Claim to Fame
Arctic Circle touts quality products in its TV ad campaign to set itself apart from the competition.

By Maya Norris

Quality prevails at Arctic Circle. Known for using higher-end ingredients such as halibut and Black Angus beef, the Midvale, Utah-based QSR has run a TV ad campaign for the last four years that has focused on the quality of its menu, boosting sales and traffic in the process.

Since launching the ads in 2001, Arctic Circle has seen its sales go up by 4 percent to 7 percent each year. Traffic at the 25 company stores has increased about 4 percent to 6 percent a year; the company does not track guest counts at its 60 franchised units. With an average unit volume of $645,000, the company expects to generate sales of $52.8 million in 2005.

Arctic Circle credits its strong balance sheet in part to its television campaign. The 30-second spots feature Artie, the chain’s buyer, searching for quality ingredients. However, Artie is never seen or heard in the commercials. Rather, vendors such as a dairy farmer and rancher talk about how he has come to them requesting the finest wholesome ingredients including sweet cream from prized cows for milk shakes and Black Angus beef for the chain’s burgers.

Brand Turnaround
But Arctic Circle, which has been around since 1950, hasn’t always been known for its high-end products. In the late 1980s and 1990s, many had considered it a low-end, tired brand with mediocre food. Unit sales had remained flat at about $500,000 for 10 to 15 years, and the company was closing more stores than it was opening. So in 2000, it embarked on a five-year branding strategy to revitalize the chain.

The goal was to attract a younger demographic: 25- to 49-year-olds and mothers with young children. The company remodeled the restaurants, replacing the brick and dark colors with modern elements such as cream walls, light woods and glass. It also installed an indoor play area, called Play Zones.

Arctic Circle decided to use high-end ingredients rather than resort to deep discounts and large portions to better compete with national and regional fast-food chains. The company replaced the ground chuck used in its burgers with Black Angus beef. It later exchanged cod with halibut for its fish and chips and fish sandwich; switched to chicken breast meat in its chicken sandwiches and chicken fingers; and incorporated fresh fruit and brand-name candies in its shakes. To keep food costs to 33.5 percent, the company raised prices on selected items by 3 percent to 5 percent.

“The company was trying to move up in the ranking to where we were still perceived as fast food but the food quality was closer to midscale,” President and CEO Gary Roberts says

Behind the Scenes
Arctic Circle turned to Salt Lake City-based Love Communications to help define its new image. The ad agency created Artie to play up the chain’s high-quality ingredients as its point of differentiation, ending the spots with the tagline, “Where the good stuff is.”

“We thought it would be fun to use a fictional character—an Arctic ircle employee that nobody really saw who was always going out to vendors and people in the field looking for the good stuff because it goes into our competitive advantage,” explains Rich Love, partner and co-creative director of Love Communications. “So we thought Artie would be an interesting way of promoting the fact that we go the extra mile to find the good stuff.”

But the agency kept Artie out of sight to showcase the food. “We didn’t want our character to be the star of our commercials,” Love says. “We wanted the food to be the star of our commercials.”

Kevin Moll, president of Denver-based Restaurant Consultants Inc., says that Artie gives the commercials a “human touch” while effectively branding Arctic Circle as a high-end chain with quality food. He says the campaign should help Arctic Circle compete with the national players without getting into a head-to-head price war.

“I liked the homey appeal,” Moll says. “And homey frequently can equate to quality if done right. This campaign took the homey component and it added quality and so consequently it positions the restaurant in a place where they can maintain a higher guest check average without having to resort to the price competition.

“I would encourage them to try to be more expensive than anyone else in the market and maintain the focus on quality because consumers repeatedly have shown time and time again that they will select quality over price,” Moll adds. “Quality is No. 1 because bottom line is they are getting a burger. They’re not making a $20 decision. They’re making a $1 or $2 decision. So go for quality.”

But Moll says a major flaw of the TV campaign is that Artie is never seen and some of the commercials don’t mention that Artie is the buyer for Arctic Circle.

“It creates a disconnect in the mind of the viewer. And that disconnect question is, who is Artie? Especially for the first-time viewer,” he says. “I like the concept of Artie, but...that whole piece needs to be developed further.”

Trading Up
Nevertheless, the company contends that the ad campaign is working. Halibut, Ranch Burgers and shakes, which are the items promoted in most of the commercials, account for 40 percent of sales. According to Carol Brown, vice president of marketing for Arctic Circle, sales of the items featured in the ads go up after they air. For example, after the spot promoting halibut aired in February, the halibut sandwich and halibut and chips made up 8.3 percent of sales, up from 5.3 percent in January. She says the spots had a residual effect the next two months with halibut products making up 7.7 percent of sales in March and 5.9 percent in April.

Arctic Circle airs a new commercial once a month. Depending on the market, media buys include daytime programming to target senior citizens, prime-time news to grab the 25- to 49-year-old audience, and cable channels like Nickelodeon to target kids.

While the company uses the bulk of its $2 million ad budget on television, it spends some of its advertising dollars on radio, coupons, freestanding inserts in newspapers, in-store collateral materials and community involvement. Franchisees contribute to the ad budget by paying 3 percent to 4 percent of their net sales into Artic Circle’s marketing fund.

Meaningless Rewards
Although Artie has proven to be a winner for Arctic Circle, the chain is ready to move on. In September, the company launched a new ad campaign that encourages viewers to reward themselves for the most mundane activities. For example, one spot features a CEO rewarding himself with a Ranch Super Combo meal after faxing a report himself. Another spot shows a woman enjoying a halibut sandwich after finding her TV remote control. Each spot still uses the tagline, “Where the good stuff is.”

Although Artie will no longer be a part of Arctic Circle’s commercials, the company says the mission behind its advertising strategy remains the same. “Artie has searched out the country. He has found the good stuff,” Brown says. “It’s just an evolution. We’re still focusing on the same product channels. We’re not changing our direction at all. Our direction is still Black Angus. It’s still halibut. It’s still shakes. It’s still the things that we feel differentiate us from the competition.”