As we kick off the new year, we’re covering trends from key markets in 2022. We’ll recap the state of each industry over the past year, the ad strategies of its biggest players, and what we predict 2023 will hold.
In 2021, consumer spending on quick service restaurants (QSRs) surpassed $300b, up by more than 12% from 2020.
The fast, convenient, and affordable options that dot nearly every corner are poised for even more growth as many consumers experience budget cuts and adjust their dining destinations.
For QSR advertisers, ad dollars will follow, although some of them will be traveling in different directions.
Here’s what you need to know:
MediaRadar Insights on QSR Advertising in 2022
In 2022, advertisers for nearly 400 QSRs (up from 280 in 2021) spent more than $3.3b on ads.
While that spending level surpasses advertisers in other industries, including agriculture, education, and gaming, it represents a 7% YoY decline, with the biggest decrease coming in Q1.
January, in particular, saw spending fall by 32% YoY as advertisers pumped their brakes in tandem with people welcoming health-related New Year’s resolutions.
Additional declines followed in Q2 and Q3 by 16% and 14% YoY, respectively, before picking up in Q4.
Interestingly, QSR advertisers leaned heavily into TV despite the industry’s embrace of digital, especially during the pandemic. Between March 2020 and March 2021, QSRs accounted for 84% of digital orders.
In 2022, advertisers invested 70% of their dollars in TV, although spending on the format dropped by 14% YoY.
The tides may be turning, though, and the digital wave seems to be finally catching up to advertisers.
This year, they spent $1b on digital ads, representing a 17% increase. Most of those dollars (70% or $706mm) went to video, which saw a significant uptick this year.
As QSRs transition their go-to-market strategies and set their sights on digital-first consumers, dollars going to video, OTT, social, and similar formats will become the norm.
Top QSR Advertisers in 2022
Similar to years past, advertisers for 3G Capital, Domino’s, Roark Capital, Yum! Brands, and Wendy’s, contributed the bulk of the ad dollars. In 2022, these advertisers combined to spend more than $2.5b or 76% of the category’s investment.
Advertisers for 3G Capital, which owns Restaurant Brands International (Burger King, Tim Hortons and Popeyes Louisiana Kitchen), increased spending by 72% YoY as they pushed Burger King and Popeyes Louisiana Kitchen into the spotlight.
Through December, advertisers increased spending to promote Burger King, which accounted for 80% of their investment, by 104% YoY. The triple-digit increase comes thanks to a prolonged spending spree during the year’s first nine months.
In Q1, advertisers increased spending by 161% YoY. In Q2 and Q3, spending jumped by 214% and 127% YoY, respectively. That said, it fell by 20% YoY in Q4.
The increased spending from Restaurant Brands International comes at an interesting time. While the fast-food holding company saw revenue climb, much of that growth came from overseas. Meanwhile, growth stateside was flat.
That stagnation is likely the forcing factor behind the advertising resurgence as 3G Capital revives Burger King’s brand—a revival that’ll include $150mm in advertising and digital investments.
The campaign, appropriately dubbed “Fuel the Flame,” will run through 2024 and aim to rekindle the fire behind a classic: the Whopper.
Advertisers for another brand under 3G Capital’s umbrella, Popeyes Louisiana Kitchen, also increased spending. That said, the increase was a mere 5% YoY, despite new CMO Jeff Klein’s measures to restart the “chicken wars” with a digital-first campaign.
It’s been a decade since Domino’s took a brilliant approach to addressing customer dissatisfaction, wooing consumers back by acknowledging their need to change and introducing higher quality pizza and innovative ad campaigns
While some of the advertising minds who propelled the company’s reinvention have moved on, others are still pushing forward. As they do, their budget is increasing.
In 2022, advertisers increased spending by 28% YoY.
Unlike Burger King advertisers, who spent heavily in the first three quarters, those for Domino’s got the ball rolling in August.
In Q3, spending increased by 53% YoY before surging by 132% in Q4. In contrast, spending dropped by 23% and 10% YoY in Q1 and Q2.
While advertisers didn’t start putting their ingredients together until the back half of the year, arguably their most headline-grabbing move came in May when they brought “mind ordering” to the masses.
The campaign, which involved Netflix, Domino’s, and WorkInProgress (WIP), allowed consumers to use its app to take them to the center of Netflix’s hit TV series “Stranger Things“—they used the app to uncover Easter eggs, use their telekinetic powers to gain control of certain objects, and place a pizza order.
The product-placement-esque strategy differs from Domino’s historical approach to advertising, which steered away from media partnership due to being “burned” by them in the past.
That said, their willingness to reinvest in a channel that’s failed them speaks to their target audience and the industry’s future: younger generations and streaming services.
Advertisers for Yum! Brands reached deep into their pockets to promote Taco Bell (52%), Pizza Hut (38%), and Kentucky Fried Chicken (10%).
However, only Pizza Hut saw more ad dollars.
In 2022, advertisers increased spending to promote the pizza giant by 13% YoY as they fought to maintain footing in the increasingly competitive pizza category; consumer spending in the QSR pizza category jumped to $40.6b in 2021.
The biggest leap came in Q1 when advertisers increased spending by 68% YoY, which likely had to do with a push leading up to the Super Bowl and their desire to remain in the conversation after losing their status as the NFL’s official sponsor.
In May, Pizza Hut teamed up with artist Rob Shields during ComplexLand to design custom delivery vehicles, driver avatars, and nine NFTs.
The entrance into the metaverse aligns with the QSR world’s adoption of digital, including the emergence of the “Wendyverse.”
While Yum! Brand’s other labels, namely Taco Bell and KFC, saw their budgets drop, their advertising engines are far from dead.
At the same time, KFC teamed up with Jack Harlow and YouTube stars to “widen the appeal of the venerable chicken chain to a younger and more diverse audience.”
Advertisers for Roark Capital—think Arby’s, Sonic, Dunkin, Jimmy Johns, Carl’s Jr., Hardee’s, and Jamba Juice—reduced spending by 13% YoY. The only brands that saw more ad dollars were Sonic (up by 2% YoY) and Hardee’s (up by 86% YoY).
The big push to promote Hardee’s—although representing just a sliver of Roark Capital’s investment—comes in tandem with a new brand identity that includes updated restaurant design, uniforms, in-store signage, food packaging, and advertising.
In May, sister brands Carl’s Jr. and Hardee’s partnered with Universal Pictures to celebrate the opening of “Jurassic World Dominion” with a campaign that included co-branded creative, rich media, a digital game in Uber and Lyft via Octopus, an augmented reality (AR) lens on Snapchat, and content on TikTok.
The digital-first approach comes as the company starts fresh with a “focus on physical and digital transformation over the next four to six years.”
While much of the company’s portfolio saw their ad dollars cut, including Arby’s (by 18%), Dunkin (by 23%), and Carl’s Jr. (by 40%), it seems likely that they’ll see an increasing digital presence in their strategies moving forward.
Dunkin, in particular, could boost spending as it battles Starbucks for coffee supremacy.
While Wendy’s embrace of “confrontational marketing” is an enduring source of smiles, it’s not the only avenue its advertisers use.
In 2022, advertisers for Wendy’s increased spending by 8% YoY, thanks to surges in Q3 and Q4 by 26% and 47% YoY. (Spending in Q1 and Q2 declined by 20% and 16% YoY.)
Like Domino’s partnership with “Stranger Things,” Wendy’s renewed its partnership with “Rick and Morty” for a third year. The unique collaboration, which reaffirms the industry’s investment in these channels, incorporates an Uber Eats component featuring a special “Morty’s” menu.
QSR Advertisers Go Digital
Say what you want about the historical dominance of traditional ad formats in QSR ad strategies, but it appears that the pandemic pushed them over the edge and “officially” brought digital into their line of sight.
They’re not messing around, either.
Advertisers haven’t adopted digital at quite the same rate as advertisers in other industries, but now they’re diving in head first with investments in future-facing formats like AR and the metaverse.
Could the recession pull them away from these more “experimental” channels instead of those that offer a better chance of ROI?
Potentially, but they’re made it clear that they’re ready to ride the digital bandwagon full steam ahead.
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