Thinking of Buying a Fast-Casual Franchise? Read this report first.

Gauging Engagement | by Christopher Wolf

Picking the Right Fight
These days competitors and consumers are holding chains accountable for humorous claims and comparisons that go too far.

Quick-service restaurants are working overtime to attract or at least hold on to patrons, from steep price discounts to aggressive advertising strategies. Given the tough economic environment, it’s difficult for chains to resist the temptation and urgency to push the envelope with mocking humor or aggressive claims-based advertising that will cut through all the message noise. And now, more than ever, quick-serves are leaping outside of their immediate competitive set to gain market share in casual-dining and full-service sectors.

It’s easy to see why. The NPD Group reported recently that consumers are cutting back on dining-out purchases over other types. And ChangeWave’s recent Restaurant Spending survey shows that in the past year, the percentage of consumers surveyed about restaurant spending cutbacks has doubled from 22 percent to 44 percent. Increasingly, restaurants in all segments are under intense pressure to maintain a value perception in order to get their share of a smaller spending pool.

For some quick-serves, full-service restaurants are irresistible targets partially because value is an Achilles heel for many of them. Online research company Polimetrix released its BrandIndex scores in November 2008 based on consumer rankings of full-service restaurant chains that offer the best value for the money. Consumers rated Olive Garden and Cracker Barrel well above average on the value scale, but Applebee’s slipped a good deal in during October, and others like Ruby Tuesday’s, Red Lobster, and Denny’s were only slightly above average. Houlihan’s, Hooters, and Bahama Breeze, on the other hand, were well below average rankings on value for the money.

Sure, comparative advertising is a tried-and-true formula that’s been used in the food industry for decades (e.g., cola wars and burger wars in the ’80s). But a number of recent tongue-in-cheek tactics are stirring tensions not only among quick-serve competitors, but also provoking responses from offended consumers and companies who believe the marketing messages are going too far.

Last summer, McDonald’s began poking fun at the evidently pretentious coffeehouse culture with a new ad campaign and accompanying Web site called

But once again, it’s consumers who called the foul on this joke, taking offense to McDonald’s apparently coffeehouse-bashing ads. blogger Erin Zimmer declared that the company set “feminism back 30 years.”

Similarly, Dunkin’ launched a humor-touched attack on Starbucks last fall with its Web site that included a television campaign to promote the results of a blind taste test. Commentor “Swag” at the blog seemed to have picked up on this trend. On October 22, he wrote: “What I find odd is that DD and McDonald’s are both fighting Starbucks with the same marketing pitch when they should be going after each other. At least DD and McD’s are pursuing much more similar market segments.”

Today the seafood segment is front-and-center on the controversial comparison and claim advertising radar. Beginning a year ago, Captain D’s launched a series of “Tailsmack!” ads wherein a giant fish fin smacks various consumers who are holding either a generic red-and-white bucket, a burger bag, or pizza box. Then in August, Captain D’s switched from slapping quick-serves around and proceeded to engage a full-frontal assault on the leading casual dining seafood chain—intercepting departing Red Lobster patrons in a nearby parking lot to show them how they could have had the “same” food at Captain D’s for $30–40 less.

Red Lobster challenged Captain D’s menu price comparison ads that were tag-lined “sit-down food at fast-food prices,” and this time, the Better Business Bureau’s National Advertising Division referred the case to the Federal Trade Commission for review when Captain D’s chose not to participate in the review.

Rather than shy away from this objection, however, Captain D’s launched a new and potentially equally inflammatory ad in November called “Woodchipper.” In it a Captain D’s spokesperson claimed Captain D’s can make dishes that “taste just as good as [those fancy seafood places] at a way better price” because the competitor has a lot of superfluous “things you can’t eat.” He then proceeds to drop all the place settings, mounted fish, and other nonedible decor within a mocked-up Red Lobster interior into a woodchipper.

Of course, this isn’t the first time a casual-dining chain has filed claims against a quick-serve chain over misleading or unfairly competitive advertising, as witnessed by the TGIFriday’s suit against Carl’s Jr. in 2001. That suit was settled out of court a few months later.

It was only a matter of time before quick-serves started nipping at full-serves’ heels.”

CKE later proved, however, that it couldn’t take a joke either, when it sued Jack in the Box in 2007 for a sophomorically funny campaign that insinuated Carl’s Jr. angus beef came from cow anus not angus.

With quick-serves and fast-casual restaurants raising the bar on food quality and maintaining value-oriented menu prices and casual-dining restaurants primarily raising prices on menu items without enhancing value perceptions, it was only a matter of time before quick-serves started nipping at full-serves’ heels.

But it appears that quick-serves might have awakened the sleeping giant that is now very motivated to reciprocate—not with funny, innocuous ads, but with real deals and an enhanced value proposition that could be ultimately more damaging to quick-serves than a Gotcha!-style advertising response.

Witness Red Lobster, which launched a $6.99 Quick Catches lunch menu to address the value side and then trumped Captain D’s food parity claim by rolling out a new wood-fired grill offering.

Similarly, Applebee’s, Chili’s, Denny’s, TGIFriday’s, Bob Evans, and Olive Garden are all hitting the lunch and late-night dayparts with meal combos at price points just slightly above quick-serve combo prices.

Is this quick-serve versus casual-dining marketing war likely to subside soon? It doesn’t appear so.

At first blush I think tthe best parodies do indeed provide a revealing view of a restaurant chain’s weak spots and possibly pull in a few new users. But in the long run those targeted companies don’t just get mad (via lawsuits and protests in the press). Instead they get even by shoring up those weaknesses and setting themselves up for new and tangible competitive advantages that are probably much more effective at stealing business in the end than any provocative message.

As director of strategic innovation for The Turover Straus Group, Christopher Wolf serves a wide range of manufacturing and retail-based clients seeking strategic and culinary innovations for consumers and the food industry.