So McDonald’s announces that its domestic same store sales for April rose +3.3%, and gauging analysts’ reactions, one would think the sky is falling for the gilded chain Who Can Do No Wrong. Analysts had predicted that McDonald’s April same store sales would rise 5%, overseas sales were softer than expected, and nemesis Burger King announced its strongest North American sales comps in eight quarters: +4.2% for their 1Q ending 3/31/12. But lets look a little closer. McDonald’s April figure is rolling over a 4% gain in April 2011, generating a seven percent gain over two years. Burger King is rolling over a particularly weak -6% from 1Q PY, a two year net decline of roughly -2%. Now we don’t want to take anything away from BK, who achieved their strong current read before they rolled out a bevy of new salads, smoothies wraps and chicken strips. And BK is working diligently to upgrade its stores and menu quality.
Regardless, McDonald’s is up 7.4% YTD vs. BK’s 4.2% gain, vs. CKE’s fiscal 4Q (ending 1/30/12) Carl’s Jr./Hardee’s blended gain of 3.6% and vs. Wendy’s .8% 1Q increase. McDonald’s had promoted its Extra Value Menu and many of its beverages in April, nothing particularly ground-breaking and it still hit that 3.3% described as ‘disappointing’ by analysts. Maybe their projections were disappointing – we doubt many chains would be troubled by McDonald’s April figure as the economy still is trying to sort itself out, with some sources also suggesting that April’s total restaurant business will be softer than March’s results.
The Arches also announced it will offer more LTO’s than it has in the past, perhaps an acknowledgment that the chain could use a few short term sales bumps that result from satiating customer demand for a variety of new tastes. So the chain adjusts when it has to, but there’s little reason to feel less confident about McDonald’s outlook, based on the major strides in ops and marketing the Arches have achieved over the past several years.
Photo Credit: shescribes.com
Category: News
Don’t look for the “W” in Wendy’s anymore. It’s gone. Oh, the name of the respected chain isn’t changing, but the $2.99 “W” burger, meant to serve as a bridge between the $.99 Value Menu and the higher-priced items like the $3.49+ Dave’s Hot ‘N Juicy Cheeseburgers, “is shelved and won’t be promoted again,” according to company officials. As reported in many sources including Burger Business and acknowledged by Wendy’s themselves, the “W” ended up cannibalizing sales of the higher-priced Dave’s Hot ‘N Juicy Cheeseburger line vs. trading up customers from the $.99 Value Menu. This was little surprise to some industry analysts who predicted this outcome, as the “W” containing more meat than Dave’s namesake and the $2.99 price-point was just too much a jump for the $.99 customer, who tends to live at that price point regardless of where they visit. Wendy’s blames this menu mix mishap for the chain’s disappointing 1Q 2012 sales performance, with same store North American sales growing +.8%, rolling over a -.9% decline from prior-year 1Q – yielding basically flat performance for the quarter over two years.
- Restaurant Catch-Up had previously expressed concern that the “W” was launched just weeks after Dave’s signature line, perhaps diluting the brand-building impact of both signature products. Judgmentally, when a product is labeled with the first letter of its parent brand, literally standing for the brand, that product had better been tested thoroughly before being launched nationally. But hiccups can happen, and at least Wendy’s had the good sense to cut their losses in a fairly short period of time. And while analysts expected a greater 1Q 2012 sales gain, at least the chain did achieve its fourth straight positive sales read, as product improvements and rollouts continue to occur. Plus, the ”Now That’s Better” ad campaign is at least becoming talked about. In the long-term, we expect Wendy’s to benefit positively from its commitment to improve many aspects of its business.
- A short-lived Welcome
Photo credit: brandeaters.com
Category: Marketing, News, Products, Sales
Today's Special: Cold Burys, Limp Vegetables
While some restaurants frequently pine about how dead business is, the Eternity Restaurant in Truskavets, Ukraine, doesn’t mess around. This delightful eatery, as reported in CNNgo.com, may be the world’s largest coffin, according to the legitimate undertakers who run the place. The Eternity is over 60 yards long, longer than half a football field, and sports an interior of black walls, white wreathes and lit candles on each table. Uhh.. we’re not so sure the candles are a particularly good idea, no matter how supportive of the theme it is. And we hope flambes are not on the menu. We haven’t heard too many formal reviews of the place, but we assume the chefs are competent enough to prevent their customers from contracting tomb-maine poisoning.
Category: Fun, Marketing
Sometimes the tough decisions just have to be made. For Starbucks announced it is dropping the use of red dye created from dried and processed red beetles found in Latin America, as reported in the LA Times. The coloring agent requires only about 70,000 beetles to generate one pound of the rose-tinted product. Believe me, these little critters will be breathing much easier in the near future. The dye was found in the popular Frappucinos, strawberry-banana smoothies and a variety of cake and pastry products. In case you weren’t aware of Starbuck’s juice use, an anonymous vegan Starbucks barista spilled the beans to the This Dish is Vegetarian website in March. Shortly thereafter, 6,500 Starbucks customers signed a Change.org petition condemning the dye. So now, the chain will now use lyocopene, a tomato extract found in products like catchup. Hey, at least Starbucks continues to respond to its users and in this case, managed to work some bugs out of their products.
Category: News
Marketers are clearly pushing the boundaries of new advertising media. We are particularly impressed with Burger King’s new Netherlands print ad featuring the closed eye of a model made-up to appear exactly like a Burger King cheeseburger. The ad, featured in psfk, concludes the visual with “Get a Tasty New Look.” A little corny maybe, but the visual is arresting. There is one problem with the make-up, the same problem that has plagued women for centuries no matter how exotic their eye make-up is. For even this model’s cheeseburger make-up can’t cover up the bag under her eye.
A Visionary Approach
Photo Credit: psfk
Category: Fun, Marketing
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