Survey Finds Consumers Show Little Commitment to Fast Food Brands; Subway and Wendy's Outperform...

Business Editors

HORSHAM, Pa.--(BUSINESS WIRE)--July 24, 2003

Despite heavy investment in marketing, fast food consumers show a very weak commitment to national fast food chains, according to a study conducted by TNS Intersearch, one of the world's leading market information

Of the national chains, Subway and Wendy's have the highest consumer commitment. McDonald's and Burger King have a weaker base of committed customers, and a high proportion of consumers at risk of defecting -- this despite the fact that the larger chains spend more on advertising (a combined $909,439,500 versus a combined $498,712,900 for the year 2002, according to TNS Media Intelligence/CMR).

Despite competition from the majors, regional chains are coming on strong in terms of consumer commitment with Panera Bread, In-n-Out, Chipotle Mexican Grill and Chick-Fil-A among the top performers.

The study found that three out of ten fast food consumers are not committed to any specific brand because the decision of where to go for fast food is not considered important.

According to the TNS Intersearch Fast Food Consumer Commitment study, half of fast food consumers either choose their brand over and over again by auto-pilot or spread their fast food spending over several brands that they like equally. Compared to the commitment level in a broad range of other categories, for example automobiles or soft drinks, this appears to place fast food brands at the bottom of the list from a consumer commitment standpoint.

There is one bright spot for fast food chains, however. The survey showed that one-fifth of fast food consumers are especially loyal to the brand they choose, and although they may sometimes frequent other brands, they are committed to only one.

The results also indicate that among the national chains, Subway and Wendy's stand out with above-average consumer commitment, with 12 percent consumer commitment for Subway and 10 percent for Wendy's.

       Consumer Commitment for National Fast Food Chains in 2003

                                                            Percent of
                                                               Users
                                                              Who Are
                                                             Committed
                                                            ----------
Subway                                                             12
Wendy's                                                            10
Taco Bell                                                           7
McDonald's                                                          6
Burger King                                                         4
Pizza Hut                                                           3
KFC                                                                 3
Domino's                                                            2

"Both chains also show a strong ability to attract new customers," notes Ken Athaide, Executive Manager and Senior Vice President, TNS Intersearch, Restaurant Practice. "The data suggests that these chains have provided offerings to meet the needs of more than one single target."

In contrast, fast food market leaders McDonald's and Burger King have applied a consistent and prolonged promotion of value pricing that seems to have led to the positioning of fast food as a commodity, resulting in low commitment levels.

"Hence, the fast casual chains have prospered in the midst of the battle in the value space," said Athaide. "This sub-category offers quality and newness without value pricing."

As a group, the regional, fast casual chains achieve a higher consumer commitment than the traditional burger, Mexican and chicken sub-categories, with Panera Bread and Chipotle Mexican Grill in the lead. Taking both regional and national players into account, the sub-category winners are In-n-Out Burger, Papa John's Pizza, Chick-Fil-A and Taco Bell.

The results of the TNS Intersearch study indicate that in the mature fast food category, traditional national chains are faced with the challenge of building commitment among a broader consumer base while maintaining their core brand identity.

The TNS Intersearch Fast Food Consumer Commitment study is based on the results of research conducted among over 1,000 fast food customers in March 2003. Consumer commitment is calculated using the Conversion Model(TM), the world's leading measure of customer commitment. Over 4,500 Conversion Model studies have been conducted worldwide.

About TNS Intersearch

TNS Intersearch is one of TNS' custom research organizations based in the U.S. TNS is one of the world's leading market information companies providing market measurement, analysis, insight and advice in more than 110 countries. TNS Intersearch, one of the largest custom research companies in the United States, is organized into specialized groups focusing on key consumer market sectors.

TNS Intersearch's Restaurant practice provides market intelligence to the world's restaurant industry leaders. The Restaurant Practice is comprised of senior research professionals who have years of experience addressing critical issues in the restaurant industry.