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CHANGE IS ON THE MENU The Push for Health and its Impact on QSR Ad Strategy October 2012

© Kantar Media ­­­— Change Is on the Menu

© Kantar Media ­­­— Change Is on the Menu

C C ontents About Kantar Media Kantar Media provides strategic advice and competitive intelligence to the world’s leading brands, publishers, agencies and industry bodies, helping them navigate and succeed in a rapidly evolving media industry. This includes analysis of paid media opportunities; counsel on brand reputation, corporate management and consumer engagement through owned media; and, evaluating consumers’ reactions in earned media. Kantar Media provides clients with a broad range of insights from audience research, competitive intelligence, vital consumer behavior and digital insights, to marketing effectiveness and online influence. Our experts currently work with 22,000 companies tracking 3 million brands in 50 countries. www.KantarMediaNA.com

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EXECUTIVE SUMMARY....................................................................................................... 4

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INTRODUCTION: A NEW BATTLE OF THE BULGE............................................................ 6

Our analysis of creative and spend trends in QSR advertising is based on our monitoring of the multimedia marketplace. Our scope extends beyond QSR, so if you need to know how a particular category or brand is faring across the entire media mix, we can provide actionable insights based on our broad range of solutions.

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BLOOMBERG’S LATEST CRUSADE .................................................................................... 8

Please contact:

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Libby MacDonald SVP, Custom Insights & Solutions Kantar Media | Intelligence T: (404) 801-3744 E: libby.macdonald@kantarmedia.com

ADVERTISERS STRIKE BACK.......................................................................................... 10

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C onclusion As more Americans become overweight or obese, a variety of players are using different approaches to fight against fat. New health studies, government actions, and lobbying groups are just a few of the influences on emerging consumer trends in eating. Recent opinion polls show just how strongly QSR positioning around fast and healthy meal choices resonates with consumers; diminishing appeal for burgers and growing interest in nutrition are actually changing their purchase behavior23. But even though there has been a big push for healthier eating options, health is just one of many factors American consumers may have in mind when they ask themselves what’s for dinner. Patrons still demonstrate loyalty to traditional fast food, with burger and fry restaurants still ranking high among QSR favorites24. As such, QSRs must balance many conflicting, evolving demands from the public, from health issues to economic concerns.

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TV THE PRIME BATTLE GROUND FOR QSRS.................................................................. 11

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CHANGE IS ON THE MENU.............................................................................................. 12

As seen in our analysis, Quick Service Restaurants are using messages that appeal to consumers on multiple levels—those who want healthier alternatives, those who are cost conscious, and those who want to indulge.

Consumers can now choose between a low-calorie salad or a value meal with fries and the works, a balance that is reflected in advertising strategies, too. While some ads may show salads and recommend sharing and sensible portions, others still encourage supersizing and bonus sundaes. Given the breadth of the mass market QSRs are targeting, this segmented approach makes sense. And the promising 2012 sales figures for these top QSRs are a clear indication that this dual approach is indeed working. Backed by the influence of their vast ad campaigns, QSRs are the most equipped to redirect consumers towards healthy food, more so than any other stakeholder in this issue.

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TOP 5 QSR CREATIVE INSIGHTS............................................................................... 14

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CONCLUSION.................................................................................................................... 18

QSR Magazine. September 8, 2011. <http://www.qsrmagazine.com/news/fast-food-still-gets-love-social-media>.

Consumer Media Network. May 10, 2012. <http://www.cmn.com/2012/05/fast-food-nation-subway-tops-list-of-consumer-favorites/>.

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E xecutive Summary E

M

ore than one-third of U.S. adults are considered to be obese today and this number is expected to reach 42% of the population by 20301. The increased risks of diabetes, heart disease and other serious health issues that have been linked to obesity have made it a critical public health issue – and a driver of our nation’s skyrocketing health care costs.

As a result, lawmakers looking to keep health care costs down and encourage healthier habits have been taking increasingly aggressive measures against the Quick Service Restaurant (QSR) sector.

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include lobbying and public interest advertising; adding healthier options to menus; and simply overlooking these health trends and continuing to focus on taste and indulgence. In this study, we provide an overview of the rising public concerns about obesity and how they’ve shaped the food and beverage advertising landscape at large. We then explore how the attention on health has influenced messaging and strategies in the $1.7 billion QSR advertising sector.

QSRs are seasoned competitors that know how to astutely navigate this hurdle; they have vast advertising budgets, with television spending alone totaling $1.5 billion in the first half of 2012. As the focus on obesity grows, QSRs are adjusting their strategies accordingly, with different brands taking a variety of approaches. Tactics used

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THE BIG PICTURE

The fact that many QSRs have been orienting their messages toward health is significant, demonstrating a concerted response to the obesity epidemic. Others, however, have taken a very different tack by ignoring health messaging.

Several spots lured in viewers with a focus on indulgence and taste, using descriptors such as “loaded with” and “smothered in”. KFC, for example, marketed its new product introduction, the Fully Maxed Meal. Its contents—two pieces of chicken, two sides, a biscuit, and one free 20-ounce drink—is aimed at consumers looking for value meals.

Dairy Queen’s ads for DQ’s Chicken Strip Basket are another example of ads that emphasize the value of a deal. One spot features the “delicious treats and eats” of the basket with four chicken strips, fries, Texas toast and cream gravy for $3.99. The meal spins around in close-up shots to the tunes of a country singer touting the glory of the robust meal. But wait, there’s more: for only $2.99 you can add a banana split! Rather than linking its products to claims of health, Dairy Queen focuses strongly on value, positioning its meals as an inexpensive indulgence, even in tough times.

Dairy Queen Chicken Basket Ad

Centers for Disease Control and Prevention. April 27 2012. < http://www.cdc.gov/obesity/data/adult.html/>.

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CALORIE COUNTER

A number of QSR ads feature products that fall within a healthy calorie spectrum. As usual, Subway led the group on this one with a YTD ad spend increase of 11% in 2012. Subway launched a new product, the Smokehouse BBQ Chicken, and varied its messaging based on the portion size. In ads for the half-size (six-inch) sub, Subway strictly emphasized the sandwich’s dietary benefits while straying away from details on taste. The QSR giant focused on the half-sub’s six-gram fat content and positioned it as a better alternative to greasy fast food. The ads amusingly depicted the effects greasy food can have on consumers with images of people breaking chairs and trampolines from fast food weight gain, a comical spin on a serious health issue.

Subway Chicken Sandwich Ad

McDonald’s Breakfast Ad

McDonald’s also put out some new breakfast items this year, like its Blueberry Banana Nut Oatmeal and Blueberry Yogurt Crunch, both healthier options for mornings on-the-go.

McDonald’s highlighted qualities like the use of low-fat yogurt, plump and seasonal blueberries, and the product’s 300-calorie count. McDonald’s continues to push these low-calorie options with the summer rollout of its “Favorites under 400 calories” menu, an extension of its 2012 Summer Olympics sponsorship; this marks the first time the chain has nationally offered calorie counts at point-of-purchase 22.

The new sandwich was also promoted with spots of Olympians Michael Phelps, Mike Lee, and Nastia Liukin endorsing the sub as a tasty sandwich with only six grams of fat. Interestingly, fat content wasn’t the ad message focus for the Footlong version of the sandwich. Instead, the ad highlighted the sandwich’s foot-long portion size, its “explosion of warm weather flavor”, and the “juicy chicken smothered in BBQ sauce”.

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Advertising Age. July 24, 2012. < http://adage.com/article/news/mcdonald-s-launches-marketing-faves-400-calories/236291/>.

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I ntroduction: A New Battle of the Bulge 2.

Obesity has become an increasingly critical health issue in the United States. Efforts to combat the epidemic include bringing healthy food to schools, tightening nutritional requirements in advertising, increasing education about healthy food choices and monitoring portion sizes. The issue has attracted passionate advocates, including Michelle Obama. After a year as First Lady, she embarked on an initiative to reverse rising obesity rates with her “Let’s Move” campaign, which included a plan to ban junk food from school vending machines, personal appearances to promote nutrition in schools, and a White House vegetable garden.

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Several initiatives have targeted QSRs directly.

Last year, the city of Los Angeles put one of the nation’s most radical food policies into effect by banning new fast food restaurants in South LA, a section of the city that has significantly higher rates of poverty and obesity.

In an attempt to endorse healthier neighborhood dining options, the regulation limits the density of fast food restaurants in southern LA and encourages more sit-down restaurants, produce-filled grocery stores and healthier limited-service restaurants to take root.

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SHARING IS CARING?

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I’LL JUST HAVE SALAD?

Similar to how America’s beverage companies have been advertising the smaller portion size available on the market today, fast food restaurants have also recently been highlighting snack-size portions and encouraging their customers to share. McDonald’s ran ads that depicted a group of friends sharing a 20-piece Chicken McNugget bucket, happily taking part in the collective experience. The following McDonald’s ad presents an older McDonald’s patron encouraging a fellow to share his 20-piece Chicken McNuggets with a lovely girl who caught his eye. McDonald’s’ messaging promotes healthy choices by marketing menu items that are meant to be shared among groups.

While spending on salad products was relatively small in years past, the total spend skyrocketed from a few thousand in the first half 2011 to over $14 million in the first half of 2012, placing this product category on the map. Burger King led the way with $7.5 million worth of ads for salad products.

In Burger King’s most recent campaign, one ad highlighted a Garden Fresh Salads line, a 2012 new product introduction. Salma Hayek steals the spotlight in her dramatic rendition of a medley of personalities ordering a chicken, apple, cranberry salad, and matter-of-factly requesting dressing on the side. Burger King makes a strong statement about its stance in the obesity crisis by advocating a salad under 500 calories with dressing on the side.

McDonald’s Chicken McNuggets Ad

Burger King Salad Ad

There were some exceptions to this rule, like KFC, which in a commercial stated that “one [of its chicken tender Dip’ems] is never enough”. Along the same lines, Sonic markets its Jumbo Popcorn Chicken as “bite-sized pieces that are too good to share”.

Berry salads seem be all the rage this year, with Wendy’s putting out ads for the Berry Almond Chicken Salad and hiking up its ad spend for salad products from $19 thousand to almost $3 million. Similar to the fresh and natural emphasis in chicken ads, these Wendy’s ads hone in on the “ripe strawberries”, “plump blueberries”, with a “fresh taste”, “made everyday”. And, most importantly, Wendy’s stresses that its salads are never pre-processed, in line with the fresh and natural theme.

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Top 5 QSR Creative Insights To better understand the role health plays in QSR advertising, Kantar Media performed a detailed analysis of television ads from major QSR brands that ran on national broadcast networks during the first half of 2012. We identified four major messaging themes that address the obesity issue, and one additional theme that doesn’t – ads focusing on taste and value that showcase meals that would make calorie counters’ heads spin.

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Wendy’s Chicken Sandwich Ad

CHICKEN OR BEEF?

QSR’s 2012 growth in ad expenditure was in large part due to higher spending on chicken products: Ad spend for the category grew by 53% from last year, even as QSRs reduced spending on their signature hamburger products by 44%. Chicken’s new higher profile could be driven in part by health issues: consumers often consider chicken to be a healthier alternative to other meats. They have a more positive perception of the leaner white meat compared to beef and other red meats that contain higher levels of saturated fat.

The chicken ad craze is also driven by its lower cost—a significant issue in the current stagnant economy—as well as its adaptability to new shapes and sizes, such as bite-sized, dippable and tearable products21.

Many fast food chains have played up the healthy chicken theme within ads by emphasizing natural descriptors like “all natural”, “market fresh”, “premium”, “100% white meat”, “classic taste”, “whole fillet”, “wholesome chunks”, “tender”, “family recipe”, and “lightly breaded”.

Wendy’s was the third biggest spender in chicken product advertising, increasing its spend by

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With QSRs facing major limits on how they can operate their businesses as well as being branded as a cause of childhood obesity, they must tactically manage their menus and marketing strategies to navigate this health crisis.

more than 8,000% in 2012, from $45,000 in 2011 to over $24 million in 2012. The QSR chain drove home the healthy chicken theme in ads like the one above with Wendy Thomas herself assuring consumers that for its Premium Chicken Sandwiches, Wendy’s uses “whole chicken fillets, not a bunch of pieces pressed together”.

What’s interesting to note is that while none of the aforementioned qualities indicate a well-balanced or calorically appropriate meal, the descriptors appear to communicate an emphasis on health.

The Wall Street Journal. June 12, 2012. <http://online.wsj.com/article/SB10001424052702303768104577462473394465122.html>.

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In June, media giant Disney made a bold move to enhance its brand and support healthy eating by announcing that all Disney television and radio networks will require food advertising targeted at children to include certain nutritional information. The nutrition guidelines are aligned to federal standards, promoting fruit and vegetable consumption and calling for reduced calories, saturated fat, sodium and sugar. This move is part of a growing number of programs promoting child nutrition and health, from the prohibition of bake sales at schools around the U.S. to San Francisco’s banning of toys in Happy Meals last December2.

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SFGate. June 23, 2012. <http://www.sfgate.com/bayarea/article/S-F-declines-to-take-lead-on-curbing-soda-sales-3658064.php>.

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TOP QSR BRAND BACKGROUND FACTS

Bloomberg’s Latest Crusade New York City is emerging as a particularly important battleground in the obesity fight due to aggressive proposals by Mayor Michael Bloomberg.

Over the course of his nearly 11-year tenure, Bloomberg has made public health a top priority, championing a series of tough regulations that include bans on smoking in restaurants and parks; a requirement that chain restaurants post calorie contents next to prices; and a ban against artificial trans-fats in restaurant food. His long track record has earned him the moniker “Nanny Bloomberg” with critics who compare his policies to that of a henpecking nanny. Most recently, Bloomberg launched a concerted onslaught against sugary

drinks. These efforts began with a graphic 3-yearlong ad campaign against soda which mirrored the same explicit approach that Bloomberg took in his anti-smoking ads. One anti-soda subway ad asks New Yorkers if they’re “pouring on the pounds” with images of human fat globs gushing from plastic soda bottles, depicting the alleged effects of drinking soda. Along the same lines, an online video warns viewers to not “drink [themselves] fat” with a man gulping down a glass of fat. A third outdoor ad equates a 32-ounce soda to 26 packets of sugar, putting into perspective how much sugar soda-drinkers consume.

Much of the QSR 2012 spending growth for chicken has come from the giant hamburger chains, a marked change from 2011 chicken sales. Last year KFC dominated the chicken product category, with a 27% share of spend, while the other top four chicken ad vertisers (burger chains) accounted for 46% of spend. But these burger giants now account for 66% of chicken ad spend— KFC has been overtaken with only 17% share of the chicken product ad investment. With a bigger push to include healthier options on the menu, it looks as though chicken restaurants aren’t the only QSR players trying to get a piece of the chicken market.

McDonald’s has continued to thrive despite the slow economy, thanks to an increasingly diverse menu and growing global operations9. The industry giant increased U.S. sales by 5.6%10 in 2011, leading the QSR category with $34 billion in full-year sales11. Subway, one of the fastest growing franchises in the world, increased U.S. sales by 7.5% in 201112. While McDonald’s has the highest sales by far in the QSR category, Subway has the greatest number of retail units. With about 12,500 units in the U.S.13, McDonald’s has half the number of store units as Subway, with 25,000 units across the U.S. during the first quarter of 201214, achieving speedy growth by exploring non-traditional locations like ferry terminals, automobile showrooms, and churches15.

Although 2011 U.S. system-wide sales were down by 2% for both Taco Bell and KFC, each QSR rebounded in 2012 with two consecutive quarters of increased U.S. sales; Taco Bell sales were up by 6%16 and 13%17 in Q1 and Q2 of 2012 while KFC sales increased 2%16 in Q1 and 1%17 in Q2.

Last year, Burger King fell to third place behind Wendy’s in U.S. burger chain sales, with a 2011 year-end decrease of 3.3%, most likely a byproduct of its reverse merger between 3G Capital and Justice Holdings Limited18. But Burger King’s 2012 menu expansion spurred a 4.2%19 and 4.4%20 increase in Q1 and Q2 2012 U.S. sales, providing encouragement for a profitable 2012.

QSR SHARE OF CHICKEN PRODUCT AD SPEND

NYC Health Online Video Ad

BRAND

2011

2012

QSR SALES BY TOP BRANDS

McDonald’s

26.7%

35.3%

KFC

26.5%

17.0%

QSR BRAND

McDonald’s Subway

Wendy’s Burger King Sonic Non Chicken QSRs

1.7%

10.6%

17.8%

10.5%

0.0%

10.1%

46.2%

66.4%

2011 U.S. SYSTEMWIDE SALES (MILLIONS)

2011 U.S. SALES

2012 U.S. SALES Q1

Q2

U.S. RETAIL UNITS (Approx.)

FULL YR

Q4

$34,172

+5.6%

+7.1%

$11,400

+7.5%

Wendy’s

$8,500

+2.0%

+5.1%

+0.8%

+3.2%

6,500

$8,400

-3.3%

+1.5%

+4.2%

+4.4%

7,000

+8.9%

+3.6%

Not Publicly Available

12,500 25,000

Top 5 Total

72.6%

83.4%

Burger King

Total

100.0%

100.0%

Taco Bell

$7,000

-2.0%

-2.0%

+6.0%

+13.0%

5,600

KFC

$4,500

-2.0%

-1.0%

+2.0%

+1.0%

4,780

Source: Kantar Media Time Period: January-April 2011, January-April 2012

Source: Industry Reports & Company Sources Time Period: 2011 – 2012

The Wall Street Journal. May 8, 2012. <http://online.wsj.com/article/SB10001424052702304451104577391760782110118.html?KEYWORDS=mcdonalds>.

McDonald’s Corporation. January 24, 2012. <http://phx.corporate-ir.net/phoenix.zhtml?c=97876&p=irol-newsArticle&ID=1651870&highlight=>.

11 CNN Money. March 19, 2012. <http://money.cnn.com/2012/03/19/news/companies/wendys-burger-king/index.htm>.

12 Technomic. March 19, 2012. < http://www.technomic.com/Pressroom/Releases/dynRelease_Detail.php?rUID=156>.

13 Entrepreneur. August 6, 2012. <http://www.entrepreneur.com/franchises/mcdonalds/282570-0.html>.

14 PR Newswire. May 2, 2012. <http://www.prnewswire.com/news-releases/subway-restaurant-chain-recognized-as-number-one-franchise-opportunity-149811525.html>.

15 The Wall Street Journal. March 8, 2012. <http://professional.wsj.com/article/SB10001424052748703386704576186432177464052.html?mg=reno64-wsj>.

16 YUM!Brands. April 18, 2012. <http://investors.yum.com/phoenix.zhtml?c=117941&p=irol-newsArticle&ID=1684650&highlight=>.

17 MarketWatch. July 18, 2012. <http://www.marketwatch.com/story/yum-brands-reports-second-quarter-eps-growth-of-1-or-067-per-share-excluding-special- items-projects-record-international-new-unit-development-for-the-year-reconfirms-full-year-2012-eps-growth-forecast-2012-07-18>.

18 Burger King Corporation. March 14, 2012. <http://investor.bk.com/phoenix.zhtml?c=87140&p=irol-newsArticle&ID=1672788&highlight=>.

19 Burger King Corporation. May 9, 2012. <http://investor.bk.com/phoenix.zhtml?c=87140&p=irol-newsArticle&ID=1699596&highlight=>.

20 Burger King Corporation. August 1, 2012. <http://investor.bk.com/phoenix.zhtml?c=87140&p=irol-newsArticle&ID=1720779&highlight=>.

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Change Is On the Menu NYC Health Outdoor Ads Trending ad spend by product segments8 provides a

QSR SHARE OF AD SPEND BY PRODUCT SUBCATEGORY

glimpse into the minds of marketers as they try to understand the health and nutritional concerns of

2011-2012 %

QSR Product

H1 2011

H1 2012

with evolving customer demand, QSRs have made

Total, All Product Subcategories

100.0%

100.0%

3.5%

significant changes in the categories they are

General Promotion

17.3%

21.7%

30.2%

Sandwich Products

13.0%

14.6%

16.0%

Chicken Products

12.6%

13.2%

8.4%

menu items like chicken, sandwiches and salads.

Desserts, Cold Beverages & NEC Products

10.1%

12.1%

24.1%

General promotion ads have historically been responsible

Value Meals & Menus

11.3%

11.3%

3.3%

Burger Products

12.5%

6.8%

-43.5%

their customers in an effort to generate sales. In line

promoting this year. At the segment level, 2012 has been characterized by a large shift of money away from the traditional burger and towards “lighter”

for the greatest ad investment and have grown even further to $378 million during the first half of 2012.

SUBCATEGORIES

CHANGE IN SPEND

Meanwhile, sandwich and chicken product

Breakfast & Coffee Products

7.9%

6.3%

-16.8%

advertising increased this year by 16% and 8%,

Mexican Products

6.8%

6.2%

-6.2%

Salad Products

1.4%

2.2%

54.5%

potential beneficiary of obesity concerns. Ad spend

Kids Meals & Menus

3.0%

2.0%

-29.7%

for desserts and cold beverages saw increased

Fish Products

2.2%

1.8%

-16.9%

figures this year as well, with a plethora of ads for

Corporate Promotion / Sponsorship

1.8%

1.7%

-2.7%

reaching $254 million and $230 million respectively.

Salad ad spend also spiked in 2012, by 55%—one

frappes and smoothies “made with real fruit”. Burger product spend, on the other hand, plummeted by 44%

Bloomberg’s anti-obesity fight goes far beyond graphic advertising. On May 31, the New York City Health Department revealed a plan to ban the sale of sugar-sweetened drinks sized 16 ounces or larger in restaurants, fast-food venues, delis, movie theatres and sports arenas, giving sugar addicts a reason to fear that their soft-drink stream may soon run dry. Diet sodas, most water products, fruit juices and alcoholic beverages would be exempted, in addition to all beverages sold in grocery and convenience stores. After the Board of Health voted to publish the plan for review, a public hearing for the proposal was held on July 24. And the board approved the proposal on September 13 in a 9-1 vote, with a March 2013 implementation.

Source: Kantar Media Time Period: January–June 2011, January-June 2012

this year as “lighter” options like chicken and salads stole the spotlight. Last but not least, ads for children’s meals saw a drop in expenditure, an indicator that QSRs are indeed responding to campaigns which aim to limit fast food advertising targeting children.

Kantar Media classifies QSR advertising into narrower segments based on the type of food product being promoted. Ads that focus on the general image of a restaurant brand instead of a particular product are classified to a “General Promotion” segment.

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TOP 10 QSR ADVERTISERS BASED ON 2012 YTD AD SPEND

Advertisers Strike Back Of course, food and beverage companies did not sit idly by as obesity hit the headlines—they responded collectively through the support of advocacy organizations. The American Beverage Association (ABA), whose membership includes producers and bottlers of soft drinks, bottled water, and other non-alcoholic beverages, provides one key example.

Over the past decade, the ABA’s lobbying efforts have been on the rise, largely to support its industry’s opposition to new taxes on soft drinks. But the group’s lobbying expenditures over the past year in particular have skyrocketed as the group works to head off proposals like the Bloomberg soda size ban. The ABA has already outspent its 2011 television ad budget, with $14.2 million in TV ad spend as of September 31 versus $9.7 million in all of 2011.

ABA TV Ad

QSR PUBLIC OPINION: WHAT CONSUMERS WANT

McDonald’s, Subway, Taco Bell, Burger King and Wendy’s together made up two-thirds of total QSR ad spend during the first half of 2012. Growing QSR ad expenditure during the first half of 2012 was also the result of new product launches, which accounted for 40% of total ad spend in H1 2012.

According to a fast food chain public opinion study conducted last year, social media about Subway and sandwiches at large was extremely positive4. Burger chains, on the other hand, did not perform as well in the study, with consumers complaining about burgers more than any other feature of the fast food industry in 2011. Product releases with fruits and vegetables, on the other hand, often led to bumps in positive opinion on social media.

Subway also ranked highest in a May 2012 poll, an indicator that consumers “are graduating from just saying they’re interested in better nutrition choices in restaurants to actually changing their purchase behavior”5. While Subway’s low-calorie appeal deemed it the number one QSR by consumers, the second through fourth place winners leaned more toward the traditional burgers and fries model (Dairy Queen, Wendy’s, Five Guys, Chick-fil-A), proof that consumers are not yet ready to part with traditional fast food.

McDonald’s dominated QSR ad expenditure with 27% of sector spend, though its ad spend decreased by 2.5% compared to 2011.

The fast food giant advertised heavily this year for Chicken McNuggets and Chicken McBites. Coming in at number two and responsible for 15% of category spend, Subway increased its ad spend by 10% from last year. The sandwich chain allocated a large portion of funds to ads for Footlong subs, the Turkey BLT and Melt, and new product launches like the Smokehouse BBQ Chicken Sandwich and Egg White and Cheese Flatbread sandwich.

Wendy’s had a 14% increase in ad spend which was heavily focused on its Spicy Chicken Fillet Sandwich, Hot N Juicy Cheeseburger, and salad line. KFC’s 10% increase in ad spend was in part a result of its 44% dollar increase in ads for value meals during the first half of 2012, and a substantial ad investment in products like Sauceless Hot Wings, Chunky Chicken Pot Pie, and Original Recipe Bites.

TV The Prime Battleground for QSRs

Even given new product introductions like the Doritos Locos Taco, Taco Bell’s ad spend during the first half of 2012 stayed relatively the same, decreasing slightly by 0.5%. Taco Bell’s ad spend contributed to the most successful product launch of the company’s history, with 100 million Doritos Locos Tacos selling during its first 10 weeks on the market. Taco Bell continued to expand its menu with the launch of its new “Cantina Bell” line of higher-end food with natural ingredients on July 5. Through a partnership with celebrity Chef Lorena Garcia, Taco Bell pushed the healthy theme with more upscale Mexican food at prices cheaper than Chipotle’s6. Other QSRs like Burger King and Dairy Queen decreased ad spend by over 7% and 21% respectively.

Burger King began running advertisements in April for its biggest menu expansion in 58 years, adding garden salads, snack wraps, chicken strips, fruit smoothies and frappes to its menu, with an ad campaign starring celebrities such as David Beckham, Jay Leno, and Steven Tyler7.

The millions of dollars spent by the ABA already dwarf the amount spent by local governments and health organizations on promoting their programs—and the billion dollars that QSRs spend on regular advertising exceeds all that. QSR category ad spend is up by 3.5% for the first half of 2012 as compared to last year, to $1.7 billion. Historically, television has been the prime media player, responsible this year for nearly 84% of QSR ad expenditure. And, over the past year, television’s role has increased even more, by 4%.

ABA Print Ad

The ABA has put its millions to work with a series of ads designed to “clear up the myths” about soda.

The print and television ads argue that sweetened beverages are not driving obesity, but that food is the fundamental culprit as well as the main source of sugar. The ads position the beverage industry as helping consumers choose what’s right for themselves by providing more options and control over what they drink – and note that everything is fine in moderation.

The ABA claims that soda represents only 7% of consumers’ total sugar intake and that beverage calories in U.S. schools have declined by 88%. The following ads promote America’s beverage companies as offering more options, in smaller portion sizes, in fewer calories, and with clearer labels. They also seek to clarify some facts.

QSR SHARE OF AD SPEND BY TOP 10 ADVERTISERS

QSR SHARE OF AD SPEND BY MEDIA TYPE Media H1 2011

BRAND

1.

2.

H1 2011-2012

% CHANGE IN SPEND

McDonald’s

27.3%

-2.5%

Subway

15.2%

+9.6%

3.

Taco Bell

8.1%

-0.5%

2011-2012 %

100.0%

100.0%

3.5%

4.

Burger King

8.1%

-7.4%

83.4%

83.7%

3.8%

5.

Wendy’s

7.7%

+13.5%

Radio

7.5%

7.1%

-1.0%

Outdoor

6.

KFC

7.3%

+10.2%

5.1%

5.4%

8.0%

Magazines

1.8%

1.3%

-23.3%

7.

Sonic

4.4%

+12.9

Internet

1.8%

2.1%

-65.4%

8.

Arby’s

3.1%

-4.6%

Newspapers

0.4%

0.4%

5.6%

9.

Jack In The Box

2.1%

+2.5%

Dairy Queen

1.9%

-20.6%

TOTAL TOP 5 ADVERTISERS

66.5%

+1.3%

TOTAL TOP 10 ADVERTISERS

85.3%

+1.8%

TOTAL QSR

100.0%

+3.5%

Television

Source: Kantar Media Time Period: January-June 2011, January-June 2012

HANGE IN SPEND

H1 2012

SHARE OF SPEND

H1 2012

Total, All Media

And the ads seem to be resonating with the city—60% of New Yorkers are opposed to Bloomberg’s Soda Ban, echoing the ABA’s ad messaging that consumers should have the freedom to make personal choices3 .

RANK

10.

Source: Kantar Media Time Period: January–June 2011, January-June 2012

New York Times. August 22, 2012. <http://www.nytimes.com/2012/08/23/nyregion/most-new-yorkers-oppose-bloombergs-soda-ban.html>.

QSR Magazine. September 8, 2011. <http://www.qsrmagazine.com/news/fast-food-still-gets-love-social-media>.

5 Consumer Media Network. May 10, 2012. <http://www.cmn.com/2012/05/fast-food-nation-subway-tops-list-of-consumer-favorites/>.

3 4

© Kantar Media ­­­— Change Is on the Menu

6 7

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Taco Bell. June 6, 2012. <http://www.tacobell.com/Company/newsreleases/New_Cantina_Bell_Menu>.

Miami Herald. May 9, 2012. <http://www.miamiherald.com/2012/05/08/2791779/burger-king-sees-improvement-in.html>.

© Kantar Media ­­­— Change Is on the Menu

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