Study: QSR Hispanic advertising up in 2010

November 8, 2011

QSR Hispanic
Study: QSR Hispanic advertising up in 2010

The Association of Hispanic Advertising Agencies (AHAA) just released its 2010 Report on Hispanic Advertising Spending, which shows a 14 percent increase in budget allocation for these types of campaigns from 2009.

Across the top 500 advertisers, Hispanic ad spending for 2010 was $4.3 billion.

The AHAA analysis also found that the percent of ad-spend allocated to Hispanic markets is an important determinant of a company’s overall revenue growth rate. The AHAA study found with a confidence level of 99 percent that a best-in-class company (defined as a U.S. company with a Hispanic allocation of marketing dollars of more than 14.2 percent) allocating one-quarter of its ad spend to Hispanic media over five years would generate annual revenue growth of 6.7 percent.

Among the best-in-class group, companies with a strong correlation between allocation and revenue growth include: AFC Enterprises, parent company of Popeyes Louisiana Chicken, and Domino’s Pizza.

Non-restaurant brands included Allstate, AutoZone, Colgate-Palmolive, Collective Brands (Payless Shoesource), DirecTV, Echostar Communications, Heineken, JC Penney, Rent-A-Center, SAB Miller, State Farm and Vivendi.

Allocations on a post-recession rise

Hispanic media spend by the Top 500 advertisers stood $163 million below its peak in 2007, but still showed a strong recovery from the past couple of years. Unlike the general market that saw budgets slashed during the 2008 recession, the Hispanic advertising industry has remained constant at 5 to 6 percent of total advertising budgets from 2006 to 2010.

Showing a turnaround in 2010, the Top 500 reversed the previous 2-year trend returning over $500 million to Hispanic media, boosting ad spend by 14 percent over 2009 levels.

“Companies now understand that the Hispanic market is not going to simply assimilate and go away, which means that a targeted approach will deliver long-term benefits,” said Roberto Orci, AHAA president and CEO of Acento Advertising. “This research underscores that companies can’t just pop in-and-out of the Hispanic market as a fad and see benefits – real bottom-line benefits come from consistent integrated approaches. Companies must get on the train or risk being left behind and becoming irrelevant.”

QSR is a leader

The quick-service restaurant industry falls into the “Leaders” category of the AHAA’s list of Hispanic advertisers, divided as such:

•Best in Class, defined by their allocation of more than 14.2 percent of overall ad budgets to Hispanic media;
•Leaders, companies which allocate between 6.4 and 14.2 percent;
•Followers, which allocate between 3.6 and 6.4 percent;
•Laggards, defined by their Hispanic allocations of 1.0 to 3.6 percent; and
•Denial, defined by their allocation of less than one percent.
Among the Leaders category, QSR has showed a significant increase of 30 percent, or $70 million in incremental investment, for $301 million total spend in 2010.

This is the second highest increase in the Leaders category, behind the Telecom industry, which grew 51 percent.

The trend toward Spanish-speaking advertising appears to be accelerating. A 2009 analysis by the Latinum Network found that while the American economy floundered, the spending growth by U.S. Hispanics was twice the growth of general market spending. Additionally, one-third of the nation’s population 19 years old and younger is expected to be Latino by 2015.

Popeye’s and Domino’s are not alone in reaching out to this demographic. Pizza Patron has been aiming its major ad campaigns toward the Hispanic market since 2004.

Within the past year, the AHAA also recognized El Pollo Loco and McDonald’s as among the best marketers for the Hispanic demographic. Wendy’s and Burger King have launched Spanish-speaking campaigns, Baskin-Robbins created a new role to head up the company’s U.S. Hispanic marketing efforts, and Carl’s Jr. developed a format to integrate the chain’s products into primetime lineups of Univision and TeleFutura affiliates.

Also, Whataburger’s first new marketing campaign in nine years launched this week, featuring separate Spanish-language spots, created by San Antonio-based FPO Marketing.

“It is essential to actually build a bridge, provide specific messaging and penetrate this demographic in order to maintain continued success in the market,” said Darren Tristano, EVP at research firm Technomic. “Chains that research Spanish-speaking consumers and hire marketing staff with a deep understanding of the market will have a leg up on their competitors.”

The AHAA’s study analyzed all 35,000 U.S. advertisers and their allocation trends to Hispanic media from between 2006 and 2010.

View the full article at Pizza Marketplace


FOOD: Papa Murphy’s pizza chain rolls into Murrieta, with North County in sight

November 8, 2011

Papa Murphy's
FOOD: Papa Murphy’s pizza chain rolls into Murrieta, with North County in sight

Starbucks and Nike are iconic brands from the Pacific Northwest.

Now there’s another big name in the making that is muscling its way across America: Papa Murphy’s, the fifth-largest pizza chain in the United States. The chain of 1,300 pizza stores is about to step into Southwest Riverside County, and may return to North San Diego County in the next year or so, said a senior franchising executive with the Vancouver, Wash.-based Papa Murphy’s.

“We’ll add additional key markets over the next couple of years —- which could include San Diego County,” said Kevin King, chief development officer for Papa Murphy’s.

The chain once had a presence in San Diego County, but closed the restaurants after fumbling its menu for the health conscious under a different ownership group several years ago. New York-based Lee Equity Partners bought Papa Murphy’s in 2010 with the idea of boosting the brand’s expansion plans in the southwestern and southeastern U.S.

To date, the chain hasn’t had much of a presence south of San Francisco. But that’s about to change.

“We built about 100 stores a year for the last eight years. We’d like to increase that rate of growth to 150 to 200 in the next two or three years,” King said.

The very first Papa Murphy’s, which came about as the result of a 1995 merger of Papa Aldo’s Pizza in Hillsboro, Ore., and Murphy’s Pizza in Petaluma, is scheduled to open in Murrieta on Monday. There are no locations in Los Angeles County, and a handful in Orange County.

“The product does well in a down economy,” said Peter Wynia, the franchisor who has plans to open a total of eight Papa Murphy’s in a geographic footprint that includes Temecula, Lake Elsinore, Murrieta, Menifee, Perris and Hemet over the next two or three years.

Wynia fell into this Papa Murphy’s franchise territory by accident.

His last steady job was helping to develop new hotels out of his office in Spokane, Wash. He was familiar with Southwest Riverside and North County because of his work for a hotel development consultancy that led him to work here occasionally. Wynia, 38, traveled to the area several times to explore the possibility of building hotels in Temecula and Oceanside before the economic crash halted funding on new hotel construction in the late 2000s.

He left the hotel development job and moved his family to Phoenix, where he pursued a master’s degree in information technology from the University of Phoenix. But he tossed in the towel on pursuing an IT job because he couldn’t line up an internship. He all but dismissed the thought of getting a Papa Murphy’s franchise because of the tight hold of the 525 franchise owners in areas such as Washington, Oregon, Iowa and Utah.

While on a vacation to visit a brother who lives in San Marcos, Wynia’s wife, Lindsey, posed the million-dollar question: “Why isn’t there a Papa Murphy’s in this area?”

The couple had been accustomed to seeing one on seemingly every street corner in the Pacific Northwest, where they had lived most of their adult lives until the move to Phoenix.

“Other areas were locked up, but not here,” said Peter Wynia, who pulled his family’s stakes up from Phoenix and moved here in June. “I like this area. It’s very family-oriented.”

Darren Tristano, executive vice president of Technomic Inc., a Chicago-based restaurant industry consulting firm, said Papa Murphy’s is the leading “take ‘n’ bake” chain in the country, with estimated revenue in 2010 of $655 million, followed by Salem, Ore.-based Figaro’s Pizza with $20 million, Chicago-based HomeMade Pizza Co. with $15.4 million and Nick-N-Willy’s, a unit of Centennial, Colo.-based World Famous Pizza Co. Ltd., with $13 million.

“Papa Murphy’s without a doubt is the big player,” Tristano said. “Their competition tends to be warehouse clubs and supermarkets.”

Papa Murphy’s has an ordering concept similar to Subway sandwich stores, in which customers select the amount of cheese and ingredients to toss onto an uncooked pizza. Patrons then take these Cellophane-wrapped pizzas with them to bake in their kitchen ovens —- thus the nickname of “take ‘n’ bake pizza.”

The menu is simple. Pizzas range from $8 to $13 or so, with different sizes and thicknesses: original, stuffed and a “delite” thin-crust style for the health conscious. Dough for the pies is made fresh daily.

Zagat Restaurants Survey and Consumer Reports have given the chain’s pizza pies high grades in recent years. They’re ranked better than Domino’s, Little Caesars, Pizza Hut, Sbarro and the other papa —- Papa John’s.

View the full article on NC Times


Panera Bread: A Restaurant For The Recession

November 8, 2011

Panera Bread

Panera Bread: A Restaurant For The Recession

A new Technomic report found that bakery-café chains are stealing market share from quick-service and casual-dining brands at a feverish pace.

The Bakery Café Consumer Trend Report reported that in 2008, only 43 percent of consumers had visited a bakery café, such as Panera Bread (Nasdaq: PNRA). This year, that figure shot up to 71 percent. Among that 71 percent, 72 percent visit at least once a month.

About the Technomic Report

Operators and suppliers use these types of reports to understand consumption behavior, identify purchase and traffic drivers, explore catering usage and size up the competition, which allows them to take advantage of growth and better compete.

Bakery-café patronage is increasing as consumers take a pass on traditional full-service restaurants to save a few bucks. On the other hand, they spend a little more money and trade up from fast-food restaurants for higher quality and healthier options.

The report also hints at the growth in sales over the last three years. How much? The bakery-café segment has grown to $5 billion in annual sales and about 3,600 restaurant locations. Since 2008, total units have increased 4.2 percent and total bakery-café sales have risen 12 percent.

Panera Leading the Growth
According to Darren Tristano, Executive Vice President of Technomic, “Bakery-café chains continue gaining market share in a zero-growth environment. More consumers are visiting these restaurants and gaining familiarity, but nearly one in three consumers surveyed still say they have never been to a bakery-café concept.”

According to Tristano, problems with location and unfamiliarity are the most common reasons given by consumers who have not yet visited bakery-cafés. This means it’s easy to assume that as more stores open and awareness increases, growth and success in the segment should be sustained.

Technomic also reported that 69 percent of the polled bakery-café consumers said they visit Panera occasionally, if not more often. Further, 69 percent of those customers said they go to Panera at least once a month.

According to the Nation’s Restaurant News’ Top 200 census, Panera had U.S. system wide sales of $2.9 billion and 1,324 domestic locations last year. That number far exceeds its closest competitor, Tim Hortons, which only had $443 million in annual U.S. system wide sales last year.

Panera and The Bakery-Café Concept’s Bottom Line

So here is the outlook: The segment has positioned itself between the over $10-per-person eating experience that most Americans no longer think they can afford and the $5-to-$6-per-person eating experience that most of us are told to avoid for health and nutritional reasons.

The bakery-café experience also gives a different aesthetic atmosphere that’s not exactly fine dining, but isn’t a drive thru, either. According to the numbers, the more that people are exposed to the experience, the more they go back. Expect Panera to keep expanding in this uncertain economic landscape that’s going to be around for some time.


IBD 50’s Chipotle Beats Despite Rising Food Costs

November 8, 2011

IDB 50

IBD 50’s Chipotle Beats Despite Rising Food Costs

Food costs rose faster than menu prices, pinching margins at burrito chain Chipotle Mexican Grill. But strong new-opening sales and an 11.3% same-store sales gain boosted earnings above Wall Street’s third-quarter estimates.

Chipotle (CMG) earned $1.90 EPS, 25% above a year ago, and 5 cents higher than views. Revenue rose 24.1%, to $591.9 million. But rising commodity prices pushed food costs to 33.1% of sales, from 30.6% a year ago. Operating margins decreased by a full percentage point. Shares of the IBD 50 company were up 4% after hours.

Also Thursday night, the pizza and brewery chain BJ’s Restaurants (BJRI) matched Q3 EPS forecasts for 24 cents, 20% above a year ago. Revenue increased 17.6% to $151 million, slightly over estimates, with revenue from restaurants open more than a year up 6.5%. Shares fell after hours.

In a statement, BJ’s CEO Jerry Deitchle called the same-store growth “an impressive accomplishment for any casual dining restaurant company in this difficult operating environment.”

Darren Tristano, executive vice president of the restaurant consulting firm Technomic, expects restaurants across the board to institute 2.5% to 3% menu hikes this year, and to push for the same in 2012. They would ask for more, but with unemployment high and the economy still shaky, consumers might not stomach it.

“All the growth will likely be in price increase and not in higher traffic, or more spending from the consumer,” Tristano says.

Earlier this week, Buffalo Wild Wings (BWLD) and Cheesecake Factory (CAKE) both pushed menu price increases. Buffalo rose about 7% Thursday after its strong results out late Wednesday. Cheesecake edged up less than 1% a day after missing views.

Burger giant McDonald’s (MCD) raised prices earlier this year and could do so again when it reports Friday.

View the full article on Investors.com


Technomic develops newsletter for international growth markets

November 8, 2011

BRIC Newsletter
Technomic develops newsletter for international growth markets

Food and beverage industry research firm Technomic has created a new newsletter, BRIC, which focuses on the growing international markets of Brazil, Russia, India and China.

The launch coincides with the acceleration of U.S.-based restaurant chains’ evolution into global brands, reaching emerging markets where less industry saturation and competition exists. As chains seek to establish footholds in these relatively untapped markets, they are challenged to strike a balance between maintaining their brand identities while tailoring menu items and service formats to local preferences.

“These brands can take advantage of the worldwide recognition they’ve established, but in order to gain loyal customers in new markets, they need to innovate on the menu and introduce items specifically adapted for local consumer preferences,” said Technomic EVP Darren Tristano. “Chains are also leveraging their international experience and applying lessons learned to improve domestic operations and innovation.”

The newsletter was specifically created to keep foodservice executives up to speed on food-and-beverage developments within the fast growing markets of Brazil, Russia, India and China.

Features from the premier issue include:
•McDonald’s Brazil recently rolled out the CBO (Chicken Bacon Onion) sandwich, which was originally developed for the European market. The premium sandwich features breaded chicken, bacon, bacon-spiked cheese and spicy bacon-flavored sauce on a bun dotted with sesame seeds and bacon bits.
•Cherkizovo, one of Russia’s leading poultry processors, has broken ground on a new poultry production complex. The facility in the Lipetsk region is expected to begin operations in 2013 and operate at full capacity by 2015. At full production, the complex will be able to produce about 500,000 metric tons of live poultry per year. Most of the country’s current plants are only able to produce between 15,000-20,000 metric tons annually, so the foodservice implications could be significant.
•Cafe Coffee Day, India’s largest coffee chain with more than 1,100 locations, is rolling out spinoff brands to meet growing consumer demand. The chain’s new Coffee Day Lounge is a concept geared towards young professionals and is expected to grow from its current 19 units to 100 by spring of 2013.
•Burger King and its new master franchisee for Brazil are planning major expansions in the country. Burger King recently awarded its franchising business to an affiliate of private equity firm Vinci Partners as part of a joint-venture deal. The chain currently has about 110 franchised units located in Brazil.
•Yum! Brands Inc. has offered to purchase a majority stake in Little Sheep, the Chinese hot-pot chain. The deal values the chain at $863.5 million, or about $.83 per share. Yum! Brands currently owns about 27 percent of the chain.
BRIC is a quarterly newsletter that covers major restaurant news in those four emerging markets, with an emphasis on both local chains and U.S.-based brands. Each issue of BRIC will feature an in-depth profile of a leading chain for each of the four countries.

To request a complimentary premier issue contact Robert Hicks at 312-506-3860 or rhicks@technomic.com.

View the full article on QSR Web