Fast Food Sales Promotions

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Introduction

The United States is known for their fast food restaurants, yet these days it seems like healthy living is the newest fad. As of 2014 there are 16 million people that are either vegetarian or vegan. Fast food has been an American staple for generations now, known for helping out working moms who cannot make every meal, and for being fast and cheap. My research question is: Do consumers respond to sales promotion in the fast food industry? This topic is interesting because I believe the tables have turned in terms of how Americans are eating. The fast food industry does not seem to be conforming to the evolving eating habits, they seem to be making larger combinations for cheaper prices.

Americans are not eating out as much as they were 20 years ago. "Consumers want to feel that they're doing healthier things and eating a healthier diet." (Olinga. Business Insider) Since 2014 fast food restaurants have seen a decrease in sales with chains such as Panera Bread and Chipotle getting closer to the top 10 chains in the nation. The most interesting part of this topic is that even though there has been a dip in the fast food sales fast food restaurants are offering salads for adults, or fruit and milk for children, other than that they have not changed their main menu much, if at all. It is clear that Americans have been more thoughtful about what they are putting into their bodies so why haven’t the restaurants changed?

I will be researching different promotions for different chains of traditional American fast food giants, such as McDonald’s or Wendy’s, when they started and ended and if sales increased in the quarter because of the promotion. Secondly, I will research social media comments on what consumers actually think of the promotions across the nation. I will conduct a survey that will include questions like: Did you know about the promotion before choosing the chain? Did the promotion change your decision? In order to know how consumers actually respond to sales promotions will likely have to ask people as they leave restaurants that are currently having promotions.

From this research topic I expect to learn more about fast food consumers, meaning are the same people always eating out or is the daily customer there because of an impulse decision to not have a home cooked meal. I also expect to learn why fast food chains have not made more changes to their menu to attract the healthier consumer. Fast food has been around in America since the early 1920s and almost a hundred years later I believe it might be time to offer something other than milkshakes, fries, and burgers. Even through the decline in major fast food chains, the Panera Bread’s and Chic-fil-a’s of the United States are seeing climbing profits. Does the traditional chain need to convert to heathier items to stay relevant or will the more for less method keep them afloat for a hundred more years?

Literature Review

In a society that has an increasing weight-conscience there has been a few studies of the effectiveness of fast food marketing. According to Timothy Richards and Luis Padilla, “fast food promotion strategies do indeed have an impact on category demand…”. They believe that consumers who eat fast food do so often, and the limited-time offers persuade consumers to choose the restaurant again, not draw in new consumers. This study was for those in society accusing fast food marketers for not only making North Americans fat in general, but targeting children. Using consumer behavior equations Richards and Padilla were able to prove that fast food marketing does not increase the marketing share as much as society thinks. Marketers are more trying to sway consumers not to go to other restaurants by using LTOs that sometimes bring back old favorites.

The traditional giants such as McDonald’s and Wendy’s are starting to decline from their monopoly of the top 5. “Chick-fil-A claims the crown as America's best fast-food chain as the only one to rank in the top five each for financial performance, customer satisfaction, and value.” (Martin, Loudenbeck, Pipia. Business Insider). It is believed that Chick-fil-A is seeing climbing profits not because of healthier choices, they have actually added items such as a barbecue-bacon sandwich to compete. Chick-fil-A has prided itself with southern hospitality as the framework for customer service. Even throughout their antigay stance the upcoming giant has continued to see rising profits.

Fast food chains are notorious for the limited-limited time offers. McDonalds almost yearly will do the same offer for example, the shamrock shake offered near St. Patrick’s day. “So why doesn’t McDonald’s add them to the permanent menu? Largely because quick serves have discovered that a good limited-time offer can boost brand excitement and even single-handedly drive sales.” (Morell. QSR Magazine). These offers bring people back to the firm, even it is only for a limited time. Usually offered at the end of the quarter to boost sales or to experiment with new menu items, LTOs are almost as necessary in the industry as French fries.

Marketing for fast food chains have changed dramatically since the introduction of social media. Social media has been a curse and a blessing for marketing companies. These websites have been a direct response to the firm on how the consumer has responded to the limited-time offer of LTO. “Successful promotions today are almost always hybrid campaigns regardless of whether the main focus is traditional, digital, in-house or guerilla marketing.” (Sonnenshein, Gourmet Marketing). Most campaigns for fast food will consist mostly on television and social media sites. The traditional way of knowing whether the LTO was bust or not was by comparing the expected sales to the reality. The issue with this method is the consumers’ insight was never considered and firms would not know how to fix campaigns for future offers. ““If you’re not using social media to promote, you almost don’t exist,” says Mandy Calara, CEO of Forever Yogurt, which has four outlets in the Chicago area. “But it’s still so new that a lot of businesses are still learning how to make it work for them.”” (Morell. QSR Magazine). Firms are learning that the internet has its downfalls, drawing customers in that are spending half the amount they normally would isn’t raising sales.

As stated, Richards and Padilla believe that marketing targets the customers who are not yet loyal to the chain, promotions are to make people comeback and often. With so many different firms competing for the same customer “consumer behavior shapes the competiveness of the firm.” (Asamoah and Chovancová, Recent Researches in Economics). Emmanuel Asamoah and Miloslava Chovancová believe that if the promotion is aggressive enough the consumers will buy impulsively and do not spend as much time wondering whether it is a healthy decision. As with any promotion in other industries, it does not always work. Firms are learning to use social media to communicate with their consumers and also “hear” their opinions. In summary from prior research, limited-time offers at fast food restaurants work, but in a different way. Firms need loyalty in order to stay relevant in times where people are always looking for the next dietary fad. The only way to always compete in an industry where products are so similar is to offer more for less, even if it is only for a limited time.