MRK106 Assignment 2
Taco Time Dreams Grande
A Calgary-based chain is betting its rebranding as a provider of authentic Mexican food will let it knock off Taco Bell for first place in Canada
Taco Time’s head office is in a two-storey building of indeterminate colour tucked behind an auto parts store on Calgary’s busiest commercial strip.
It’s a modest place, but Taco Time president Ken Pattenden’s plans for his company are anything but. His vision is to make Taco Time “the dominant Mexican restaurant chain in Canada.”
At first blush, it seems an overly ambitious goal for a chain of franchised Mexican fast food outlets that started in Lethbridge, Alta. in 1979 with a lone restaurant and that still has no presence east of Thunder Bay, Ont. But listen to Taco Time’s intense and energetic president for a while, and he’ll convince you it can be done.
Pattenden is betting on a two-part marketing strategy the company is launching this year. The first and most important element is to rebrand Taco Time as a provider of authentic Mexican food, rather than simply fast food. The second initiative is a move into the growing fast casual dining segment with a line of restaurants under the Cantina banner.
Pattenden calls the rebranding, which will be backed by a $2-million ad campaign this year, “the biggest and most important strategic change in the history of the franchise.” Since Taco Time’s founding, it has positioned itself firmly in the Quick Service Restaurant (QSR) segment of the restaurant industry, operating small food court outlets and drive-throughs in strip malls. When Pattenden, a former shopping centre and real estate developer, bought the company from his father-in-law Jim Penny in 1993, he expanded from 80 outlets to 112 stretching from Victoria to Thunder Bay, but kept the focus on providing inexpensive fast food.
However, Pattenden realized three years ago that it was increasingly difficult for Taco Time to compete in the “99¢ value meal market” against heavyweights like Burger King, McDonald’s and Wendy’s, and he began looking at ways to reposition his company.
About the same time, he started refurbishing many of the chain’s aging outlets, hiring Maxim Design Group of Calgary to give them a more Mexican adobe and earth tones look. “Many of our stores were nondescript both in design and location,” says Pattenden. “It was a real leap of faith when you walked by one to assume it offered Mexican food.”
His marketing epiphany came after a series of customer focus groups held in the spring and summer of 2000. When participants were asked what came to mind when they thought of Mexico, food shared top billing with sunshine, beaches and tequila.
“That blew us away,” says Brian Carnwath, Taco Time’s marketing vice-president. “There was a huge market out there for authentic Mexican food we didn’t know existed.”
With virtually no Mexican restaurant chains other than Taco Bell operating in Western Canada-where, unlike elsewhere in North America, Taco Bell is a fairly minor player-Pattenden and Carnwath saw not so much a marketing niche as a marketing chasm waiting to be filled.
The focus groups also told them that when food is served on a plate rather than wrapped in wax paper, it’s more likely to be perceived as authentic and desirable. To test that finding, Taco Time took its existing Casita Platter and began to promote it heavily in store, picturing it on huge, colourful posters. Prior to the campaign, Carnwath says the average Taco Time outlet would sell one or two Casita Platters a day compared to its signature tacos, fajitas and burritos, but after the posters went up “we averaged 15 platters a day, and at some units it was as high as 50.”
With that proof in hand, the executives decided to rebrand and reposition Taco Time as a Mexican restaurant serving authentic food. The campaign, through Calgary’s TAG, kicked off in January in Vancouver-a market Taco Time is targeting for expansion-with full-page tongue-in-cheek ads in the Province offering readers “Mexico from about $6,” the price of the company’s new line of Mexican Fiesta Platters, which include salad, rice and beans.
Taco Time remodeled its outlets with a Mexican adobe and earth tones look (left), is highlighting Mexico in its ads (centre) and is about to open more-upscale Cantina fast casual restaurants (right)
The frequency and choice of medium for the new campaign differs from Taco Time’s traditional print and billboard price point advertising, which usually consisted of two or three ad blitzes per year centered on specific promotions. The new campaign, which uses radio, runs for 48 weeks with saturation 30-second spots on one station in each market that best reaches the company’s target demo of people 18 to 49. The idea, says Carnwath, is “you can’t go to bed at night without having heard about us that day.”
The first set of “Girl at a Party” 30-second spots began running in markets where Taco Time operates in early February. They feature a young woman at a party talking about the five new Fiesta Platters delivering “a real Mexican food experience.” The idea of the spots, says Pattenden, “is to elevate Taco Time above the menu offerings of typical fast food restaurants.”
The Fiesta Platters, or similar full meal offerings, will be offered at the company’s new fast casual dining Cantinas, the first of which is scheduled to open in Cranbrook, B.C. in late March. The Cantinas are intended as street-front, Mexican-styled restaurants that will attract walk-by traffic. Food will be prepared in front of the customer, and the Cantinas will also offer Mexican beer and wine. Pattenden hopes the new restaurants will catch the fast casual dining wave that is growing in the U.S. but is, as yet, barely lapping Canadian shores.
There are various definitions of fast casual dining. But Jim Robinson, VP of NPD Group Canada in Toronto-a market research company that tracks trends in the Canadian restaurant market-defines it as “a quick-service type of atmosphere but with higher-end food, a greater degree of table service and a cheque about 20% to 25% higher than QSR.”
Fast casual is also, according to Restaurant Business Magazine in New York, a “hot, hot, hot” trend. So hot, in fact, that QSR giants McDonald’s and Wendy’s have moved into the business, McDonald’s with the purchase of Chipotle Mexican Grill of Denver and Wendy’s with the acquisition of Baja Fresh of Thousand Oaks, Calif. Even Wolfgang Puck, the Los Angeles-based pizza maker to the stars, has opened a fast casual restaurant called Wolfgang Puck’s Express.
Fast casual still makes up less than 2% of the U.S. restaurant market, says Robinson, accounting for US$6 billion (C$9.2 billion) of the US$400-billion (C$615-billion) industry. But it’s expanding fast, with an impressive growth rate of 16% in 2002. In contrast, QSR growth slowed from 5% to 2% in the same period, thanks to resurgence in sit-down dining and a growing feeling among consumers that QSR chains don’t sell healthful food.
Fast casual is growing in Canada, says Robinson, who cites as an example the Vancouver-based Canadian subsidiary of Quizno’s Subs, which is rapidly expanding eastward. Robinson says a recent survey by NPD Canada didn’t reveal any Mexican fast casual chains.
Pattenden believes the more upscale Cantinas will be his company’s key to penetrating major urban markets. His first target is Vancouver, where TacoTime has just 3% of the fast food market, versus 5% to 12% in most other western cities. “Streets like Denman and Robson in Vancouver are ideal for an urban street-front type of restaurant,” Pattenden explains.
And he’s hoping that two or three years down the road, the Cantinas concept will be just as ideal for Toronto and elsewhere in Southern Ontario. “To be successful in Toronto with the TacoTime concept, we would need to open 50 to 75 stores in a very short period of time, and that’s a huge number for a franchise operation.” Moving into Toronto with TacoTime, rather than the fast casual Cantinas, also means going head-to-head with Mexican food QSR giant Taco Bell, a division of priszm brandz in Vaughan, Ont. It has 200 franchise outlets in Canada, most of them east of Winnipeg.
However, a move into Toronto and points east, whether it uses the Cantina or TacoTime brands, is a necessity if Pattenden is to fulfill his dream of transforming a little taco franchise into Canada’s largest Mexican restaurant chain.
(Norman Ramage, Marketing Magazine, March 2003)
Evaluate the Marketing Strategy.Your evaluation should include:
· The Marketing Concept
· A situation analysis
· New product development
· The 4 Ps
· Competitive assessment
· Product Life Cycle
· Channels of distribution
· A “S.W.O.T” analysis (Strengths, Weaknesses, Opportunities and Threats)
· Comments and recommendations on the marketing strategy
What is a detailed integrated marketing communications plan that reflects your comments and recommendations in Part 1. The plan should include:
· Sales Promotions
· Socially responsible marketing
· The Internet
· Personal selling
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