· Brand values of the biggest fast food brands falling due to healthy eating & fast casual trends
· McDonald’s is down 9%, Subway 1%, Taco Bell 10%, Domino’s 16%, Pizza Hut 22% and KFC 27%
· Papa Johns and Tim Horton buck the trend, growing strongly
· Health scandals see US$442 million wiped off Chipotle’s brand value
Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. The world’s 25 most valuable fast food brands are included in the Brand Finance Restaurants 25.
The brand values of McDonald’s, KFC, Subway, Taco Bell, Pizza Hut and Domino’s have all fallen due to heavy competition in an increasingly fragmented market as well as healthier challenger brands offering greater choice for consumers.
Panera Bread, regularly lauded as the healthiest fast food chain, is a beneficiary of this trend for slightly healthier, fast-casual options. Panera’s communications and advertising (developed with lead agency, Anomaly, since 2015) draw heavily upon this theme, stressing the importance of ‘clean’, natural food as the foundation of a full and healthy life. The brand is going from strength to strength, with its Brand Index Score increasing from 71 in 2025 to 76 in 2016 and 80 this year. Brand value is up 32% to US$1.9 billion.
The same cannot be said for follow fast-casual pioneer Chipotle Mexican Grill. Its brand value is down 13% to US$2.9 billion. Though consumer trends are in its favour and the brand had been growing rapidly, reputational issues have dogged Chipotle over the last 18 months. In late 2015, dozens of customers were taken ill in several separate incidents due to outbreaks of Salmonella, E Coli and Norovirus.
Though firm steps have now been taken to address hygiene standards, sales for 2016 were down 13% on the year before and profits were down over 75%. Some tentative signs of recovery are just starting to emerge however, suggesting that Chipotle has been able to develop a sufficiently strong brand to weather the crisis long term.
Bucking the healthy eating trend is Papa John’s, this year’s fastest growing restaurant brand. The firm continues to expand and is rapidly approaching a total of 5,000 locations. Franchisee fees are relatively high, including an ad royalty of 8%, though with brand value growth of 52% and a 5-point increase in its Brand Strength Index score, CEO and founder John Schnatter will feel confident in justifying the royalties.
Papa John’s product and advertising are fairly traditional, Papa Johns has pioneered digital technology. It was the first pizza chain to offer online ordering, back in 2002, its first mover advantage netting it additional market share. This year, it is trialing ‘Papa Priority’ which will enable customers to move their orders to the front of the queue for a $3 fee. Though there is every chance that this will prove popular with some customers and generate extra revenue, there is a significant risk this will alienate others, undermining Papa’s everyman image, weakening the brand. Papa John’s should ensure that it has done its brand due diligence in addition to examining the short-term financial case before proceeding.
Tim Horton’s is another strong performer, with a 45% increase in brand value. The coffee chain offering may be considered run-of-the-mill to some, but its surge indicates that there is an under-exploited appetite for reasonably priced rather than premium coffee.
Its merger with Burger King has benefitted both brands (Burger King’s brand value is up 11%) as well as shareholders; the brand’s combined market capitalization is US$4 billion higher now than at the time of the merger. The deal provides opportunities for improved distribution and cost saving. Tim Horton’s devotees may be concerned at the loss of a Canadian icon but the strength and unique identities of both brands would make the disappearance of either almost unthinkable.
Note to Editors
Brand values are reported in USD. For precise conversions into local currency values, please confirm rates with the Brand Finance team. More information about the methodology, as well as definitions of key terms are available in the Brand Finance Restaurants 25 2017 report document.
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.
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.