How Others Do It

Quick Serve Restaurant Chain

Quick serve restaurants (QSRs) can significantly improve their marketing effectiveness by looking at their marketing mix and media flighting. With this type of analysis they can easily drive improved results that can be measured in top-line revenue and bottom line profits. This mini case study illustrates how a quick serve restaurant chain was able to use Marketing Mix Modeling, a statistical approach, to determine ROMI factors for all of its major media. With these ROMI factors the QSR was able to improve its media flighting and media mix moving forward. This led to an increase of $25 million in sales revenue with out any net change in marketing budget.

Situation:  The regional franchise group of a global quick serve restaurant chain (name witheld) encompassed just over 500 restaurants representing over a half billion in sales revenue. The QSR chain had been using mostly traditional media, including TV, Radio, direct mail and some billboards. The media was split between both national (mostly brand) media and local, franchise controlled media, with most of the marketing budget being spent on TV. In addition, during the modeling time period, the company introduced a number of new promotions, new campaign creative concepts and new products.

Solution:  A project team was established, comprising management, agency, marketing and research representatives. The project team gathered weekly historical data for each of the media elements. In addition, information concerning pricing, new product introductions and store growth (net of openings and closings) was also obtained. Each of these data streams were gathered as weekly time-series data. With this data, a marketing mix model was developed, through which ROMI coefficients were determined and elasticities were calculated. The project took about six weeks to complete.

Results:  From this marketing mix analysis it was determined that, without increasing the net marketing budget, another $25 million in new revenue could be generated. This incremental revenue could be achieved through improved media flighting and adjusted marketing mix. The adjustements included, increased pricing to support increased media spend. Media weight would be shifted to supporting new product promotions through Radio and local TV. Investment in billboards would be reduced. In addition, the quality of the three creative concepts was also determined with the latest creative concept being over 3% more effective than the prior two concepts. The old creative concepts would be quickly phased out.

If you'd like to learn more about how you can apply this and other methods to improve your marketing activities, then join us at our next workshop.

To learn more, feel free to contact us at 770.570.8205 or if you have other questions you can email Susan.Howard @ MarketingROIWorkshop.com.