While many quick-service restaurants touted price in January TV ads, not all of them improved their value perceptions with consumers, according to new “value score” data from YouGov BrandIndex, a market research firm.
In order to cut through the clutter in cost-conscious times restaurants need a balance of new-product news and prices that denote value for money — not just price points that undercut the competition, according to BrandIndex senior vice president Ted Marzilli.
BrandIndex calculates a value score by surveying thousands of American consumers every day and asking, “Does this brand give a good value for what you pay?” Negative responses for each brand are subtracted from positive responses, and a moving average is calculated in a range from negative 100 to positive 100, with a zero rating denoting neutral value perceptions.
Throughout January, Wendy’s had the largest lead in value scores, staying consistently in the mid-40-point range, even though it has not been advertising its My 99 Value Menu anywhere near the level of its biggest burger competitor, McDonald’s, and its Dollar Menus at breakfast and lunch.
But value scores are not solely about price points.
“The question asks not who has the cheapest price, but which of these brands provides the most for what you pay,” Marzilli said. “Quality is built into the question and people’s perceptions of value. Wendy’s has a high-quality positioning, and consumers believe that. They also believe Wendy’s is competitive on price.”
Pizza Hut, the biggest improver
Few quick-service segments are as competitive on price as pizza, and in January, Pizza Hut and Papa John’s were locked in a tight contest on pricing. While Papa John’s scores in the high 20s and low 30s reflected its consistent branding with “Better ingredients, better pizza” commercials and the $11 price point, Pizza Hut made bigger improvements in its value scores.
Pizza Hut ran new spots for its $10 any-pizza deal, and its value scores improved 12 points, from 22.0 at the beginning of January to 34.0 at the end of the month. Pizza Hut ended January with value scores ahead of Papa John’s 29.1, although Pizza Hut started the year trailing its rival in that metric, probably because Papa John’s premium price point bolstered perceptions of the quality consumers could get for $1 more, Marzilli said.
“You’d think $11 versus $10 would be pretty clear, but there’s also an evaluation of what you get for that $10 or $11,” he said. “Pizza Hut started out a little bit below Papa John’s, and it could be because of a perception that you do get more quality for $11 [at Papa John’s].”
Pizza Hut may have benefited from the fact that the brand switched up its creative and ran some new commercials around the $10 any-pizza deal, including a spot with a guitarist singing a Pizza Hut jingle, Marzilli speculated.
By contrast, Papa John’s continued its long-running campaign with founder and chief executive John Schnatter, who always reinforces the “Better ingredients, better pizza” positioning in his commercials. The spots also revolved around the $11 price point, which Papa John’s has worked hard to claim the past several quarters, and involved its tie-in with the National Football League, with whom Papa John’s is in the second year of a multiyear partnership.
Watch Papa John’s Super Bowl commercial; story continues below
“If you tweak a campaign and change the creative, that may resonate with consumers, compared with a more continuous one,” Marzilli said. “When people hear the same promotion long enough, they start to think that’s the real price … and it may lower the value perception [of the offer].”
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Not workin’ for the Weekend Bucket
New-product news and persistent advertising probably drove Burger King’s improvement in value scores, according to BrandIndex’s data. Burger King ended January with a score of 32.7, up 9.6 points from 23.1 to begin the month, in which it promoted its new French fries and executed a large direct-mail campaign with coupon books.
Taco Bell also had a significant improvement in January, taking its value scores from 27.5 to 33.1 on the strength of the Beefy Crunchy Burrito limited-time offer for 99 cents.
Yet some chains, especially KFC, struggled to improve price-value perceptions meaningfully with consumers. The fried-chicken brand got a small boost in its value scores to begin the month, when it heavily advertised the $11 Weekend Bucket and 50-cent Hot Wings. But the value score dropped to pre-January levels in the middle of the month.
Watch KFC’s Weekend Bucket commercial; story continues below
Marzilli theorized that the crowded space of restaurants advertising value deals made it hard for KFC to break through.
“The value or the price promotion is tricky, particularly if you know your competitors are going to be promoting theirs at the same time,” he said. “It has to work for you as a brand and still be profitable. How much it resonates has to do with what everybody else is doing, and it’s a challenging environment.”
The $11 price point may have been problematic for a fried-chicken offer as well, Marzilli added.
“If KFC is advertising an $11 Weekend Bucket, people have to equate $11 with feeding a family of four typically,” he said. “That’s about $3 per person. But there also is somebody not doing the math or who doesn’t have a family of four, making $11 not that relevant. The potential problem is that this may not resonate with singles or couples.
“If we had sliced this data by families,” he said, “it might have been better for KFC.”
YouGov BrandIndex is based in New York.