Naugles Hires Agency to Plan Radio-TV Blitz
Naugles Inc., trying to stem a tide of losses, has hired a Los Angeles advertising agency to help prepare a $1-million April radio and television blitz.
In preparation for its campaign, Naugles is spending another $1 million to install char-broilers and other new equipment in all 230 stores. It soon will introduce a number of char-broiled chicken and beef dishes. Naugles has also slashed prices up to 20%, cut the number of menu items by 10% and plans to modernize the look of its units, according to Michael Mooslin, president of the Fullerton-based chain of Mexican-American fast food restaurants.
Although specifics of the advertising campaign are still undecided, the theme likely will be that Naugles provides good food and solid value, Mooslin said.
Those themes would echo the current advertising campaign of Carl Karcher Enterprises, owner and operator of Carl’s Jr. restaurants, which also has been troubled by declining sales.
Naugles’ actions come just one month after Collins Foods International Inc. of Los Angeles announced plans to gain controlling interest in Naugles. Collins, a major franchisee of Kentucky Fried Chicken outlets and owner of Sizzler Restaurants Inc., intends to increase its stake in the Naugles chain to 51%. It now owns 41% after purchasing 36% interest from Naugles’ former chairman, Harold Butler, last month.
Behind the whirlwind of activity at Naugles is what some analysts say may be a last-ditch effort to save the struggling company.
Current Sales Down
Naugles’ current sales are down 6% from last year--and things were not too promising then. The company reported a $1.4-million loss for its fiscal 1986 first quarter ended Oct. 17. Naugles has lost money for four consecutive quarters and several analysts say Collins intends to convert the chain to Kentucky Fried Chicken stores if its losses continue unchecked.
Competition in the fast-food industry is intensifying at the same time sales are declining, and analysts say that giant volume dealers such as McDonalds and Burger King are doing best at weathering the slump.
“The greatest threat to the industry right now is there are too many seats and not enough people filling them,” said Donald W. Rice, an analyst at Blunt Ellis & Loewi, a Milwaukee brokerage house. He said that Naugles is just one of a number of medium-sized fast food chains nationwide that are under intense financial pressure.
Naugles regards its decision to turn to television and radio advertising for the first time in its 16-year history as one step towards combating declining sales.
Six weeks ago, Naugles selected Ray Coen of Los Angeles as its advertising agency--the same agency Collins used to represente Sizzler Restaurants International Inc. during that chain’s turnaround in the mid-70s. Sizzler was purchased by Collins in 1967.
Coen would not reveal details of the campaign his firm plans to present to Naugles’ executives next month but said it would be very aggressive in order to compete with the fast food giants. He also said that the theme may vary in Naugles’ different markets.
Although plans for a Naugles advertising campaign were previously announced in August, that campaign, under Dentsu, Young & Rubicam of Los Angeles, never got off the ground.
