The world’s top 25 most valuable restaurant brands could lose over US$30 billion worth of brand value as a result of the COVID-19 pandemic. Brand Finance’s analysis shows that the restaurant sector is a heavily impacted industry globally and could face a potential 20% loss in brand value.
Looking beyond the restaurant sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
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. 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.Richard Haigh, Managing Director, Brand Finance
Starbucks has retained the title of the world’s most valuable restaurant brand following a 5% brand value increase to US$41.0 billion. The multinational coffee house chain leads the way for a further 19 US brands in the ranking, with all 20 brands reaching a total brand value of over US$150 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 most popular hot pot restaurant, Haidilao, is the fastest growing brand in this year’s ranking, up a staggering 136% to US$4.7 billion, simultaneously jumping 6th spots in the ranking from 9th to 15th. Serving more than 100 million customers a year, Haidilao 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, with Haidilao aiming to have 1,000 stores worldwide by the end of 2020.
There are three news entries in this year’s ranking: Chick-fil-A (brand value US$3.5 billion), Wetherspoons (brand value US$1.0 billion) and Popeyes (brand value US$898 million) 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 6 months after opening its doors following controversary surrounding the brand’s 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.
Celebrating its 40th birthday in 2019, Wetherspoons now boasts a vast portfolio of over 900 pubs and hotels spanning the UK - an impressive feat as pubs continue to diminish, with one pub shutting its doors permanently every 12 hours across the country. Renowned for its bargain booze and often spectacular buildings, Spoons has thus far been able to buck the trend across the sector. Unsurprisingly, however, Wetherspoons has a rough journey ahead as it negotiates months of nationwide pub closures amid the COVID-19 pandemic.
In addition to measuring overall brand value, Brand Finance also evaluates 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 US$37.4 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 in 2.4 points in its BSI score year-on-year, as the brand grapples with a drop in recommendation metrics, as well as a general drop 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 the brand since returning to 95% store operation – as of June 2020 – the brand hopes to see a marked increase in sales again.