We’re all quite familiar with the proposed beverage ban that was unveiled this spring. While this is isolated to the New York City area now, those in the industry are closely watching the developments. The Department of Health in New York will vote on the proposal in September but until then, “Everyone is watching this as a benchmark law,” according to Joe Pawlak, vice president at the food industry research firm Technomic who was quoted in a recent USA Today article.
Regardless of where you stand on the issue personally, the impact to the food and beverage industry has the potential to be significant. In a time when carbonated beverage volumes are declining, revenues could be further jeopardized as a result. Profit margins on fountain drinks are traditionally substantial for those that pour carbonated beverages and iced teas, the products that would be primarily affected by the regulation. The official denotation for the 16-ounce cap is on sweetened drinks that have more than 25 calories per eight ounces. Establishments such as restaurants, movie theaters, sports stadiums and street carts are all on alert.
The volatile topic has created much dispute and subsequent marketing efforts from both the New York City government and anti-ban organizations that have banded together to fight the plan. Both large companies like Coca-Cola and Pepsi and mom-and-pop food sellers are joining forces with the American Beverage Association and others to make their voices heard. From social media to radio to airplane banners, petitions and subway ads, both sides are fighting to take a stand for their position.
The food and beverage landscape is changing continually. From mandatory nutritional information on menus to this potential restriction on selling large sugary beverages, the industry is evolving with political and cultural trends. Time will tell on the specific effects but for now, all eyes will be watching what happens in New York in the coming months.
Photo credit: Ben Ostrowsky
Burger King, Sonic, Starbucks and Pizza Hut have all toyed with alcohol sales to varying degrees. But it’s unlikely that these QSRs or any others will extend alcohol to national distribution any time soon due to criticism of this practice by watchdog groups, and the abundance of beverage alternatives.
History shows that parent and consumer advocacy groups have influence with QSRs. A prime example of this is the Children’s Food and Beverage Advertising Initiative (CFBAI). Participants in the Better Business Bureau (BBB) promise to devote 100% of their child-directed advertising to “better-for-you” foods. Both McDonalds and Burger King are members.
Alcohol sales at QSRs have also been strongly discouraged by groups such as Alcohol Justice (formerly Marin Institute) and The American Council on Alcohol Problems.
Beverage offerings have been expanded greatly over the last few years with very little of that expansion attributed to alcoholic options. Smoothies, coffee, frozen drinks, lemonade blends, sports drinks, and soft drink personalization tools such as Coca-Cola’s Freestyle have made appearances at QSRs around the country. With all the variety, restaurants are increasingly able to provide customers with satisfactory beverage options without the need for alcohol.
While it is unlikely that QSRs will embrace alcohol sales nationally, concepts such as the Whopper Bar provide a different model that might allow alcohol a foothold in the QSR industry. Some key aspects of the Whopper Bar that make it more alcohol-friendly include:
- No drive-thru: Even if alcohol is not available via the drive-thru, selling alcohol at a location with a drive-thru option brings the drinking and driving issue to the forefront.
- It is designed to sell higher-end items and competes more with fast casual and casual dining restaurants, which traditionally offer alcohol.
- Many locations are in nightlife friendly areas such as University CityWalk at Universal Orlando Resort, Miami Beach’s tourist-heavy South Beach, and the Rio casino in Las Vegas.
As QSRs continue to expand beverage offerings, alcohol is not likely to be the next big thing, at least at the traditional QSR.
Photo credit: Shinya Suzuki. Used under Creative Commons 2.o Generic (CC BY 2.0) license.
In a recently published research study by Technomic, 33% of all breakfast coffee drinkers stated that they were loyal to a particular brand of coffee. The marketing repercussions of this are significant.
If your chain has its own distinctive coffee flavor or uses a branded coffee that consumers find appealing, you can count on one-third of your customers to keep coming back just because they love your coffee.
Add to this fact that speed is the key driver to customer loyalty for both QSR and convenience store chains, and you have the two most important ingredients to a successful daypart. The Service Management Group (SMG), which measures customer loyalty for many of the leading QSR chains, reports that speed is one of the key drivers for customer loyalty—and that it is even more critical at breakfast.
This same Technomic study also reported that 46% of all consumers eat breakfast out occasionally on weekdays. That compares to 39% who reported that behavior in 2009—an 18% increase in just two years.
The question for chain brand stewards is how to best take advantage of these encouraging trends?
Several QSR chains have already begun co-branding on coffee. They have concluded that it’s easier to ride on the back of an existing brand of coffee than try to build your own loyalists from scratch. And, you obviously broaden your market when you co-brand by adding those loyalists to the mix of potential users of your brand.
Speed is a much more difficult attribute to achieve. Obviously, you have to have the physical plant and processes to enable quick service to be the rule rather than the exception. But as important, if not more important in achieving speed, is the menu. The more options you offer for breakfast, the longer the customer will wait for their choice. Keeping breakfast simple is one of the keys to keeping breakfast fast.
Customers are telling us that they are eating breakfast out more often and that there are two keys to getting their business: give them coffee they like and make the whole experience quick.
Photo credit: Seth Sawyers
Coca-Cola is addressing key consumer needs head on through innovation of the soda fountain.
Three years ago Coca-Cola introduced the futuristic soda fountain, Freestyle. The fountain was only placed in selected markets for testing but, sales and foot traffic soon increased with the buzz of the futuristic machine. According to a recent article in Ad Age, Coca-Cola will expand Freestyle’s markets to 80 by the end of this year and will introduce the first marketing campaign for the machine.The Freestyle allows consumers to mix 125 different flavors of soft drinks, flavored waters, sports drinks and lemonades. Not only is the fountain able to combine multiple flavor options, but it is also able to collect data that executives at Coca-Cola headquarters look at closely. They have already started to evaluate the data from the more than 1,500 machines in restaurants such as Wendy’s, Burger King, Taco Mac and Five Guys.One data insight collected so far has been the popularity of Caffeine-Free Diet Coke after 3:00 in the afternoon, which could lead Coca-Cola to suggest adding the Caffeine-Free Diet Coke brand to traditional soda fountains when restaurants have high traffic in the afternoon.As part of Coca-Cola’s initial testing phase, Firehouse Subs saw their sales and traffic double with the addition of the Freestyle. In addition to traffic, they also saw an increase in people eating in the restaurant, families with kids coming in, and orders including a drink with a sandwich, rather than just a sandwich. Firehouse Subs will be adding the machine to all of its 437 locations by the end of the year.
Along with the market expansion, Coca-Cola is working with Ogilvy & Mather to create the first marketing campaign for the Freestyle. Radio, outdoor and digital will most likely be the start of any measured media. According to Consumer Edge Research, more than 20% of consumers agreed they would switch restaurants if the Freestyle was offered at another place. Teens and parts of the multicultural population have shown an extremely high interest in the machine.
In addition to the 2012 marketing campaign, a new Facebook app and mobile app are in the works. This app will allow consumers to mix up and share their favorite Freestyle combinations. These recipes would then be converted to 2-D barcodes that could be scanned at any Freestyle machine to produce the mix. Coca-Cola is planning to retrofit a limited number of machines with barcode scanners in the first quarter of 2012 to test the app.
Taking into account the things Barkley has learned from “American Millennials: Deciphering the Engima Generation,” our recent study in partnership with with SMG and The Boston Consulting Group, as well as our experience in the restaurant category, it’s my opinion that this is a brilliant innovation by Coca-Cola. Millennials seek adventure and customization, which Freestyle delivers while empowering the consumer to be creative.
Photo credit: Rondo Estrello
Cross-posted from Off the Shelf
I can’t count the number of ads I saw for the new Strawberry Lemonade beverage from McDonald’s over that past month. I can’t even remember where all I saw ads. I know I’ve seen it in OOH, I’m pretty sure I saw a TV ad. Did any of that work? No. But something else did.
I was stopped in my tracks—literally and figuratively—by a brilliant tactic the fast feeder executed to promote Strawberry Lemonade. This tactic was so basic and to the point that it made it so easy and simple for me as a consumer to buy. And this tactic lived a long way from any billboard or television set. Let me set it up for you:
I’m in line in the drive thru at McDonald’s with two restless kids in the back seat. As I pull forward in the line to a position where I am one car behind the menu ordering board, a McDonald’s employee greets me at my car. (This alone has captured my attention as it is anything but part of my routine drive thru experience.) The guy is offering Strawberry Lemonade samples, in the drive thru, 30 seconds prior to the point of ordering.
To make it more fun, he had a Norman Rockwell-looking lemonade stand positioned where typically I would see an expected (yet still unwelcome) yard sign telling me one of many ways I can spend more money. What a welcome change. The kids stopped screaming, I tried the new drink, I ordered one 30 seconds later, and everyone won.
The experience was a good reminder of the difference between an impression and an impact. Impressions get you awareness, but impact gets you action. In this case, McDonald’s did something different, did something welcome to me (the consumer), and they were rewarded with action (I bought the drink). Think of all the money the franchisee could have saved by skipping production and media for the television and billboard ads. I tip my hat to the brilliant, yet embarrassingly simple effort at the store level. Good job, McDonald’s, for leading by example.