Get ready for the great 99-cent menu war, coming soon to a fast-food restaurant near you.
With No. 2 burger chain Burger King preparing a major national marketing assault around 99-cent menu items, executives at Oak Brook-based McDonald’s are making their own value strategy a priority with franchisees.
Marketing executives and franchisees of the nation’s No. 1 fast-food chain are set to meet in Chicago this week, and the value strategy is expected to be at the top of the list of proposed additions to the U.S. marketing strategy, McDonald’s sources said.
So far this year, McDonald’s efforts in the value arena–all regional–have been lackluster. Most notably, it launched a test of a 99-cent “McValue Menu” in Southern California earlier this year, but it was shelved almost as quickly as it was rolled out. Backed by an ad campaign from Moroch Partners and Leo Burnett, the campaign promoting 20 items under $1 included the Ace of Base tune “The Sign,” but it failed to drum up the consumer interest franchisees wanted to see.
Now it’s testing a new value menu strategy through Boston-based Arnold Communications in the Northeast and through DDB in Detroit.
DDB Chicago remains McDonald’s main agency.
With Burger King ready to roll out its 99-cent menu with a major marketing splash, sources say that executives in Oak Brook are itching to fight back.
If they do, it may still be on a regional basis, at least for now: Although sources said a national campaign may be in the offing, a spokesman denied that, saying several “local options” continue to be looked at.
The dueling discounting strategies, often disguised as “value,” are a sign that the weak economy and red-hot competition continue to conspire against raising prices and margins in the fast-food segment.
The test for McDonald’s will be whether it has the patience to support both sides of the marketing equation–promoting value to fend off a competitive threat, while also trying to build the brand long-term.
Faced with that dilemma, there may not be a better time for the company to bring in its first global chief marketing officer. A search is under way.
Stefani expanding cafe format: Restaurateurs here and in other major cities continue to rethink expansion plans because of the economic slowdown and falloff in business travel after last year’s terrorist attacks.
That includes Chicago original Phil Stefani, who is preparing to open his second Tuscany Cafe, this time on the fringe of the Loop, in the R.R. Donnelley & Sons headquarters at 77 W. Wacker Drive.
Stefani takes over the space formerly occupied by Caffe Baci. That restaurant shut its doors late last month, citing the ongoing Wacker Drive reconstruction, and plans to move to a location on South Michigan this spring.
Stefani will open the smaller cafe version of his successful Taylor Street eatery at the end of May, focusing on breakfast, including gourmet coffee, an array of pastas at lunch, and an emphasis on a “cocktail program” for after-work gatherers beginning at 4 p.m. Considering the challenges Loop restaurants face at night, he will offer after-hours “light dining” in the evening.
His first Tuscany Cafe opened more than a year ago in the new North Bridge complex off Michigan Avenue.
But looking for existing space that doesn’t require a lot of build-out is key to Stefani’s strategy.
“The industry has taken a major hit since 9/11,” Stefani said in an interview Monday.
Stefani, who also owns several other restaurants–including Riva on Navy Pier, 437 Rush and Lino’s–sees a turnaround toward the end of the year.
Merlotti out at JWT: Bob Merlotti–the senior partner and group creative director at J. Walter Thompson, Chicago, brought in a few years ago by former agency chief creative Dennis Ryan–was let go last week. “The fact of the matter it was either me or [Cubs manager] Don Baylor … and I took one for the team,” he quipped. “Everything is fine. These things happen.”
Separately, the agency also parted ways with Eric Lefton, who had been head of the agency’s Miller Brewing business. Don Durbin replaced Lefton on the business earlier this year.
On the move: Paula Stein, account manager at Time Inc.’s Teen People, was promoted to Chicago manager. … Southern Progress Corp. promoted Katie McTigue Cairns to Chicago sales manager of Southern Living magazine. … Jodi Wolf was named president of Paulette Wolf Events & Entertainment Inc. Founder Paulette Wolf moves to chief executive.
