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World’s most valuable chains could lose £25 billion in brand value; number one player revealed

McDonald’s queue

The world’s top 25 most valuable restaurant brands could lose up to US$33 billion (£25 billion) worth of brand value as a result of the Covid-19 pandemic, it has been claimed.

Analysis from this year’s Brand Finance Restaurants 25 report suggests the industry’s most powerful chains are staring down the barrel of a 20% loss in brand value versus what it was on 1 January 2020 as a result of the pandemic.

“It is no surprise that the restaurant sector has borne the brunt of the global coronavirus lockdown, with closures destroying sales and social distancing measures changing the way in which customers dine for the foreseeable future,” said Richard Haigh, managing director of Brand Finance.

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“With consumer habits changing towards delivery and collection, it is yet to be seen how the industry will look in the coming year. More dynamic brands that respond and transform in response to this shift should record a more positive movement in their brand value than those that are slow or reluctant to change.”

Starbucks has retained its title of the world’s most valuable restaurant brand following a 5% brand value increase to $41 billion (£32 billion).

Starbucks’ growth-at-scale agenda – which includes innovation in its technology and development of its rewards programme – has paid off, with the brand posting solid sales growth over the last year, particularly in the US and Chinese markets, which saw a 6% and 5% increase respectively.

Starbucks has, however, accelerated plans to close 400 restaurants due to Covid-19, as part of its store transformation strategy.

China’s Haidilao grows 136%

China’s most popular hot pot restaurant, Haidilao, is the fastest growing brand in this year’s ranking, up a staggering 136% to $4.7 billion (£3.7 billion), simultaneously jumping six spots in the ranking from 9th to 15th.

Haidilao serves more than 100 million customers a year and prides itself on its best-in-class customer service, a key driver towards the brand’s pursuit of perfecting the dining experience.

The brand has continued to focus on its expansion programme, both at home and abroad, with over 300 stores opening globally last year. It is aiming to have 1,000 stores worldwide by the end of 2020.

Ones to watch

There are three news entries in this year’s ranking: Chick-fil-A (brand value $3.5 billion [£2.7 billion]), the UK’s very own JD Wetherspoon (brand value $1 billion [£800m]) and Popeyes (brand value US$898m [£705m]) entering in 13th, 21st and 24th positions respectively.

Chick-fil-A posted record revenues in 2019 – up an impressive 48%. The brand was, however, forced to close its UK restaurant a mere six months after opening its doors following controversy surrounding its stance on LGBTQ+ rights.

Rival Popeyes’ entrance in the ranking can somewhat be attributed to its viral chicken sandwich, which sold out in less than a month.

Wetherspoon, which has been trading for more than 40 years, now boasts a portfolio of more than 900 pubs and hotels, and has grown rapidly off the back of an aggressive price-led strategy.

McDonald’s is sector’s strongest

In addition to measuring overall brand value, Brand Finance also evaluated the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation.

Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, McDonald’s (up 19% to $37.4 billion [£29.4 billion]) is the world’s strongest restaurant brand with a Brand Strength Index (BSI) score of 87.9 out of 100 and a corresponding AAA brand strength rating.

McDonald’s Velocity Growth Plan has continued to reap results and the brand boasts strong financial performances, last year achieving the highest global comparable sales growth in over a decade.

Despite retaining the title of the sector’s strongest brand, the global fast food behemoth has dropped 2.4 points in its BSI score year-on-year, as it grapples with a fall in recommendation metrics, as well as a general decline in its web visits and social media following.

Brand Finance’s global brand monitor study has unearthed this trend across fellow fast food restaurants signalling, perhaps, a shift in the public’s attitude towards fast and unhealthy food options.

Despite 75% of the brand’s restaurants remaining open during the coronavirus pandemic, CEO Chris Kempczinski cited significant disruption to the business from limited operations and a shift in consumer behaviour, which has dented sales significantly. With McDonald’s since returning to 95% store operation – as of June 2020 – the brand hopes to see a marked increase in sales again.

Tags : brandsChick-fil-AHaidilaoJD WetherspoonMcDonaldsPopeyesPubsresearchRestaurantsStarbucks
Andrew Seymour

The author Andrew Seymour

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