Fast-food restaurants face a difficult business climate: Restaurant visits still have not returned to pre-recession levels, according to researchers at NPD Group. And Americans say they are seeking healthy food options, items they feel they can’t often get at fast-food joints.
For Arby’s, the Atlanta-based sandwich chain with about 3,400 outposts, the problems run even deeper. It was taken private in 2011 when Wendy’s sold it off amid lackluster sales. The company says its customer base is among the oldest in its industry. And its research shows many people think it sells only roast beef sandwiches.
Now, Arby’s is making an aggressive push to turn around its business with an overhaul that includes new leadership, fresh marketing, remodeled stores and new menu items. There are early signs that the strategy might be working: Its same-store sales were up 2.8 percent in 2013, compared to an industry average of 0.2 percent. Sales are up an average of 20 percent in the stores that have been renovated. It’s latest limited-time only sandwich, the Smokehouse Brisket Sandwich, has been the best-selling limited-time item in the company’s history.
“We have one shot to get these customers back,” said Christopher Fuller, Arby’s vice president of brand and corporate communications. “If they have one bad experience, they’re going to be done with the brand.”
Analysts say a comeback for Arby’s will be challenging at a time when fast-casual chains such as Chipotle have emerged as favorites of millennial-generation diners.
“They’re a large national brand who has to spend a lot of money to just to stay visible,” said Clark Wolf, president of restaurant consulting firm Clark Wolf Company. “The question is: Can they stay relevant at a time when the message is all about healthy?”
With its store remodeling efforts, Arby’s is aiming to give its restaurants a look and feel more in line with their fast-casual competitors. They’ve added large, communal tables in many restaurants, a set-up they believe will have more appeal to young professionals. They’re offering free WiFi so customers can linger while using their laptops or tablets.
“Maybe they’ll order a dessert or go back for a shake,” said Jason Rollins, Arby’s manager of public engagement.
The company plans to remodel 30 stores this year and about 100 more stores next year.
Arby’s has also launched a new television marketing campaign and a slogan, “We have the meats,” that the company hopes will help prospective customers recognize they have more than just roast beef sandwiches. Fuller said the campaign is especially timely given that it plays to the recent trend toward high-protein diets. Fast-food competitor Taco Bell has also tried to take advantage of the trend, offering a Cantina Power menu focused on high-protein items. (For a glimpse at perhaps the most protein-heavy item at Arby’s, read here about their new Meat Mountain.)
Restaurant consultant Aaron Allen said Arby’s menu, with its emphasis on deli meat, not only faces competition from other restaurants, but from grocery stores that offer freshly-cut deli meat and prepared foods.
“The consumer has to be thinking, ‘Can’t I just get that same thing at Publix?’” Allen said, referring to the grocery chain with many locations in the Southeast region of the country.
As part of its efforts to reach younger consumers, Arby’s has also been working to boost its social media presence, an effort that was especially visible during this year’s Grammy Awards, when the brand pointed out that R&B singer Pharrell’s distinctive Vivienne Westwood hat looked awfully similar to the hat in the Arby’s logo. The company subsequently bought the hat in a charity auction and after displaying it briefly in its headquarters, has loaned it to the Newseum in Washington. Executives were in town last week to celebrate its debut at the museum.
As it looks to expand in the U.S. next year, Arby’s will be looking at a variety of settings. A recently-opened outpost in downtown Atlanta has a smaller footprint than many other Arby’s restaurants, a test of whether the format might be effective in other dense, urban locations. In the suburbs, Fuller said it will continue to focus on spaces where it can offer a drive-through window. That means it would mostly opt for freestanding stores, but would consider an end unit in a strip mall or similar property.
“Right now they really seem to have things working,” said Jonathan Maze, editor of Restaurant Finance Monitor, a trade publication. “But they still have a ways to go.”