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New tastes, fresh experiences

Ryan Brazelton and Jessica Shvarts

The restaurant sector is a growing industry, yielding USD $2.4 trillion in sales across the 25 countries that comprise the largest global markets in 2016. But as tastes change, it’s clear that the top players are going to have to exercise newfound agility in order to sustain their growth. In the US, for example, the leading 500 restaurant chains have been experiencing under 5% annual sales growth while the 20 fastest-growing small restaurant chains boast an average of 64.5% annual growth.

These fast-risers are turning casual diners into committed loyalists by leveraging their brands to adapt to growing trends—creating stronger, more relevant customer experiences. The large industry players that demonstrate this flexibility and engagement are the ones that will achieve the greatest growth going forward.

Learning from the little guys

According to Technomic, a food service-focused consulting firm, major full service chains in the casual dining sector are struggling, thanks in part to increased competition, low grocery costs, and the growing popularity of cooking at home. However, independent eateries that have unique offerings, strong value propositions, and a local focus are successfully attracting consumers. In order to compete, large players are adopting the behaviors of these niche brands to stay ahead of industry trends. From classic casual chains like LongHorn Steakhouse to fast-casual breakthroughs like Shake Shack, restaurant brands are focusing on locally-sourced ingredients to appeal to more socially conscious eaters. Global burger chain Five Guys focuses on “food with a story” to be more relatable to everyday people. Even Best Global Brands like McDonald’s are anticipating a long term shift in customer’s expectations by adopting artisanal offerings and naturally sourced ingredients.

Using brand to flex

Brands cannot be everything to everyone. While successful restaurants embrace new technologies and trends, they must strike a crucial balance of maintaining a focus on what is important to the brand while finding new ways to entice customers. Taco Bell did this successfully with the launch of its Cantina restaurant and concept store, building upon its brand legacy to offer a fuller and richer experience.

Similarly, Cracker Barrel Old Country Store, which operates approximately 640 stores in 43 states in the US, saw a need to give its model a new, youthful twist. Rather than trying to stretch the 50-year-old iconic brand beyond its target market, it established a second brand, Holler & Dash, to meet the desires of rising consumer groups via a fast casual model and a strategically limited menu that focuses on a core offering.

Both of these new concepts blur the lines between different categories within the restaurant sector, marrying holistic experience and fast-casual models to stand out among the competition and deliver on consumer desires.

Technology serves up new synergy

People want convenience, but they also want to be catered to and delighted. Technology gets restaurant brands closer to customers, faster. Brands are finding ways to deliver on customer needs through omnichannel integration, delivery services, and in-store touchpoints. In China, for example, KFC teamed up with Alibaba’s Tmall to co-launch a flagship digital store that enables KFC customers to purchase coupons and e-tickets. Additionally, Yum China, operator of both KFC and Pizza Hut, recently acquired DAOJIA.com.cn, an established online food delivery service.

McDonald’s has also been focusing on digitalization opportunities. The rollout of its ordering kiosks is a major initiative to upgrade the customer’s in-store experience. The brand also found creative ways to engage a younger cohort of consumers in Canada through this integrated kiosk technology. It launched a campaign that pitted Montreal Canadiens teammates against one another in a battle to customize the best burgers via the kiosks, which were released for a limited time.

All of these moves represent a forward-thinking strategy among fast-food players to accelerate growth through digital synergies, increasing engagement and helping restaurant brands move at the Speed of Life.

Engage to entice

 For restaurant brands, offering a “third place”—a welcoming home-away-from-home environment that fosters interaction—has been a critical success strategy (think Starbucks). However, engagement must extend beyond the physical space to create the greatest impact. Engagement is key in a digital-savvy age in which endless social networks influence behavior. Brands must focus on understanding their audiences and relating to them on their own terms. Creating “buzz” builds brand advocates fast and will go further than any traditional advertising ever could.

When Starbucks went social to promote its limited-release Unicorn Frappuccinos, it garnered over 17 million social media engagements globally, on Instagram alone. Similarly, Wendy’s cheeky, disruptive, yet always consistent persona on social media gives life to the brand and reaffirms its purpose, driving the second highest level of social engagement amongst fast food brands. When Wendy’s challenged a high school student to get 18 million retweets in exchange for a year of free chicken nuggets, it created the most shared tweet in history and raised money for charity through the #NuggsForCarter campaign.

Shared tastes in true values

Consumers seek out brands that embody the same values they hold dear. Wendy’s engaged with a larger audience by adding a layer of social responsibility to a clever social campaign, which built additional awareness and affinity for the brand. Global brands like Starbucks invests in measures to ensure sustainability and ethical sourcing throughout their supply chains. Small, fast-growing brands, such as Mission BBQ in the US, appeal to customers’ patriotism through extensive fundraising for military-related nonprofits.

Changing with new tastes

Today’s dining trends are largely driven by the young, contemporary consumer. This demographic views brands as an extension of their values and beliefs. They are largely influenced by the rise of the foodie culture, maintain high expectations, and mandate that their interactions with a brand to be immersive and connected.

Restaurant concepts that can nimbly address these expectations are experiencing the greatest success. The speed at which large restaurant chains are working to adapt to consumer expectations is a true testament to the influence of this cohort.  This is an indicator of the importance of continuous change to maintain growth. Whether stopping for a burger or splurging on a full meal, customers are craving experiences more and more. Businesses poised to thrive in this sector will leverage their brands to serve up better experiences with the greatest agility and responsiveness.

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