Endorsed branding: The next step in restaurant-brand management

E ndors ed Branding The Next Step in

Restaurant-Brand

by Christopher C. Muller

Management

The value of a name could be considerable for restaurant

companies that extend their brand name to distinct but related

concepts.

B I uilding brand value will become the primary focus of all international restaurant executives. Some have already begun the process of applying brand-management theo- ries and practices (most of them developed by consumer-products and retailing firms). Others are just beginning to explore brand management, having focused strongly on product-based strategies. Some restaurant companies have begun the necessary steps to reshape their corporate mission from a product orientation to a brand orientation, and they are being rewarded by increas- ing consumer loyalty and market

Christopher C. Muller, Ph.D., an assistant professor at the Cornell University School of Hotel Administra- tion, is contributing editor for this issue 0fCornell Quarterly.

© 1998, Cornell University

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F O C U S O N F O O D S E R V I C E

share. As has happened in virtually every segment o f the retail econ- omy, to remain competitive in the marketplace o f the future, food- service companies will need to adopt the skills of the brand manager as their core competencies.

A brand is both the memory and the future of its products. The brand memory that develops contains the program for all future develop- ments, the attributes of later mod- els, the characteristics they will have in common, and their family resemblance as well as their indi- vidual personalities)

Kapferer's assertion that a brand is both the memory and the future o f any consumer product rings true, in the sense that a brand name is a promise to the customer o f a certain level o f product quality and service execution.

In this article I explain three types o f brand-management strategies and explain how the most complex of these strategies, endorsed branding, could work in the multiunit restaurant industry.

What's in a Brand? Larry Light, president o f Arcature, Inc., suggests that brands are more than merely products or names. They stand for something: "Brands are much more than simply trademarks or logos; a brand is a promise to the customer. ''2 Restaurants create those promises on a multiple set o f complex and overlapping levels. We expect restaurants to serve us safe and reasonably wholesome food in clean surroundings. We also look for the more ethereal promise that a restaurant will provide us with an experience that enhances our self-image.

People don't love brands merely because they run efficiently or have

Uean-Noel Kapferer, Strategic Brand Manage- ment (New York: Free Press, 1992), p. 13.

2 Rebecca Piirto Heath,"The Once and Future King," Marketing Tools, March 1998, p. 38.

effective systems, although that is the result of "behind the scenes" flawless execution. They love brands because they offer levels of service delivery and product quality that are personalized, amazingly good, and dependable.

The consumer accepts restaurant brands because they excite, or they comfort, or they are reliable. Some- times they are all three. Great restaurant brands are both consistent and surprising. We expect them to be great, and then we are surprised because compared to everything else we buy, they are better than we expected.

The min imum requirements for building a restaurant brand are pro- viding quality products and services, flawless execution, and establishing symbolic imagery that communi- cates a distinctive position. The first two of these, products and execution, are "table stakes" in the national restaurant game. One cannot open the doors without them. The third element, creating a distinctive "story," is the most important, because it sets the brand apart from others in the consumer's estimation.

Quality products and services. Consumers judge the acceptable level of restaurant product and service quality as a combination of sacrifice and utility, which restaura- teurs commonly call "value." At the Q S R level this means a balance between price points and food quality. Based on an unscientific inspec- tion of menus, the price-point limit for QSRs in the United States ap- pears to be about $5.00 per person. Interestingly, that level (equivalent to approximately 10 DM) seems also to be current in Germany. 3 Food quality involves an acceptable mix of taste, temperature, speed, and convenient access. The limits for

3 See: Rupert Spies and Gretel Weiss,"Is Germany's Traditional Restaurant a Dying Breed?," in this issue of Cornell Quarterly, pp. 82-89.

those characteristics are set by con- stant consumer research. In this highly competitive segment, substitution o f main menu items is rela- tively fluid, allowing the consumer to choose from a broad selection of products that will meet their needs. That substitution can occur within the store (chicken instead of burgers) or between chains (tacos instead of pizzas). Market leaders in the category maintain market share, and a corresponding measure o f brand equity, by continually offering a high quality product at a "fair" price. Category leadership is judged more heavily by consumers on the measures of product quality and service delivery than it is simply on low price.

Flawless execution. To build brand equity, service-delivery systems must be established that guarantee that the quality level of products and services meet customer expectations. In this area, timing of the service delivery is of paramount importance, second only to the guarantee that food is presented in the most attractive market-usable format. Time is measured in two ways. The first is the traditional standard of product quality. It should be delivered when it's ready. Hot food should be delivered hot; cold food should arrive cold. Second and more important, customers have become time sensitive in much the same way they are price sensitive. I f a restaurant takes too long to serve a product, that product becomes too costly.

Time cost thus is now the third leg o f the consumer's purchase-cost decision, joining food quality and price point. The consumer's esti- mate of food quality relies on service execution. An excellent meal that takes too long "isn't worth it." The two main time-related customer dissatisfiers are ordering and payment. Ordering should be easy, fast, and simple. Likewise, check

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The Value of a Brand Great brands transcend the products and services they offer, and establish a secondary "meaning" in the marketplace. Throughout its phenomenal growth stage, for instance, McDonald's meant "quality, service, cleanliness, and value" to the world, while Burger King told us to "have it your way." Coca Cola was the =real thing," and Mercedes Benz represents to many both "luxury" and "solid engineering." Ads for Macintosh computers ask us to =think different," while Nike challenges us to =just do it," no matter what "it" is. Those examples illustrate secondary meaning, and those brands that can establish it in customers' minds create a position that is more solid and harder to displace than that of competitors who can't.

The market value (brand equity) of a restaurant brand lies in its ability to capture price premiums above the intrinsic value of the products it sells. A brand will build equity and acceptance in the marketplace when it focuses on three key issues:

(1) Quality products and services; (2) Execution of service delivery;

and (3) Establishing a symbolic and

evocative image.

Through the combination of these three key elements of restaurant-brand development will come the opportunity for:

• Charging price premiums, and • Enhancing customer loyalty.

Customer loyalty, in turn, brings in- creased frequency of use, positive brand positioning in relation to competitors, and the forging of consumers' personal identification with the brand.--C.C.M.

settlement should be timely, free of errors, and uncomplicated.

Symbo l i c imagery. The brand must be reinforced by symbolic images that are consistent, evoke deep meaning, and are graphic manifesta- tions of the chain's positioning re- garding quality and execution. This symbolism repeats throughout all communications materials, with brand icons, logotypes, trademarks, sales marks, and trade dress protected from misuse, licensed for merchan- dising, and aggressively managed.

Brand Expectations Restaurant-brand management goes beyond the traditional means of product differentiation such as signature menu items, narrowly defined price points, or site-location analysis. Instead, brand management relies on positioning strategies based on clearly defined consumption attributes, demographic-cohort identities, and consumer-behavior characteristics. Making the move toward this decision framework has given innovative companies the potential to become market leaders.

C o n s u m e r expecta t ions . After more than 50 years of multiunit restaurant development, American consumers have high expectations for restaurant products. Whereas success once required little more than a convenient location and an appealing menu, today the marketplace has developed a consumer who expects a customized, often individualized, service and product offering.

Restaurant customers have seg- mented themselves, defining and differentiating their needs and wishes in a multitude of ways,just as they have done across all other retail purchase decisions. Families with young children, for example, want a different experience than empty- nesters in their 50s, while young urban business executives desire a different entertainment selection

than do 40-year-old couples in a suburban bedroom community--but all of these groups could be in the same restaurant at the same time. The question is whether a single operation actually can handle their distinctive desires.

Some restaurant firms have ad- dressed the segmentation of the American marketplace by operating a number of chain concepts. Tricon Restaurants is a classic example, offering the venerable chicken menu of KFC, the contemporary pizza menu of Pizza Hut, and the Q S R menu of Taco Bell. Few consumers, however, would be able to identify those restaurants as belonging in any way to the same company. As I explain in a moment, an endorsed brand-management strategy might be one way for a single company to serve diverse market segments while augmenting one concept with the brand strength of the other. Indeed, many restaurant companies now seek to offer a portfolio of different selections. In 1990, the Technomic Top-100 chain companies controlled 189 restaurant brands, in 1996 they controlled 206. 4

Brand Leadership Restaurant operators are developing ways to manage brand portfolios. In the United Kingdom, the Bass Res- taurant Group has already begun to use brand-management principles to position its rapidly growing concepts. Using psychographic pro- files, segmentation strategies, and consumer-attribute mapping, they are assembling a portfolio of neo- traditional pubs, family restaurants, urban bars, and sophisticated center- city eateries, s In the United States,

4 Technomic Top-100 Chain Companies (Chicago: Technomic, Inc., 1997).

5 For a discussion of consumer-attribute mapping, see: Robert C. Lewis, "The Market Posi- tion: Mapping Guests' Perceptions of Hotel Operations," Cornell Hotel and Restaurant Adminis- tration Quarterly, Vol. 26, No. 2 (August 1985), pp. 86-99.

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~pple South has taken a lead in ~rand development by jettisoning ts former growth vehicle, the fran- :hised Applebee's Neighborhood 3rill, for a newly defined collection ~fproprietary casual-theme restau- ants, brewpubs, and ethnic specialty :oncepts all designed to attract spe- :ifically targeted market segments¢ ks another example, the South kfrica-based Nando's Chickenland, vhich has outlets in more than a lozen countries, uses evocative dvertising, highly stylized graphics nd iconography, and social-trust :ontracts with its customers to dif- erentiate itself from its competitors.

'hree Strategies ¢1urphy identifies three generic ,rand strategies: simple, monolithic, nd endorsed. 7 Two of those, a imple strategy and a monolithic trategy, are in common use in the estaurant industry, as I explain be- 3w. The third, an endorsed strategy, Las yet to be seriously attempted, ,ut it has great potential. Moreover, he endorsed strategy is already in pplication in the lodging industry.

Stand-alone . A simple brand trategy involves a company's allow- ng each independent brand to tand alone. This is the strategy hOSt often used by consumer- ,roducts firms such as Procter & ~amble (think of Pampers, Folgers, 2rest, and Tide).

In the restaurant industry this trategy has been followed over he years by such industry leaders is Tricon (Pizza Hut, Taco Bell, nd KFC), Darden (Olive Garden, Led Lobster, and Bahama Breeze), nd Brinker International (Chili's, )n the Border, and Romano's ¢Iacaroni Grill).

(' The proprietary concepts are Hops Restau- mt & Bar, McCormick & Schmick's Seafood ~estaurants, Canyon Care, and Don Pablo's 4exican Kitchen. 7john M. Murphy, Brand Strategy (New York:

rentice Hall, 1990).

Chain power. A monolithic strategy is built on the precept that the strength of the corporate brand will add value to an paw's product offeri well in sore " ' others. In el name conju of televisior camcorders- owns CBS,' movie-theat In the restat employed tt success by n products wi preface. Th~ the sense th stantly idenl ace, but ill-c not benefit

Extendil pany can us, range, strate: o f a single u to a numbez The endors~ recognized and well-accepted name, which comprises identifiable guar- antees o f quality and consistency, on a cluster of products or services in a similar general product category. By endorsing a range of products the lead brand lends its good name and image to the entire line. One must wonder whether a PepsiCo stamp would have helped KFC during the time it was struggling while the other former PepsiCo brands were riding high. Since PepsiCo has now divested its restaurants, that question cannot be answered because Tricon currently has no brand identity with customers. The same question might have been asked about the General Mills brands, particularly Red Lob- ster and Olive Garden, before the Darden divestiture.

Using the power of the restaurant brand, restaurant companies have the opportunity to move beyond the existing traditional simple or monolithic strategies, which seem

June 1998 • 9~

Exhibit 1 Marriott's product-tier attributes

Full-service restaurant

Marriott Hotel x x Cour tyard x ~_ x Fairfield Inns * Residence Inns x Resorts x x

Ritz-Carlton x

• Somet imes, but not a lways, avai lable.

Banquet Meeting Bar or Room Health Executive

X X X X X X

X * X

X X .X , X X X

to have played to their maximum benefit, and into a more complex endorsed one. Pizza Hut's diversifi- cation strategy is a step down this path. The chain offers the image and positioning statement of its traditional red-roof sit-down restaurants to the Pizza Hut Express kiosks and limited-service stores and to its Pizza Hut "DELCO" units (delivery- carryout only).

The Lodging Approach Certain companies in the lodging industry have made effective use of the brand-range or corporate- endorsement strategy in the wake of the burst of product tiers that the industry experienced in the 1980s. Marriott and Sheraton both maintain a collection of lodging brands operating in different industry segments. Each brand has distinct attributes, but they are unified by the corporate name (e.g., Sheraton Luxury Collection, Four Points by Sheraton) and have certain attributes in common. This path pre- sents the restaurant brand manager with a new tool in fighting for market share and position. Marriott Hotels and Resorts offers a strong example of the endorsed strategy, because the company has affixed its name to what may be the broadest range of lodging types. Not only does it offer distinct lodging tiers (e.g., the flagship Marriott Hotel, Courtyard by Marriott, Fairfield Inns by Marriott, and extended-stay Residence Inns by Marriott) but it

also operates Marriott Resorts and a timeshare firm, Marriott Ownership Resorts.

In this instance, Marriott Hotels is the core brand that has supported the launch of the other lodging products that use the Marriott name. Having the "by Marriott" tag on distinctive property names aids the hotel company in maintaining the differentiation, lowers operating risk, and limits new-product intro- duction costs. At the same time, it helps the customer recognize that the product will have a reliable quality level since it is operated by a known entity. The customer's cost of searching for a reliable property is reduced, as is the uncertainty of the purchase. A business traveler can choose a set of these product- service attributes (at given price points) in making a purchase decision,just as a family on vacation can choose from the same attribute set, albeit using different decision crite- ria than the business traveler. These differentiated products are respond- ing to the differentiation of market segments, but the endorsement strengthens the hand of each product in the line.

The distinctive attributes of Marriott's hotel products can be listed, as shown in Exhibit 1. The core product, the Marriott Hotel, is targeted to the business-travel segment, and is positioned to supply the needs of a transient hotel guest in an urban or airport location (fea- tures include: full-service restaurant,

pool and health club, room service, banquet rooms, meeting rooms, a bar and lounge, business center, and an executive f loor for frequent guests and VIPs). Through the care- ful management of this list of attributes, the Marriott name has come to stand for solid, professional service at a moderate price in convenient business locations.

Building on or borrowing from the brand's meaning (that is, the set of attributes connected with the firm) over the past decade, Marriott has attached its name to an array of other lodging products. Significantly, these brands have essentially been created from scratch--meaning that (with a recent exception) Marriott has not inherited any meaning from an existing brand. The exception, Ritz-Carlton, I discuss below.

Originally targeted to business travelers who are more price sensitive than those patronizing the mainline hotels, Courtyard by Mar- riott has also made a hit in the family market. The Marriott brand name indicates to potential guests that there will still be solid, professional service, but the Courtyard designation implies that it will be in a relaxed, casual setting. There is still a restaurant, but service times and style might be altered. Also present is a pool with some limited exercise or health club attached, and usually a small meeting r o o m .

Fairfield Inns by Marriott has targeted a market at a price point below that of Courtyard, aimed primarily for the budget segment. The service is every bit as professional as in the flagship hotels, but the hotel has become an inn and the room tariffs are aimed at a price- sensitive traveler. The restaurant is transformed into a place to serve continental breakfast, and the inn may not have a pool.

The Marriott brand has been extended into the extended-stay market. Residence Inns by Marriott are targeted to the business traveler

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with needs for limited professional services at a competitive price when compared to a short-term apartment lease.

Meanwhile Marriott Resorts are targeted to the up-market business traveler. Here the guest will find all of the traditional professional ameni- ties of the urban Hotels, but will also find golf courses, tennis courts, and a fuller array of entertainment options. When visiting a resort, this market segment is seeking the expected Marriott level of professional services whether for business confer- ences and meetings or when on personal holiday.

Recently Marriott acquired the luxury hotel chain Ritz-Carlton. This name brings its own brand strengths and weaknesses, but at this writing none of its distinctive attributes are the same as those of the Marriott Hotel. The Ritz-Carlton acquisition points up a challenge inherent in the brand-extension strategy. That is, one can usually extend a brand from upscale segments downward, but it is hard to extend a brand upward, as Holiday Inn, Howard Johnson, Choice, and Ramada all discovered in their 1980s foray into upscale hotel segments. Instead of trying to extend its own name to luxury hotels, Marriott purchased an upscale brand name.

A Hypothetical Restaurant Strategy In Exhibit 2 I hypothetically applied the product-line segmentation approach to branding to one of the restaurant industry's recent growth stand-outs, Outback Steakhouses. Although the Australian outback includes some of the harshest envi- ronments on the planet, Americans connect it with the lighthearted movies of Paul Hogan and with a country that is different without being too different. Outback restaurants stand for a fun atmosphere, with large portions of tasty food, distinctive service, and moderate prices. Deciding to expand to an-

Exhibit 2 Hypothetical brand extension of Outback restaurants

Reserva- Credit W i n e

tions

Outback × × × x ×

Great Barrier Reef × × × × ×

Walkabout × x

Gold Coast x

other concept, however, the Out- back principals chose to open a second, unrelated brand, the Italian- concept Carrabba's.

What might the Outback strategy look like if the firm applied an endorsed strategy instead of what ap- pears to be a simple brand strategy? If Outback wanted to carry over its image of Australian fun into another restaurant segment, say, quick service, what brand attributes would pertain? Beginning with the name, the necessary symbolic imagery would have to relate to Australia. One name that evokes an Aborigi- nal right of passage is "Walkabout," which carries with it the idea of movement and fits with the concept of food packaged to go--seemingly appropriate for a Q S R concept.

Other distinctive attributes of the flagship brand could be scaled to fit the product category, never losing sight of the core attributes of fun and value. Large portions of food in this segment don't need to be measured in the same manner as in the casual-theme segment. A six-ounce burger, for instance, is substantially larger than other comparable products (e.g., McDonald's Quarter Pounder) and can carry a price pre- mium while still being "moderate" in price. To ensure a distinctive fla- vor (and relate to the main brand), the burger could be seasoned with Cajun-based spices, as could other menu items.

On the other hand, perhaps a brand extension to the Q S R seg-

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ment is not appropriate for the Outback firm. If the company were interested in extending the brand with other casual-theme concepts (as seems to be the case with Car- rabba's), it could continue its Aus- tralian theme for product lines other than a steakhouse. One suggestion might be to develop a seafood chain, with a likely name of "Great Barrier Reef." The company's core attributes of fun and value still would apply: large portions of tasty seafood, served in a fun and distinctive manner. Such a brand extension should be entirely feasible.

While moving upscale is difficult, it is not impossible, and Outback might consider a fine-dining concept, perhaps based on the imagery of Australia's Gold Coast. As in other categories, quality products, flawless execution, and symbolic imagery are essential, but Outback's core attributes of fun and value would still apply. Market research would perhaps be needed to deter- mine the extent to which fun could mix with upscale dining.

A final consideration in this example is the naming approach used for the brand extension. This illus- trates the key issue in endorsed branding, which is the determina- tion of whether the corporate name should be the centerpiece or whether the product name should be foremost, with the corporate name as a supplement. Marriott uses the second approach for its brands, while most automobile companies put their corporate name first in referring to their cars. If Outback were to put its name first, as in "Outback Walkabout" or" Outback Great Barrier Reef," the symbolic imagery of the Outback itself would overshadow the concept names. On the other hand, using the Mar- riott model the brands would be "Walkabout by Outback" or "Great Barrier Reef by Outback." Outback becomes a supporting image for the concepts, lending its name and im-

age but not limiting the concept's opportunity to create a differentiated position in its segment.

The risk inherent in the first approach is that the equity invested in the Outback name might not add sufficient value to concepts in different segments and the brand equity may thus be squandered. The risk in the second, "by Outback," form is that the new brands may not be sufficiently differentiated enough to create their own identities. In either case, should the new brands not be successful they might erode the value of the endorsing Outback brand by not living up to the promises of the original.

Advancing the Brand-Planning Process The keys to moving the restaurant industry toward the branding mod- els used in other industries are con- tained in the three-step model dis- cussed here, which is: (1) deliver quality products, (2) guarantee flawless execution, and (3) create meaning through symbolic imagery. Con- sumers are carrying over their purchase-decision habits from retail and consumer-product offerings to restaurants. That is one reason why chains have been so successful. To continue that success, restaurant operators must focus on offering the highest quality for the fairest price but that will merely satisfy consumers' base expectations. In an era when consumers are accustomed to unconditional, money-back guar- antees, restaurants will need a system for guaranteeing flawless execution. Beyond that restaurants must offer customers individualized meaning in the values and images represent- ing the brand.

The value of a brand is considerable, as explained by Robert McMath, who studies brand intro- ductions (and failures):

.,.[I]f you take a brand and continually extend it with new technologies, forms, and benefits without losing sight of the original, you can run

with it for years. Procter & Gamble has done this with Tide detergent, now celebrating its 50th anniversary as the leader in its category. Tide has endured because, as a corporate spokesperson puts it, "it is kept up-to-date, meeting consumer needs in doing so in ways that provide steadily improving performance and value. ''a

By looking at performance and value through the eyes of their customers, restaurant companies can renew and regenerate their concepts,just as P&G has renewed Tide. But most consumer-goods companies have in recent years gone beyond simply renewing their flagship brands. Instead they have extended the brand with related products. One example of a brand extension from the restaurant business into the grocery store is that of Chi-Chi's, which licensed its name to purvey- ors of a line of salsa (Hormel) and tortilla chips (Mesa Brands). Most QSR chains have attempted to stay fresh by introducing new products. Perhaps the most successful reinven- tion occurred when McDonald's introduced its breakfast menu--a wildly successful and widely copied innovation. Wendy's effort at rein- venting itself with its Superbar (which emphasized the consumer benefit of a fresh, healthy menu) drew mixed results, and the parent chain has recently removed its Superbars. Salads--whether served in pitas or in plastic containers-- generally have not prospered in the burger-chain environment, as Burger King and McDonald's have also learned.

While restaurant chains must continue to focus on the meanings inherent in their signature products (e.g., "hot and juicy"), they might well consider ways to extend their basic story to a new brand using an endorsed-brand strategy. CQ

s Robert M. McMath,"Sinking the Flagship," American Demographics, Vol. 19, No. 5 (May 1997), p. 60.

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Documents

Endorsed branding: The next step in restaurant-brand management