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Chain Restaurants Buck Trend, Increase Couponing

Steak 'n Shake is a frequent user of couponed FSIs.

KFC plans to tuck a freestanding insert (FSI) with a coupon for its new Original Recipe Bites into newspapers nationwide this Sunday (July 15). Sunday papers are not a medium KFC often uses, but couponed FSIs have become a more important and more frequent advertising channel for restaurants.

Data from Minneapolis-based researcher Kantar Media finds that overall number of FSI coupon distributed fell by 1.2% to 148 billion during the first half of 2012 versus the year-earlier period. Average face value for coupons declined by 3.2% and the average “fuse” or duration fell by 9.2% to 7.5 weeks.

That’s positive news. Couponing is a too-often-overlooked economic indicator: when the economy declines, the numbers of coupons distributed and redeemed increase. Coupon usage for consumer packaged goods (CPG) distributed through all channels (direct marketing and other media as well as FSIs) increased in 2009, which was the first uptick since 1992, according to data from another researcher, Inmar/NCH Marketing Co. If FSI coupon distribution is declining in 2012, it could mean Americans are feeling less compulsion to penny pinch and they may ease their reliance on discounted meals and value menus at restaurants, especially QSRs.

Restaurants are bucking that trend, however, and distributing significantly more, not fewer, coupons. Although Kantar reports a 0.1% decrease in FSI pages for the CPG sector and a 6.8% drop in direct-response FSI pages, the 11.2 billion FSI pages in the “franchise” category—much of which is chain-restaurant activity—jumped up 9.5% during the first six months. The franchise category now accounts for 10.1% of the total or one of every10 FSI pages. In the first half of 2010, the franchise category’s share of the whole was 8.9%.

Restaurant’s increased use of coupons and FSIs reflects the tight, highly competitive share battle raging in the marketplace. Restaurant brands must take share from rivals and not just rely on physical expansion to grow sales. In that way, restaurants increasingly market like retailers, and retailer promotional marketing pages increased 11.2% to 9.3 billion pages during the first half, Kantar reports.

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