When a business struggles, it’s the market’s that’s to blame. But when growth and profits start to surge, well, chalk that up to executive genius. Here’s Exhibit A for your consideration.
Arby’s fast-food restaurants — until very recently — had been struggling. Along with tepid sales growth, the 3,400-unit chain was not only saddled with aging, uninspiring stores, it had the oldest customer base among its competitors.
And we know that if there’s one thing that high-priced marketing consultants absolutely hate, it’s doing business with people outside the 18-to-34-year-old demographic.
More on that in a moment.
Here’s how bad Arby’s performance had become: Wendy’s management had acquired Arby’s assets in a 2008 merger deal worth $2.3 billion. Six years later, Wendy’s unloaded the chain to the private equity firm the Roark Group for $130 million in cash and an 18.5% stake in the business, valued at about $30 million, according to a 2011 Washington Post story.
Not sure that’s the kind of deal they teach MBAs to broker at those prestigious Ivy League business schools.
But things began to turn around, as detailed here in an earlier story (www.porknetwork.com/pork-news/Commentary--Twin-piques-278530211.html). In fact, 2014 has been an outstanding one for the 50-year-old company. As a major feature in Entrepreneur magazine noted, “Along with a new tagline (‘We have the meats’ — or #meatcraft for the hipsters out there), the company has launched a major restaurant remodeling program, a revamped approach to marketing and a number of new sandwiches. Even better, the chain just celebrated 16 consecutive quarters of same-store sales growth, with 2.8% growth in 2013.”
And if there is one other thing we know about business, when things are going south, it’s “market forces” to blame. But if the bottom line and/or the share price start perking up, well — that’s shrewd and savvy management, don’t ya know?
True to form, Arby’s CEO Paul Brown announced that, despite the surge in vegetarian options among Arby’s competitors, meat was now trendy— “quality” meat, that is — and Arby’s was determined to board that bandwagon.
“We use the word deli-inspired,” Brown told Entrepreneur. “If you think about delis … you think about high-quality proteins, high-quality meats, you think about combinations of those types of ingredients in places and ways that you can’t necessarily do at home.”
“Fast-crafted” meat became the chain’s new buzzword (marketers love crafting new buzz phrases) and the key to a plan to gain the loyalty of the meat loving segment of consumers. With the popularity of the Paleo Diet and other similar diet regimens in the past several years, meat is now “a brand to be embraced,” according to the geniuses now running Arby’s.
Better to be lucky
Here’s what Brown and Chief Marketing Officer Rob Lynch neglected to mention in their upbeat analysis: It was pure happenstance, not marketing savvy, that helped fuel Arby’s turnaround. The key to the chain’s “We have the meat” positioning is the iconic “Meat Mountain,” an over-the-top menu item containing all of the various meats available at the chain piled onto a single sandwich: More than a pound-and-a-half of chicken tenders, roast turkey, ham, corned beef, brisket, Angus steak, bacon and roast beef retailing for $10 each.
Meat Mountain garnered lots of media attention (all free) and provided the platform Arby’s used to underscore its newfound passion for animal protein. But as most industry observers know, Meat Mountain was born from promotional signage showing all those meat products artfully piled high. Allegedly—and no one in corporate’s denying it — a customer walked in one day and ordered “what’s on the poster.” The store manager happily obliged and the chain’s counter-veggie movement was underway.
Look, I’ll give management credit for a number of moves that were sorely needed: New, “hip” creative (including a “Trick-or-Meat” Halloween promotion offered customers could a free piece of bacon) was launched, a company-wide redesign of store interiors (see photo) got underway and some new, high-end choices showed up on the menuboard, such as beef brisket.
Moe importantly, although management won’t admit it publicly, it’s not a bad strategy to focus on an older demographic more likely to prefer meat-centered menu. The lean, light, low-fat vegetarian fare is primarily the province of Xers and Millennials, not Boomers. Why not appeal to the largest segment of the U. S. population with hearty comfort foods they prefer?
It remains to be seen how successfully Arby’s will be with its new branding once the media buzz dies down and the novelty of a 48-ounce sandwich wears off — which for most people will probably be right around the time the sandwich is fully digested.
Record beef and pork prices could slow its resurgence, and a variety of other socio-economic factors could lead fickle consumers off in another dietary direction.
But for now, Arby’s has the meat and the momentum.
Here’s hoping they keep cooking.
The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.