COVID-19 has had a serious impact on the restaurant industry globally, with more than half of the brands in this year’s Brand Finance Restaurants 25 2021 ranking declining in brand value and the total value of the world’s top 25 most valuable restaurant brands dropping from US$162.1 billion in 2020 to US$153.9 billion in 2021.
Many governments responded to the outbreak of the pandemic by closing or severely curtailing the activities of the restaurant industry, meaning many brands had to undertake a complete overhaul in operating practices, with a renewed focus on drive-through, mobile ordering, and meal delivery services.
Richard Haigh, Managing Director, Brand Finance, commented:
“The restaurant sector has shown remarkable adaptability in the face of unforeseen and challenging circumstances brought about by COVID-19. The efforts to refocus on at-home dining and the investment in digital presence have inured many of the biggest brands from far more dire consequences. The pace of vaccine distribution - particularly across the US and the UK - means there are signs of hope yet for the restaurant sector, with many customers eager to return to socialising and dining together.”
Starbucks cashes in
Starbucks has retained the title of the world’s most valuable restaurant brand for the 5th consecutive year, despite recording a 6% drop in brand value to US$38.4 billion.
The chain - which has over 30,000 stores globally, about half of which are in the US - used the pandemic to further differentiate itself from rivals and has adapted to focus on speed and convenience in its service. This includes ramping up the pace of the construction of ‘drive-thru’ stores, a renewed focus on a loyalty rewards scheme, and further integration of digital technology across the business – all of which are reflected in a surge in drive-through and mobile orders, accounting for 90% of all orders in the US in Q3 of last year.
The Seattle-based coffee chain stands out from the rest of the American brands in the ranking, which are predominantly focused on fast food. In recent years the brand has, however, expanded its culinary offering and thus is in good company amongst these food-focused brands.
American chains dine out on success
US fast food chains dominate the Brand Finance Restaurants 25 2021 ranking, claiming the first eight spots and 20 out of the total 25. Altogether, US brands account for a staggering 92% of the total brand value in the ranking.
This dominance reasserts the US’s status as the world leader in the fast-food industry. This is notable at a time when health-conscious marketing and regulation are increasingly debated and pursued, particularly in Western Europe. These brands’ continued dominance showcases the resilience and ongoing appeal of cheap, well-known, and often unhealthy food brands.
Beyond the scale and influence of American restaurant brands, the response of state-level governments in the US was broadly far less severe than in most other nations, with restrictions predominantly limiting indoor dining rather that in-restaurant dining entirely, meaning these brands could shelter themselves from the fallout of the pandemic more successfully.
Jack in the Box pops up
The fastest growing brand in the ranking is Jack in the Box, following an impressive 84% brand value growth to US$1.7 billion, simultaneously jumping 7 spots to 16th. The Californian brand was notable for its effective social media marketing campaigns throughout the pandemic – from encouraging customers to stay at home with its #StayInTheBox tag, to hosting a virtual prom for high school students.
The brand continued to provide a full menu and remain open 24 hours during the crisis and benefitted from its existing dining patterns, where 90% of its sales pre-pandemic were takeaways. Jack in the Box implemented emergency paid sick leave to employees and donated old uniforms to be converted into PPE.
Papa John’s gets a slice of the action
Papa John’s is the highest ranked newcomer in 19th, with a brand value of US$1.1 billion, and is the third highest ranked pizza brand after Dominos (up 7% to US$6.1 billion) and Pizza Hut (down 6% to US$5.1 billion) in 5th and 8th, respectively.
With consumer habits being forced to change towards delivery and collection, brands that are already set up to accommodate this under their operations have largely managed to shelter themselves somewhat from the damage of the pandemic. Papa John’s leveraged this change extremely effectively and recorded month after month of record sales throughout 2020 – delivering the best sales in the brand’s history.
Papa John’s, founded in Indiana in 1984, implemented a series of Covid-safe measures to ensure the continuation of business during the pandemic. This included contact-free delivery and an expanded benefits package for employees, including free virtual doctors’ appointments.
UK’s Wetherspoon in 21st
British pub chain Wetherspoon is the only bar or pub chain to feature in the ranking. Wetherspoons boasts a vast portfolio of over 900 pubs and hotels spanning the nation and is renowned for its bargain booze and often spectacular buildings. The brand and its outspoken chairman Tim Martin faced criticism for a lacklustre response to the pandemic and accusations of abandoning staff, as well as displaying ‘anti-lockdown propaganda’. Despite this controversy, the chain has fared remarkably well given the uncertainty that has plagued the British dining and hospitality sector over the past year, claiming 21st place in the ranking and maintaining its brand value of US$1.0 billion.
McDonald’s is lovin’ it
In addition to measuring overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, customer familiarity, staff satisfaction, and corporate reputation. According to these criteria, McDonald’s (down 10% to US$33.8 billion) remains the strongest restaurant brand in the world with a Brand Strength Index (BSI) score of 86.9 out of 100 and a corresponding AAA brand strength rating.
With more than 38,000 restaurants in 118 countries, McDonald’s reach is unmatched. Its universally recognised ‘golden arches’ as well as advertising campaigns in recent years focused on the brand’s community outreach and ethical sourcing of its ingredients are key contributors to the brand’s strength.
In response to COVID-19, like many other restaurants, the chain renewed its focus on its ‘drive-thru’ and delivery capacity, as well as enhancing its digital presence. McDonald’s has also taken a proactive stance in terms of controlling the virus. Social distancing and hygiene measures are in force in restaurants globally. In US states where rules on indoor dining and mask wearing have been relaxed, McDonald’s has taken more stringent measures voluntarily, limiting in-store dining and mandating mask-wearing. Globally, the brand has donated US$3.1 million in food to support communities during the pandemic.
Note to Editors
Every year, Brand Finance puts 5,000 of the biggest brands to the test, evaluating their strength and quantifying their value, and publishes nearly 100 reports, ranking brands across all sectors and countries. The world’s 25 most valuable restaurant brands are included in the Brand Finance Restaurant 25 2021 report.
The full Brand Finance Restaurants 25 2021 ranking, additional insights, charts, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Restaurant 25 2021 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. Please see below for a full explanation of our methodology.
About Brand Finance
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations 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 nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation 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.
Definition of Brand
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 value refers to the present value of earnings specifically related to brand reputation. Organisations own and control these earnings by owning trademark rights.
All brand valuation methodologies are essentially trying to identify this, although the approach and assumptions differ. As a result, published brand values can be different.
These differences are similar to the way equity analysts provide business valuations that are different to one another. The only way you find out the “real” value is by looking at what people really pay.
As a result, Brand Finance always incorporates a review of what users of brands actually pay for the use of brands in the form of brand royalty agreements, which are found in more or less every sector in the world.
This is known as the “Royalty Relief” methodology and is by far the most widely used approach for brand valuations since it is grounded in reality.
It is the basis for our public rankings but we always augment it with a real understanding of people’s perceptions and their effects on demand – from our database of market research on over 3000 brands in over 30 markets.
Brand Valuation Methodology
For our rankings, Brand Finance uses the simplest method possible to help readers understand, gain trust in, and actively use brand valuations.
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.
Our Brand Strength Index assessment, a balanced scorecard of brand-related measures, is also compliant with international standards (ISO 20671) and operates as a predictive tool of future brand value changes and a control panel to help business improving marketing.
We do this in the following four steps:
1. Brand Impact
We review what brands already pay in royalty agreements. This is augmented by an analysis of how brands impact profitability in the sector versus generic brands.
This results in a range of possible royalties that could be charged in the sector for brands (for example a range of 0% to 2% of revenue).
2. Brand Strength
We adjust the rate higher or lower for brands by analysing Brand Strength. We analyse brand strength by looking at three core pillars: “Investment” which are activities supporting the future strength of the brand; “Equity” which are real perceptions sourced from our original market research and other data partners; “Performance” which are brand-related measures of business results, such as market share.
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.
3. Brand Impact x Brand Strength
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. Brand Value Calculation
We determine brand-specific revenues as a proportion of parent company revenues attributable to the brand in question and forecast those revenues by analysing historic revenues, equity analyst forecasts, and economic growth rates.
We then apply the royalty rate to the forecast revenues to derive brand revenues and apply the relevant valuation assumptions to arrive at a discounted, post-tax 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.