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Qdoba’s Gamble on All-Inclusive Pricing

How do you set your brand apart in a tough, competitive marketplace? Mexican fast-casual chain Qdoba is finding that the concept “No charge” can help. It’s a discovery from which burger concepts that charge for add-ons also can learn.

Qdoba_FreeFlavorLast month, the chain, owned by Jack in the Box, announced a new simplified pricing structure. Essentially all entrees are $7.80 or $8.40 depending on protein selected. That’s a bit higher than previous entry prices, but now customers can add on as many additional components—including house-made guacamole, 3-Cheese Queso, Queso Diablo and others–as they want without additional cost. It was a gamble, but “it was really important that as we tried to differentiate the brand we didn’t just differentiate it with the food but also differentiated it in the way we provide the service,” Jack in the Box Chairman, President and CEO Lenny Comma told analysts this week.

Qdoba_Queso“Our guests told us that they hated being nickeled and dimed for add-ons and upgrades and they have responded favorably to the new pricing structure,” Comma said. This pricing model not only simplifies service it also creates a more upbeat experience for crew as well as customers.

“If you can imagine going down at Qdoba line and having the service provider have to tell you, with all the different things that you wanted to add to your meal that that was going to be extra, what it created was this tension between the guest service person and the consumer where there was stress from our employees as they kept having to nickel and dime the consumer,” he said. “As a result of that, we are we are seeing, at least qualitatively, that the consumers are quite pleased with the guest service and the change. It’s just much simpler and it’s much more focused on a quality meal.”

Initially, Qdoba saw some resistance from consumers who focused on the higher-priced starting price points, but that was expected, Comma said. “We hypothesized that as folks started to experience burritos with guacamole and with Queso Diablo and those types of things, grilled vegetables, that the finished product would bring them back and that essentially they would in their minds develop a new consumer value proposition that says essentially, this food is way better and its worth a little bit more.” Consumers also like the predictability of the new pricing model, he said.

Qdoba didn’t rejigger its pricing model because sales were slow. On the contrary, it has performed better than sibling Jack in the Box in the past year. Same-store sales rose 5.7% for its fiscal year at company-owned Qdoba stores, compared with 2% for company Jack in the Box.

Qdoba has marketed its new pricing approach primarily through digital media (using the hashtag #FreeYourFlavor) and Comma coined a new social-media-influenced term when he told analysts that the chain has “some exciting new items we are launching in a few weeks that we think will be instantly Instagrammable.”

Five Burger Trends to Watch in 2015

Last year BurgerBusiness.com forecast a Year of Fresh with vegetables and herbs emerging as popular toppings. We didn’t wait longer than February for that to be borne out: Burger Boss in Evergreen Park, Ill., made the French Cauliflower Melt its burger of the month. So I’ll say I was good on that forecast.

2015 could be the Year of the Cheeseburger because of, not in spite of, higher beef prices.

2015 could be the Year of the Cheeseburger because of, not in spite of, higher beef prices.

But I missed on hot dogs. Hot dogs were everywhere on menus this year, from Sonic’s Cheesy Bread Dogs and Chili Cheese Pretzel Dogs to Carl’s Jr.’s Jumbo Chili Dogs. Indies like Crow Burger Kitchen in Newport Beach, Calif., and Grill ’Em All in Alhambra, Calif., are topping burgers with grilled hot dogs.

What I also didn’t see coming was the crazily rapid rise of menu crowd sourcing. It seems every independent burger bar now has asks customers to dream up the burger of the month or some other special. McDonald’s has successfully run its “My Burger” promotion across Europe. Have burger joints run out of ideas? No, I think the “create our next LTO” trend is about customer engagement, and that’s always good.

So how about 2015? I think these five trends are worth watching:

The Year of the Cheeseburger: Not the cheeseburger with bacon, arugula, aïoli, sambal and onion rings. Just a good ol’ Cheeseburger, where the quality of good beef reclaims the spotlight. Does that mean over-the-top burgers are passé? Certainly not! They’re fun and delicious. But sometimes simple is best. Sometimes what’s wanted is a good burger. Burger joints and their customers will rediscover simple in 2015. That first entry on most burger joint menus, sometimes called the Original or the Classic or just Cheeseburger, gets in the game again in 2015.

Burger King's Breakfast Whopper in New Zealand

Burger King’s Breakfast Whopper in New Zealand

Beef is going to be even more expensive in 2015. Burger bars will want customers to taste the quality of the pricey meat.

In a Pickle: House-pickled toppings are going to be big(ger). House-made pickles are popping up everywhere and that’s just the start. Look for pickled vegetables of all sorts to proliferate.

What’s for Breakfast?: Burger King made news when it said it would start selling Whoppers in the morning. The next step, and one that even McDonald’s ought to be able to take part in, is egg-topped breakfast burgers. Burger King has a Breakfast Whopper in New Zealand now. Why not here?

Espresso Yourself: We have Burgers & Beers and Burgers & Bourbons concepts, but how about Burger & Espresso bars? A few such places pairing these two have opened on the West coast and in Australia (check out Batch Burgers & Espresso). Short of that, watch for coffee to be a popular rub or flavoring for burgers around the world.

Swap Meat: Because beef will be more expensive and because there also are more diners willing to go meatless, if only occasionally, watch for burger bars to create better non-meat burgers. Watch for them to promote those veggie burgers, too, and not just list them at the bottom of the menu. Crabtree’s Kittle House Restaurant and Inn in Chappaqua, N.Y., included this year on Wine Enthusiast’s “100 Best Wine Restaurants” list, menus a Pat LaFrieda custom-blend cheeseburger alongside a quinoa, chickpea, corn and mushroom burger. Watch for more parity like that.

Burger Traffic Dips in Q3

McD_Customer.350Customer traffic for quick-service burger restaurants declined 3% during the summer months of Q3, a normally busy time for the segment. The NPD Group says overall restaurant industry traffic was flat during July, August and September.

However, customer traffic was up a robust 8% (compared with a year ago) at fast-casual concepts during the quarter. Mexican QSRs and coffee/doughnut/bagel concepts each posted strong 5% increases in visits.

Asian QSRs and sandwich concepts (such as Subway and Arby’s) each were down 1% in customer traffic in Q3.

Spending was up 3% due to higher menu prices that increased average checks. NPD did not provide a Q3 average check figure but it was $6.67 in Q2. Perhaps because overall customer traffic remains sluggish, the share of visits that involved some sort of discount or deal increased 4%.

Research: Casual Dining’s Emotional Detachment

Casual-dining restaurants have encountered more than their share of difficulties recovering from the recession. Onetime category leader Red Lobster’s rapid decline is the most obvious example. But a new study from Boston Consulting Group (BCG) says casual-dining restaurant (CDR) brands can rescue themselves. While it concludes that economic indicators and dining trends “suggest that the tide for most CDRs will continue to recede,” it is “premature to write off the CDR segment as having lost its relevance.”

The report, “Casual Dining: How Brands Can Pivot from Irrelevance to Growth,” was written by BCG’s Tom Lutz, Dylan Bolden, Keith Melker and Mary Martin. It sees the CDR segment as being “at another historical inflection point, with older brands that have not maintained their differentiation fading and newer players rising to take their places.” Casual concepts have been hit by a number of marketplace shifts, including the health & wellness trend’s emphasis on fresh, high-quality ingredients (to which CDRs are slowly responding); the growth of breakfast , which most CDRs do not offer; time-constrained lifestyles that benefit faster service models; and CDRs’ inefficiency in converting first-time guests to repeat customers (a 6.5% conversion rate, compared with 15% for quick-service and 18% for fast casual).


And while 23% of CDR visits come from Millennials, BCG’s report says that age group chooses quick-service restaurants (QSRs) or fast-casuals (FCs) more often.

What’s gone wrong with many casual concepts? BCG says they’ve lost their connection with what it postulates are the key drivers of consumers’ choice of a restaurant. BGR identifies 12 emotional “need states” that determine those choices. It defines these need states as “something consumers want to feel during a restaurant visit and, therefore, what they expect the restaurant to deliver.”

Casual_OldChicagoThe top three most persuasive need states, which BCG says determine as much as 50% of all restaurant visits are “satisfy a craving,” “in and out” and “money’s worth.” But for casual concepts, these three needs bring just 33% of visits. QSRs and FCs do better. (See chart above.)

Despite what CEOs love to call “headwinds” that inhibit growth, BCG’s report says CDRs can return to growth tracks by establishing a differentiated market position and meeting the expectations spawned by consumers’ emotional needs.

BCG sees three components of any company plan to target consumer needs:

  • The first is to “clearly articulate a brand ladder that establishes the technical, functional and emotional benefits of the brand so that consumers can readily grasp and appreciate them.”
  • The second is to develop a brand strategy that “focuses the entire organization on delivering the technical attributes that make a difference to consumers form the targeted need states.”
  • Finally, that strategy has to be executed across “a wide variety of functions,” including menu, pricing, communication and in-store experience.

The second component may be the most important. BCG says casual brands need “end-to-end engagement” at the corporate level, even if it requires thinking differently about consumers or the brand or altering the company culture.

For more information on the report, contact Boston Consulting Group.

‘Berry Kristmush’ from Burger King!

BK_Japan_KristmushBurger King in Japan is wishing everyone a “Berry Kristmush.” That’s the culture-mashing message accompanying the chain’s new holiday menu that begins November 17.

One offering is the unfortunately named Mush’n’Cheese burger. Luckily that topping is chopped mushrooms, not mush, plus cheese. It’s priced at ¥480 (US$4.15).

Then there’s the Premium Berry burger, topped with bacon, lettuce, tomato…and cranberries. A la carte it’s ¥590 or US$5.10.

Burger King Japan has a proud history of outlandish holiday menus, including the NY Pizza Burger in 2010. That was followed by the Pizza-Size Burgers in 2011.

Neil Perry Gives Australia a ‘People’s Burger’

Acclaimed Australian chef-restaurateur Neil Perry has opened Burger Project, a new Sydney burger bar that appears to raise the bar for celebrity-chef burger pomposity.

The Australian burger of Neil Perry's dreams: Beef, lettuce, tomato, onions, bacon and cheese and sauce that isn't mayonnaise.

The Australian burger of Neil Perry’s dreams: Beef, lettuce, tomato, onions, bacon and cheese and sauce that isn’t mayonnaise.

The bar menu at Perry’s Rockpool Bar & Grill is famed for its AU$24 (US$21) Wagyu beef burger with bacon, Gruyère cheese and Zuni pickle. You know it’s famous because the Burger Project site calls it “one of the world’s great gourmet burgers.” For the 100-seat Burger Project, Perry has made the burger more affordable, even labeling it “the people’s burger.” In place of Wagyu is 36-month grass-fed Cape Grim beef chuck and brisket ground in-house. Served with onion, pickles, tomato, lettuce and a “secret sauce,” the basic burger is a people-friendly AU$7.90 (US$6.90). A Double Is AU$12.90

Also are available are The Korean (with kimchi, onion, lettuce and spicy Korean dressing for AU$8.90), a Spicy Pork Belly (crispy free-range pork belly with salted chill, pickles, pickled slaw and lettuce for AU$9.90). For non-meat eaters, a Magic Mushrooms burger has grilled confit mushrooms, cheese, onion, pickles, tomato, lettuce and the secret sauce. Pork and chicken hot dogs and crispy chicken wings also offered.

In an online review for ConcretePlayground, Kara Jensen-Mackinnon applauded Burger Project’s decision to serve its burgers in “crisp white paper bags” on trays. “They’re not those shameful late night American style burgers that are currently trending in Sydney,” she sniffed with appropriate culinary xenophobia.

It’s a trait Perry shares. “I’ve set out to make the Australian burger I remember before McDonald’s came to this country,” he announced in a release. He remembers that burger as having “beef, lettuce, tomato, onions, bacon and cheese, and sauce that wasn’t mayonnaise,” which would seem easy enough to recreate.

Beverages? The menu boasts “Our drinks list is pure, unadulterated ‘the classics’ – revisited and revitalised.” By this is meant that the iced tea is made in house and there are house sodas as well as Coke Zero and Sprite. “House made ice creams that will have you begging for more” go into shakes.

Burger Project is open from 11 a.m. to 3 p.m., and then closes for an hour to catch its breath before reopening from 5 p.m. to 10 p.m.

McDonald’s Abandons ‘You Deserve a Break’ Rights

Keith Reinhard, the legendary ad man who created “You deserve a break today” in 1970, recently recalled that a McDonald’s exec asked how long he thought the campaign would last. “I said, ‘You should stop running this campaign when people no longer deserve a break,’” Reinhard, now chairman emeritus of DDB Needham, told Advertising Age.

Are we really there?

It’s likely more symbolic than significant, but 43 years after the slogan was written for McDonald’s first national TV campaign, putting the brand on the map, McDonald’s Corp. has abandoned its trademark for “You deserve a break today.” Ad Age rated it the top advertising jingle of the 20th Century. Now it can be yours for as little as $159.

Reinhard was a creative director at Chicago agency Needham, Harper & Steers in 1970 when it was among the agencies invited to pitch McDonald’s national ad account, which was valued then at an impressive $35 million. Last year it reportedly spent $1.43 billion on U.S. advertising, with DDB Needham still its lead U.S. agency.

If you think that “You deserve a break today” is a bit corny, realize that a McDonald’s executive raised that same objection when the line was pitched. He was overruled. “[McDonald’s Corp. Founder and Chairman] Ray Kroc said in his high-pitched voice, ‘Nothing wrong with a little corn!’” Reinhard recalled him saying. “And I knew we were in good shape.”

Reinhard–whose book “Any Wednesday” was published earlier this year–has said that part of the power of the line he wrote was that “You deserve…” granted consumers permission to indulge in a fast-food meal at McDonald’s. And the lyrics were particularly appealing to Kroc, who was a stickler about cleanliness:

Grab a bucket and mop,McD_DeserveABreak1995
Scrub the bottom and top.
There is nothing so clean
As my burger machine!

With a broom and a brush
Clean it up for the rush
Before you open the door,
Put a shine on the floor!

When we’ve finished, what then?
Start all over again!
Tell me, what does it mean?
At McDonald’s it’s clean!”

You deserve a break today!
So get up and get away!
To McDonald’s! McDonald’s! McDonald’s!

“You deserve a break today” was first used in 1971 in a TV commercial that featured actor John Amos—later the father on “Good Times,” the adult Kunta Kinte in “Roots” and other roles—dancing with a bucket and mop. Sidney Woloshin composed the music for the jingle (despite frequent erroneous reports that Barry Manilow wrote the words and/or music), a credit that was  the lead to Woloshin’s obituary in 2000.

Keith Reinhard

Keith Reinhard

“You deserve a break today” was revived for ads in 1981 and 1982 after Chicago’s Leo Burnett replaced DDB Needham as lead agency. In 1995, Burnett tweaked it as “Have you had your break today?” and that was the line’s last hurrah.

In July 1997, McDonald’s sales were struggling. Ed Rensi stepped down as president of McDonald’s USA. And the McDonald’s account, then $400 million, was returned to DDB Needham.

Several years ago, McDonald’s abandoned its trademark claims to “We do it all for you,” one of the many memorable ad slogans it has used over the years. But “You deserve a break today” was the first real tagline, the iconic one and the one that many people still can hum.

McDonald’s again finds itself struggling to ensure its relevance. Sales are down again. Mike Andres was named president of McDonald’s USA in August, succeeding Jeff Stratton, who stepped down. “You deserve a break today” wouldn’t necessarily put the brand back on the tracks now, but it’s probably worth remembering that what first made the brand relevant was its slogan’s commitment to simple, clean operations and to being a tasty reward for everyday living.

BK Joining Crowded Indian Burger Market

Burger King’s announcement that it will open its first location in India this month doesn’t mean it has run out of more-burger-friendly markets. Long considered a tough sell for burger chains because 42% its roughly 1.2 billion citizens are vegetarians, India has become a new hot destination for American brands. Estimated by researcher Technopak to be a $2.5 billion market in 2013, India’s chain-restaurant business is projected to hit $8 billion in 2020.

Dunkin' Donuts added a line of Tough Guy burgers in India last year.

Dunkin’ Donuts added a line of Tough Guy burgers in India last year.

The present wave of new burger players comes not only because India is more receptive but also because the creative revolution that U.S. burger bars have spawned means non-beef and non-meat burgers no longer are considered second-class alternatives. Inventive chicken and veggie burgers are commonplace here. The burger market is ready for India.

What India’s burger market lacks in carnivorism it makes up in style and sass. The country exhibits a flair for burger names that rival those at burger joints here. And they can come from unexpected sources: Promo materials for Dunkin’ Donuts’ Tough Guy Brute Burger promise “a bulked up black kidney bean core that just wants to take you out. Think you can handle it?”

Dunkin’ Donuts, which has 38 Indian locations, added its line of four vegetarian and four meat burgers last year. Prices range from Rs. 59 (US 96¢) for a Potato Hash Brown Burger to Rs. 170 (US$2.77) for the Heaven Can Wait Burger, which combines a spicy chicken patty and chopped vegetables with chili mayo and cheesy jalapeňo sauce. Click here to continue reading BK Joining Crowded Indian Burger Market