No, I'm not imagining it. No need to adjust your TV. In fact, we're seeing more advertising and marketing campaigns from restaurant companies on broadcast, mobile phones, streaming services, social media feeds, and more.
In fact, increasing advertising/marketing spending was one of the key themes in this latest earnings release, a strategy common to brands from Brinker to BJ's and Shake Shack to Dutch Bros. There's a reason (or reasons) for this. First, after his three years of nothing happening, we're back to a much more normalized environment. Second, some brands are growing and developing top-of-mind recognition when entering new markets. Third, consumers are increasingly discerning, driving traffic back, and it's important to keep their attention.
“For us, that's always been an important factor. But we've seen other brands that have largely retreated during the pandemic start to build up their marketing budgets again,” said Joel Yassin, Applebee's CMO. Ski said in a recent interview. “I think it's because we're hearing that our guests, especially low- and middle-income households, are facing pressure. And everyone needs to respond to the current situation, which is making people a little bit anxious.”
In other words, as companies once again increase their marketing and advertising budgets, most are focused on furthering their value proposition. This is something Brinker has been doing for the past few quarters, featuring its 3 for Me platform, for example. CEO Kevin Hockman recently told analysts that a return to TV advertising last year led to “more sustained business growth,” including increased traffic.
Brinker executives said the company will spend the bulk of its advertising budget in March and May to increase traffic and sales, and Mike Ware, vice president of finance and investor relations, said the company will spend the bulk of its advertising budget in March and May to increase traffic and sales. It is expected to increase by approximately $20 million from the previous year. Blinker has doubled the proportion of its sales from advertising to about 1.5% last year and about 3% this year, close to pre-COVID-19 levels.
“We're making a pretty big bet on advertising growth,” Ware said. “I feel like we are moving very quickly to reset demand generation in this business.”
There are several examples of such increases with demand generation in mind. Potbelly is also increasing this year's marketing budget by approximately 20%, driven by his 3% contribution for the full year and continued system-wide sales growth. CEO Bob Wright said this “full-court press” on marketing will help drive customer traffic, value “and excitement.”
Shake Shack's outgoing CEO, Randy Garutti, said the company is increasing spending on digital channels, which have been “highly profitable.” General and administrative expenses are expected to increase 11% to 14% this year, primarily due to increased advertising activity.
“We're not yet big enough to capture the scale that someday we want to do a Super Bowl commercial. We're not there yet,” Garutti said in February. . “But the day will come when that will happen.”
Meanwhile, Shake Shack is focusing on one-on-one marketing, brand partnerships, third-party distribution promotions, and proprietary channels.
“We will continue to test and learn new strategies in all types of markets to see where they work best,” Garutti said. “We have a lot of opportunities ahead of us and our marketing team is ready to tackle a lot this year.”
Dutch Bros. added about 160 new stores last year and expects to maintain that pace in the short term, with a long-term goal of 4,000 stores. The company is focused on increasing its visibility as it enters new markets, and CEO Christine Barone said on an earnings call in February that advertising provides that opportunity. Ta.
One of BJ's priorities is increasing brand awareness. In a presentation to investors in November, the company revealed that its own recognition rate was about 12%, compared to 20% to 40% among its peers. CEO Greg Levin said the company, which recently returned to television for the first time in years, will increase spending on linear and connected TV in some markets.
“We have two flights scheduled – one in Q2 and one in the second half. Our flights will launch further in April, in another market with an increasing weight on streaming services and linear TV. ,” Levin said.
Domino's is certainly no lightweight or newcomer when it comes to advertising, but the company has been promoting a new loyalty program on TV and recently promoted Pan Pizza for the first time since 2014.
“We call Pan Pizza our best-kept secret. It's time to change that,” CEO Russell Weiner said on an earnings call in February.
Meanwhile, Bloomin' Brands CEO David Deno said the company will increase spending on marketing and advertising in 2023 and continue to do so this year to increase its voice in the competitive category. He said he plans to increase the amount by about $20 million.
“This investment will increase our share of voice and build traffic through a combination of television and high-yielding digital tactics,” Deno said.
Cracker Barrel also plans to increase advertising spending this year after pulling out last year. New CEO Julie Masino told analysts that the exit would likely have a negative impact on the company's sales.
“We're focused on being relevant and driving business. We started evaluating everything from ad spend to tactics to messaging to channels,” she said. She added that Cracker Barrel would “surround national purchases with local purchases,” driving traffic and relevance.
Speaking of national buying, Papa John's is working to increase media spending by 20%, including a new national advertising campaign that the company believes will generate strong sales momentum. Outgoing CEO Rob Lynch recently told analysts that national and local advertising has more consistent revenue. The company has therefore changed its approach as part of its “Back to Better 2.0” strategy. The strategy includes increasing franchisees' national marketing fund contributions from 5% to 6%, while eliminating the need to spend 3% of revenue on local marketing.
“If you look at the return on ad spend, we’re seeing an improvement of more than 25% at the national and local level,” he said. “On an apples-to-apples comparison, we reduce total advertising investment by approximately 25% and our customers get back 25% of their investment.”
Red Robin intentionally toned down its marketing efforts last year while focusing on product and operational improvements as part of CEO G.J. Hart's five-point North Star plan. But now that many of those pieces are in place, we're moving full steam ahead. The company plans to test the TV in six core markets, targeting specific channels and time slots.
“We believe being on TV will help get the word out,” CFO Todd Wilson told analysts last month. “So part of our approach is to go to these six markets and measure their performance, and that will determine how we approach the second half of the year. There is a huge push to get people back involved.”
Finally, Portillo CEO Michael Osanloo said the company's marketing strategy is driving traffic and is working very well in certain markets like Chicago. This advertising campaign increased his general and administrative expenses by $3.8 million over the previous year. But despite the proven gains, he also offered a slightly cautious outlook on spending increases towards the end of this year, leading us to think we may see another major strategy and budgeting change. .
“It costs a lot of money to run ads during an election period,” Osanloo said. “So we probably won't be promoting it anywhere in the country for the second half of this year. We're going to get yelled at by local politicians.”
Contact Alicia Kelso. [email protected]
