the Central Penn Business Journal and and Lehigh Valley Business.