QSR Retailers Increase Advertising 2%

April 26, 2010

While advertising as a whole took a hit in 2009, U.S. quick service restaurant (QSR) retailers ramped up spending during the year by 2% compared 2008, according to The Nielsen Company.

TV Advertising Dominates other Channels
Fast food restaurants spent almost $4.1 billion on advertising from January – December 2009. Nearly 36% of that figure, or about $1.47 billion, was spent on spot TV advertising. Network TV advertising followed with $934.8 million in advertising spending, or 23% of the total. Cable TV was the third-most-popular advertising outlet, with $868.3 million in spending, or 21% of the total.

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No other advertising channel came close to equaling TV’s hold on QSR advertising dollars. Spanish-language network TV came in fourth place with $203 million in spending, or 5% of the total. Syndicated TV came in eighth place with $80 million in spending, another 2% of the total. Combined, all forms of TV advertising accounted for almost 87% of the $4.1 billion total, or about $3.56 billion.

Although spot radio advertising spending led outdoor advertising spending by $183.2 million to $149 million, after rounding both channels accounted for about 4% of total spending. Internet advertising spending only amounted to $58.9 million, or 1% of the total.

Breaking out statistics on QSR advertising in African-American media, the sector spent $84.7 million on African-American media during the year, an increase of 18% from the year before. African-American able TV showed significant advertising spending growth (42%), while African-American network TV spending dropped more than 70%.

Wait Service Ad Spending Drops 4%
On the wait service side of dining, ad spend fell 4% in 2009 to $1.56 billion. More than 25% of that was spent on network TV, followed by spot and cable TV. Local newspapers was the fourth-largest category, with $124 million being spent, compared to just $14.8 million in that category for quick service restaurants. For wait service restaurants, all categories, except for cable TV, registered a decline in advertising spending during the year.

RPI Signifies Expansion This Year
2010 may see across-the-board increases in restaurant advertising spending as the Restaurant Performance Index (RPI) rose 0.7% in February 2010, after seesawing for several months. As reported by Retailer Daily, the index of restaurant performance climbed from 98.3 to 99, its strongest level since November 2007, the month before the current economic recession began.

Restaurant operators are particularly optimistic about improving conditions in the months ahead, as opposed to current conditions. The Expectations Index, which measures restaurant operators’ six-month business outlook, stood at 101.4 in February 2010, up 1.2% from 100.1 in January 2010 and its strongest level in 29 months. In addition, the Expectations Index stood above the 100 level for the second consecutive month, which signifies expansion in the forward-looking indicators.

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