- Rising labor costs, changing millennial tastes, and an oversurplus of restaurant chains are heightening the turf war within the fast-food industry.
- To stay in the game, brands are modernizing, pushing discounts, enhancing conveniences, adding healthier fare and more to get customers in the door.
- But for Arby's, one of their biggest recipes for success was simply to pull back on the corporate speak and substitute it with a little humor.
Rising labor costs, changing millennial tastes, and an oversurplus of restaurant chains are heightening the turf war within the fast-food industry. It is estimated that there are 194,723 franchised quick-service restaurants in the U.S, up from 151,887 a decade ago. To stay in the game, brands are modernizing, pushing discounts, enhancing conveniences, adding healthier fare and more to get customers in the door.
But for Arby's, one of their biggest recipes for success was simply to pull back on the corporate speak and substitute it with a little humor.
The quick-service sandwich chain, founded in Ohio in 1964, was recently ranked No. 3 in the sandwich category behind Panera and Subway by QSR magazine's list of the nation's top quick-serve and fast-casual brands. Arby's currently has 3,450 locations in eight countries, with a total of 80,000 employees. Annual sales: $3.9 billion.
Arby's is under the wing of multibrand restaurant company Inspire Brands — whose portfolio also includes Buffalo Wild Wings, Sonic Drive-In, and Rusty Taco, for a total of 8,300 locations worldwide.
But there was a time, nearly a decade ago, when sales and margins were shrinking, leading a JPMorgan analyst to refer to Arby's performance as "amongst the worst in modern restaurant history." That was before Paul Brown, the former president of Hilton Worldwide, was brought in as CEO in 2013 — at what was then Arby's Restaurant Group — to help turn the struggling chain around. It was clear the brand needed a refresh.
Since Brown took over, innovation has been rampant. Arby's tests more than 1,000 menu items each year, offering a constant flow of limited time offers. In 2013 Arby's released a brisket sandwich, which lifted sales 12% and became the company's most successful product. Over the next few years it added gyros. Its venison sandwich, which launched in 17 hunting-heavy markets for a limited time drew mixed reviews but sold out on its first day. In 2014 Arby's introduced its new tagline "We have the meats" to emphasize the chain has at least eight different meats.
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By 2016 Arby's returned to net restaurant growth for the first time since 2008, opening 60 new restaurants nationwide and remodeling 229 of its existing locations.
In 2018 Brown and Neal Aronson, founder and managing partner of Roark Capital Group, partnered in February 2018 to launch Inspire Brands, an umbrella under which they acquired the Arby's restaurant chain, Buffalo Wild Wings, Rusty Taco and Sonic Drive-In. The company is based in Atlanta and owned by Roark Capital Group. Brown is Inspire Brand's CEO.
Beyond improving its menu and instituting a new tagline, it was actually a social media stint that helped catapult the sandwich chain into the forefront of pop culture: On the night of the 2014 Grammy Awards, Arby's tweeted about Pharrell Williams' hat and how it looked like Arby's own brand icon.
The message — "@Arbys: Hey @Pharrell, can we have our hat back? #GRAMMYs" — got retweeted some 80,000 times and generated 6,000 new followers for the brand.
"What we learned with the Pharrell hat event was, it was funny because it was Arby's," said Brown. "When we replied to Pharell and we said, 'Hey, can we have our hat back, why was that funny? In a large part why it was funny is because Arby's was the one that did it. It's because we were being authentic; we weren't being defensive, and it's a little bit like at the time like your grandfather doing something fun on social media. And so that's when we said, this is the personality of the brand, and that's what we need to be."
Shortly after, Arby's became the target of countless Jon Stewart jokes while he was host of "The Daily Show." Stewart would quip: "Arby's: for when you're wondering what it tastes like when a cow dies" and "Arby's: the meat that is a dare for your colon."
Brown admitted that a number of franchisees called him up asking what he was going to do about it. "We could have played the corporate defensive, but it wouldn't have been any good, we weren't advertising on the show, so we just said let's just go in the opposite direction: Why don't we cater them, and why don't I send a note saying, 'Hey, we'd love to have an opportunity to introduce you to the food,' and we started catering him more or less every time he started making fun of us."
The strategy worked. Stewart responded with "Arby's: proof Jon Stewart cannot destroy a brand by telling people what's in it."
After almost two years of jokes, Jon Stewart announced his retirement, and Arby's responded in the form of a job offer: "Jon, feel free to reach out to us at email@example.com."