· Starbucks continues to dominate as world’s most valuable restaurant brand, with brand value of US$39.3 billion
· McDonald’s is strongest brand in sector, only brand to receive AAA+ brand strength rating
· Taco Bell is fastest growing restaurant brand this year, up 83% to US$3.3 billion
· US brands dominate top 25, with only 3 non-US brands in ranking
Starbucks, the ever-popular coffee chain, remains the most valuable restaurant brand after its brand value increased by 21% since last year to US$39.3 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Starbucks has continued to expand its business to strengthen its lead in a sector that remains dominated by large US brands.
Over the last year, the brand has broadened its footprint geographically and through strategic partnerships: the doubling of its stores across China; a joint venture with Indian non-alcoholic drinks brand, Tata Global Beverages; an upcoming partnership with Uber Eats, enabling customers to have hot coffee delivered right to their doorstep; and by entering the packaged coffee market in a partnership with Swiss giant Nestlé.
McDonald’s lovin’ its AAA+ rating
McDonald’s has maintained its second position closely behind Starbucks with a brand value of US$31.5 billion, up 27% from last year. The top two brands leave the rest of the ranking far behind, with KFC pulling ahead into third place following 67% growth to US$13.5 billion.
Aside from calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Along with the level of revenues, brand strength is a crucial driver of brand value.
The world’s most iconic fast food chain, McDonald’s, is the only AAA+ brand in the restaurant sector, with a brand strength of 90.3 out of 100 versus the 86.2 out of 100 rating for Starbucks. It has continued to vigorously improve its reputation in the market, abolishing the use of artificial preservatives, colours, and flavourings.
McDonald’s has reduced its workforce significantly over the past five years and has also increased its locations to circa 38,000, serving 69 million customers worldwide per day. Their expansion programme has seen the company reinforce its presence in the Nordic region and increase visibility in Australia and Russia. Over the past year, the company has seen its brand value increase by 27% to US$31.5 billion.
Supersized chains put on weight
The most valuable brands in the ranking have grown considerably faster than those in the bottom half of the table. The top thirteen restaurant brands with values of US$2.5 billion or more have achieved an average growth of 36% year on year, compared to only 1% for the remaining twelve brands.
The most rapidly growing brand in the sector is Taco Bell, its brand value rising by an impressive 83% to US$3.3 billion. Similarly, franchises Pizza Hut and Dunkin’ each grew by 73%, taking their values to US$5.4 billion and US$4.6 billion respectively. Dunkin’s success can be attributed to their recent rebrand effort, slimming down their traditional brand name. Wendy’s also saw significant growth, up 47%, resulting in a brand value of US$3.4 billion.
Smaller restaurant groups, such as Buffalo Wild Wings (up 1% to US$901million), Sonic (up 2% to US$962 million), Chipotle (up 4% to US$2.7 billion) and Olive Garden (up 4% to US$1.5 billion) have struggled to grow substantially against a backdrop of large, high-profile, multi-location chains, but some of the more modestly-sized groups enjoy high levels of loyalty and brand strength, such as Costa Coffee, which has the second highest brand strength rating (87.8 out of 100), despite losing 11% in value. Papa John’s (down 19% to US$790 million) and Jack in the Box (down 21% to US$734 million) are another two examples of brands that have lost value since last year.
David Haigh, CEO Brand Finance, commented:
“The restaurant sector continues to polarise, creating ever more larger brands that are not only very visible, but also very valuable. In a highly competitive marketplace middle sized and small players need to focus on understanding their customers’ tastes and habits to maintain their loyalty and fend off growing threat from supersized chains.
Tim Hortons tops menu outside US
Apart from the UK’s Costa Coffee, only two non-US brands make the Brand Finance Restaurants 25 2019 ranking. Restaurant Brands International-owned Tim Hortons is ranked sixth (up 10% to US$5.5 billion), with a brand presence across fourteen countries.
Jollibee of the Philippines, ranked 15th with a brand value up 11% to US$ 1.7 billion, has been touted as one to watch. Jollibee is a fast food brand rising through the ranks with its diverse menu of US and Asian inspired dishes that set it apart from other high street fast food chain brands. With its devoted following in the Philippines and international expansion across Italy, the UK, Spain and Guam, Jollibee could well become the next KFC. The brand’s visionary CEO Ernesto Tanmantiong is to be credited with steering the chain towards achieving global brand status.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest restaurant brands. The 25 most valuable restaurant brands in the world are included in the Brand Finance Restaurants 25 2019 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Restaurants 25 2019 report.
Brand Finance helped craft the internationally recognized standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.
Brand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.