Forget Rising Beef Prices: Why Arby's Is Placing All Bets on Meat
Arby's new motto is "We have the meats." And, the sandwich chain believes these meats are enough to revamp the brand.
2014 has been a year of new beginnings for the 50-year-old fast-food chain. Along with a new tagline, the company has launched a major restaurant remodeling program, a revamped approach to marketing and a number of new sandwiches. Even better, the chain just celebrated 16 consecutive quarters of same-store sales growth, with 2.8 percent growth in 2013.
Of course, any growth beats being at rock bottom. In 2011, Wendy's sold Arby's to Roark Group for $130 million, after years of decline at the sandwich chain. Slightly more expensive than the typical fast-food restaurant, but lacking the trendiness and the millennial-appeal of the rising fast-casuals, Arby's was floundering.
Then, two things happened. Under Roark's ownership, Arby's got new leadership, hiring CEO Paul Brown in April 2013 and CMO Rob Lynch a few months later. And, even as vegetarian options proliferated, meat became trendy –"quality" meat, that is.
"We use the word deli-inspired," says Brown. "If you think about delis… you think about high-quality proteins, high-quality meats, you think about combinations of those types of ingredients in places and ways that you can't necessarily do at home."
This "fast-crafted" meat is key to Arby's plan to gain support from the market of meat lovers. Paleo and other protein-heavy diets have exploded in the past three years, turning meat from the enemy of healthy eaters into a brand to be embraced. Bacon has been an ironic icon for what feels like forever, and BBQ has turned into the hipster bait of choice in places like Austin, Texas.
Plenty of fast-casual restaurants have cashed in on sustainable and veggie-heavy quality foods, including Chipotle, Sweetgreens and Panera. Arby's wants to prove that, if the spotlight is placed on high-quality meat, the sandwich chain can do the same.
"Our advertising guys say, 'meat is having a moment,'" says Arby's vice president of brand and corporate communications, Chris Fuller. "There was that Food & Wine festival in New York a few weeks ago, and it culminated in this event called 'Meatopia.' There are Carnivores Balls that are happening in Austin, there's these barbeque events happening with meatings – m-e-a-t-i-n-g-s – that are happening across the country. Meats are front and center."
So, hoping to attract new, younger customers (the chain currently has one of the oldest customer bases in the business), Arby's went whole hog on meat. The tagline "We have the meats" launched in July, replacing 'Slicing up Freshness,' a motto only introduced in 2012. The ad debuting the tagline is essentially 60 seconds of nothing but meat, a white room, a pair of hands and a bass voice breaking down steak, beef, turkey and brisket.
The meat-heavy marketing plan had been in the works for months. In May, the chain broke the world's record for the longest television commercial, with a 13-hour ad of slow smoking brisket to promote a new brisket sandwich. About 50,000 customers have ordered the "Meat Mountain," or every meat on the menu sandwiched between two buns, since it premiered on Arby's "secret menu" in August. For Halloween, customers could ask for "Trick-or-Meat" at the chain and receive a free piece of bacon with any item (the most popular was bacon in a milkshake).
Unfortunately, Arby's began advertising "fast-crafted meat" – or "#meatcraft" -- just as meat prices skyrocketed. Beef and pork prices are nearing all-time highs, due to drought-induced high feed costs and increasing global demand. Even chicken, which has become a hot item for fast-food chains this year in part due to the high cost of beef and pork, is getting pricier, as farmers struggle to keep up with demand.
"We keep getting challenged with the cost increases. It's like, 'Well, should we be changing the beef, should we be looking at a different content of fat?'" says Lynch. "Our point of view is if we have to, we'd rather take a little bit of pricing rather than degrade the quality of our protein."
The threat to raise prices is a risky one in the fast-food business, where Arby's is already on the higher end of the price range. However, it's right on target for the fast-casual industry, an arena in which Arby's is angling to compete.
With new store designs that borrow from fast-casual restaurants set to roll out in 200 restaurants next year and the emphasis on the "crafted" aspects of sandwiches, Arby's is gunning for meaty sandwiches to find a place between fast-casual and fast-food. It's something that Chick-fil-A has managed for chicken, becoming the largest quick-service chicken chain this year as it rolls out specialty-grade coffee and moves to expand to more urban areas.
Arby's is also expanding, focusing on coastal and urban expansion next year. Hopefully for the sandwich chain, the moment of meat will continue into 2015 -- without prices continuing to rise.