Walk down any UK high street and you’ll find no shortage of eateries to choose from. The traditional greasy spoon has been usurped by coffee shops, sandwich bars and a range of take away chains offering everything from sushi to falafel, noodles to dumplings and healthy salads to burgers and chips. But how consumers feel about high-street fast food names plays an integral part of whether they sink, or swim, in an ever competitive space. Our research shows that while some reputations are helping, others are not.
WHEN TAX IMPACTS REPUTATION
Step into the nearest Starbucks and you’re likely to enjoy a read of a national newspaper alongside your flat white. Rewind five years ago however, and it was Starbucks itself making the headlines. Reports that the company had paid just £8.6 million in tax over the previous 14 years invited widespread public criticism and a huge backlash. It subsequently announced it would pay an additional £20 million in tax over the following two years, but the damage had been done. Starbucks had become synonymous with tax avoidance.
Five years later and it’s clear from our research that the perception that Starbucks does not pay its fair share of tax lingers on, regardless of the facts. For all the plush velvet cushions and personalised coffee cups, it’s a perception that just won’t budge. In fact, the evidence suggests that the issue now casts a shadow over the entire category. Not only is Starbucks still tainted by the 2012 allegations, but Costa Coffee and Pret A Manger are also seeing their reputations damaged by tax, despite protestations they pay their fair share.
Starbucks seems to be struggling with a fairly poor reputation. For example, just 26 per cent of the UK public claim they have a favourable view of the company, and its high Intensity Score shows that many people in the UK feel strongly towards the company (giving the company particularly high or low scores). But what is driving this poor reputation? To find this out, and to shed light on what defines these companies’ reputations, we asked respondents whether or not they agreed that various statements applied to the companies in question.
Starbucks is being damaged by tax. Only ten per cent of UK adults agree it ‘pays its fair share of taxes’. Interestingly, Starbucks is also rarely viewed as contributing to local communities (18 per cent agree) or as contributing to the UK economy (21 per cent agree), which suggests the tax issue has impacted on views of Starbucks’ wider economic contribution. Of course, Starbucks should also be concerned by its low scores for value for money (22 per cent agree) and helping people live more healthily (13 per cent agree).
Tax is not, however, an issue to worry only Starbucks. Importantly, Costa Coffee and, to an extent, Pret A Manger (though fewer people feel strongly about Pret) are also weighed down by tax. Just 17 per cent agree Costa ‘pays its fair share of taxes’ and 12 per cent say the same of Pret (and well below McDonald’s, for example).
Knowing what a company has a reputation for is not, however, the same as understanding what exactly is driving that reputation. To that end, we conducted further statistical analysis to determine the variables that explained the reputations – why people feel positively or negatively towards the companies we were studying. We wanted to understand the most important variables that drive a company’s reputation. Our results underline the importance of tax for Starbucks, Costa Coffee and even Pret A Manger; all saw ‘it pays its fair share of tax’ emerge as one of their most significant drivers of reputation.
Indeed, that variable explained eight per cent of Starbucks’ reputation, ten per cent of Costa’s reputation and five per cent of Pret A Manger’s reputation. In contrast, tax didn’t emerge as a key driver for McDonald’s or any of the other fast food companies we analysed (for whom health and food standards were more significant).
Perhaps unsurprisingly, value for money and tasty products were found to be significant drivers of companies’ reputations, but the significance of tax is notable and should guide communications strategies in the sector. Starbucks, clearly, has to convince people that it has changed its ways (or that its ways were never wrong in the first place) while Costa Coffee and Pret A Manger need to clarify (to people who may not know the businesses particularly well) how they pay their fair share of taxes. Indeed, as recently as April, Labour politician, Brent Central MP Dawn Butler, mistakenly accused Costa Coffee of not paying its full taxes in a BBC radio interview.
As Butler said in an interview with the Kilburn Times: ‘I mistakenly mentioned Costa Coffee, I’ve apologised, they’ve accepted it and said It’s fine, it happens all the time. It was just an honest mistake.’ Costa Coffee still seems to have more work to do in convincing the country of its diligence. Tax shouldn’t be the only focus for these companies, of course, but it’s a significant roadblock between them and a more positive reputation. Considering people who view a company more positively are likely to visit more often, improving reputation is a clear way to encourage better footfall on an already busy high street.
THE LINK BETWEEN REPUTATION AND USE
Our research has shown people who give companies like Costa Coffee and Starbucks a relatively high Reputation Credit Score were around twice as likely to have visited those companies in the last year. The most common reasons for people avoiding Starbucks in the last year (apart from being too expensive and inconvenient), was ‘not liking the company’, which was cited by 24 per cent of respondents, and viewing it as irresponsible (17 per cent). These are significant hurdles to overcome in an extremely competitive sector. But there are many brands under the umbrella of fast food, and their reputations vary massively; the reasons for which are not always what they appear.
HIGH STREET REPUTATION IN THE ERA OF THE BUDDHA BOWL
It was the 2004 film Super-Size Me which sparked widespread calls for the fast food industry to take healthy eating more seriously. The documentary recorded the effects on Morgan Spurlock, the film’s director and star, of eating nothing but McDonald’s food for a month.
Just one year later, celebrity chef Jamie Oliver campaigned to improve the quality of school meals. Since then, the industry and its key players have been the subject of seemingly continuous pressure to ‘do its bit’ to address the health of the nation. This narrative is often levelled at the big fast food chains and over time there have been moves toward healthier choices and clearer labelling. But fundamentally the big chains’ focus on what is typically less healthy food as a treat has presented an opportunity for others to exploit the healthy end of the scale with chains like Subway, Pret, Eat and Leon talking up their credentials as well as smaller, niche local players like Tossed.
One fast food player that goes against the reputational grain is Greggs. You might expect it to exhibit similar reputation performance to McDonald’s or KFC, seemingly the lightning rods for industry criticism. A proud purveyor of pastries and sweet treats, it makes it hard to argue that Greggs’ primary focus is on healthy eating. Yet far from being tarnished with the same unhealthy brush, however, our data shows that Greggs is succeeding in tapping into its audience in a way they are happy to accept.
Not only does Greggs have the best reputation of all the companies we tracked in this study, it also performs best by almost every demographic. Pret A Manger performed better among professionals, but, even then, Greggs was a close second. And the good news for Greggs doesn’t stop there. It is also seen to be performing best on four key drivers – providing tasty products, having the highest possible food standards, being a good company to have on the high street, delivering good value for money – attributes with which any food company would be proud to be associated.
The question this in turn poses is why it should have such a strong reputational performance, especially if it is not necessarily associated with healthy food? While the type of food it sells should not preclude a good performance, it is reasonable to expect it to have some impact.
EXPLORING GREGGS' REPUTATIONAL RESILIENCE
It was when we asked why people didn’t shop at Greggs that things became clearer. Nearly half (48 per cent) of those who have not visited a Greggs in the last 12 months or more put it down to the fact there not a conveniently located branch. One fifth put it at least in part down to the lack of healthy products on offer. But interestingly only one per cent attributed their lack of custom to what they perceived as the company acting irresponsibly, and just four per cent said they did not like the company. There is very little protest vote against Greggs. By contrast, 27 per cent of respondents who had not visited a McDonald’s in at least a year said that they did not like the company while 18 per cent perceive it as not responsible. This is further supported when you look at the share of each company’s scores. Greggs has the lowest proportion of people who rate its reputation extremely poorly (between 0 & 100). It doesn’t have any significant reputation challenges to address in the same way others do. This gives it the freedom to focus on the messages it wants to promote and not spend time mitigating issues likely to do reputational harm.
Few would claim Greggs’ priority is to provide healthy fare, but that is also not its claim. It positions itself as a family-owned, traditional baker that provides tasty food at an affordable price at a location close to where you are, be that home or work. Greggs takes pride in its baking heritage and has 75 years’ experience. And this could be exactly where its reputational strengths lie.
THE IMPORTANCE OF VALUES FOR FAST FOOD BRANDS
Its UK heritage and typically hardy British food on offer means it has not been lumped together with the big brand (and often American) chains, which are seemingly more often criticised for health reasons. In the 13 years since Super-Size Me, McDonald’s has invested significant time and effort in the UK on enhancing its reputation. It has directly challenged misconceptions about its production processes, emphasised the provenance of its ingredients and invested heavily in grassroots football.
But the reality is that some of the challenges McDonald’s faced at the time of Spurlock’s documentary are still relevant today. Importantly, Greggs does not have the legacy issues or negative connotations around food quality that others do. It is not viewed as a global giant or a product of capitalist excess, but instead a UK company which has done well by sticking to its values. It also has not been tarnished by any tax backlash. Legitimately competing with both fast food chains and coffee shops, it could be said Greggs is enjoying the best of both worlds without the limitations affecting its competition in either category.
Reputations are shaped by the companies’ broader actions or, perhaps in some cases unfairly, the legacy issues of the sector. Greggs claims it stands for Great tasting, freshly prepared food that our customers can trust, at affordable prices. It would appear this clear, simple focus is serving the company and its reputation well. It is honest and proud about its role and focuses on delivering as well as possible.
The Populus Reputation Measurement approach has been constantly developed over 13 years, and is a proven series of tools, techniques and analysis which allows reputation to be understood, influenced and improved. It combines robust research with analytics, benchmarks, actionable advice and strategic counsel.
Between 6 and 8 October 2017, Populus interviewed 2,021 UK adults online. The research focused on eight high street food and drinks companies – McDonald’s, Greggs, KFC, Nando’s, Subway, Costa Coffee, Pret A Manger and Starbucks – in order to understand their standing in the eyes of the UK public. Each company was assigned a Reputation Credit Scores (Populus’s established method for measuring and comparing top line corporate reputations) and Intensity Scores (Populus’s measure of how strongly people feel towards a company).