How Arby’s Rediscovered Sales by Embracing Brand identity

Company Background:

Arby’s is the “second-largest quick-service fast-food sandwhich restaurant chain in America, with more than 3,300 stores nationwide”. It’s menu features items such as brisket, angus steak, roast beef, and a variety of other protein based foods that will send any vegan running to the nearest Sweetgreen. The restaurant chain was founded in 1964 by the “Raffel Brothers”, who believed there was opportunity in the burgeoning fast food market for foods other than hot-dogs and hamburgers. The company was cleverly named after the R-B in their initials, and quickly saw success through both company and franchise operated stores. Ownership of the company changed several times throughout its history, most notably with the purchase by TriArc, who also purchased Wendy’s and created the Wendy’s/Arby’s group, then subsequently sold most of their stake in Arby’s to Roark Capital, the current owner as of 2018.

Problems:

Roark Capital, a private equity firm, took command of the company with the purpose of restoring the company to its former glory. At the the time of the change in ownership in 2011,

“Arby’s was experiencing an operating loss for the year of $35 million with 350 Arby’s franchisees more than 60 days late in royalty payments and 74 low performing franchised units and 96 company-owned units forced to close”.

In the year prior to this (2010) , J.P Morgan analyst John Ivankoe said “Arby’s performance is amongst the worst in modern restaurant history.” The purchase of Wendy’s is believed to a contributing factor behind the neglect of the Arby’s performance. Arby’s inability to differentiate, and attempt to offer a $1 menu like it’s competitors, only further drove its profit margins down. Also, the growing need to renovate up to 75% of all franchises, was forcing executives to look straight down the barrel of the gun, and search for game-changing initiatives. Additionally, the climate of the 2008 stock market crash haunted sales, and did not provide a great climate at the time of the change in ownership.

Catalysts for Change:

Paul Brown, former President of Hilton Worldwide, joined the Arby’s team as CEO in 2013. He began leading the company by investigating what needed to be changed from the bottom up- That meant asking all levels of employees every time he was in a restaurant,

“What would you do differently if you ran this?”

He spoke to more than 1,000 employees across 50+ locations throughout the United states. After 6 months, he realized that Arby’s unique identity had provided it’s success in the past, not by trying to follow powerhouses like Mcdonalds; Arby’s simply needed to focus on it’s own niche to increase customer, and employee loyalty. Brown chose not to be like Arby’s prior leadership, who were trying to fit a square peg into a round hole, and instead he allowed the company to self-realize where their “square” was.

In the first steps to rediscovering Arby’s identity, Brown brought on Rob Lynch as their new Chief Marketing Officer. A new marketing strategy included consulting with a new, top-tier ad agency in Publicis, adopting a catchy slogan “We Have The Meats”, acceptance of their true target audience and clever social media manipulation.

Virality of the marketing campaign was highlighted in the response to artist Pharrell donning a hat eerily similar to Arby’s logo during the Nationally Televised Grammys ceremony. Arby’s social media manager quickly capitalized on this analogy,

Other brands, such as Pepsi, and Hyundai attempted to hop in on this press coverage through brand association, which also achieved greater audience response.

This social media driven campaign was entirely aligned with increased brand-identity by attempting to resonate with the average Joe; People are who are okay with who they are, what they do, and choose to eat food because it tastes good — not because of its caloric amounts. This target audience is generally 18–34 males, who are actively involved with social media, and are seeking high protein, but quick meals.

Another marketing move that offered great publicity that resonated with it’s brand identity, was offering a venison, and elk sandwhiches for a limited time to celebrate the beginning of hunting season. The new offering was met with great publicity due to its limited supply by quickly selling out, and the fact that no chain has ever offered venison as nationwide menu item. Arby’s continues to use special limited-availability menu items as a tactic to engage their customer base.

Brown also influenced greater scrutiny in the quality in cleanliness and up to date design of stores, putting resources in where they were desperately needed. The refocused identity gave way to focus on higher quality food sources, improvement of facilities, and higher reliance on tried and true menu items such as the beef and brisket.

Effects of Change:

Since Roark Capital, Paul Brown, and Rob Lynch have taken command, Arby’s has seen great success. The 2016 revenue is reported to be 3.6B, and ranks #17 in the Quick Service Restaurant rankings. Their success is also evident in the continued growth of same store sales over the past 25 consecutive quarters. Additionally, plans to open new stores have left analysts future sales predictions optimistic, the company plans to hit $4B in sales in 2018.

More recently, Arby’s has decided to purchase Buffalo Wild Wings for 2.9B to provide additional revenue streams, and further consolidate the “fast-casual” dining segment.

Conclusion:

Arby’s decided to be realistic about who their target audience is, by looking back on what made them successful, and allowed that insight to drive multiple factors of the business. Refocusing their model on tried and true menu items, providing a superior dining experience through newly designed restaurants, and emphasizing the importance of cleanliness and higher quality cuts have proved to be successful for the chain. Widespread media campaigns and timely social media promotions have resonated with their target audience and have been complementary to their brand identity. Plans to continue this strategy will prove to be successful for time to come.

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