When Naugles Inc. first offered Wayne Jones a job in 1983, the Southern California native said his first question was “What’s Naugles?”
Jones, now Naugles’ chief financial officer, said his reaction three years ago captures the essence of why the Fullerton-based chain of Mexican fast-food restaurants continues to struggle: Too few people know they’re out there.
But in a campaign orchestrated to a large extent by its new parent, Los Angeles-based Collins Foods International, the financially troubled Naugles--it has lost more than $45 million in the past three years--now is intent on getting its name out.
By spending at least $6 million this year to forge an image for itself, company executives hope to turn around the company’s fortunes in the fiercely competitive Mexican fast-food market.
The campaign--Naugles’ first try at mass advertising in 16 years of existence--so far includes a pair of television commercials, a $600,000 program to repaint the exterior of most of its 170 restaurants to make them look more like Mexican food outlets, a $200,000 direct mailing of discount coupons and a few additions to the chain’s already hefty menu.
“It’s quite a change in direction for us,” Jones said. “But I think we all are in agreement that it was clearly the right thing to do.”
One of the few industry analysts that continues to track Naugles--most dropped out of sight along with the company’s earnings--was upbeat about future prospects.
“I really feel that they’re making . . . good progress in turning things around,” said Barry Ziegler, an analyst for Tucker, Anthony & R. L. Day in New York.
A big part of the effort is concentrated in Naugles’ television campaign--two 30-second ads now airing in Los Angeles and other markets. The spots cost $250,000 to produce, and so far it has cost Naugles $1.3 million to air them in the Los Angeles market alone. An additional $300,000 is being spent to air the ads in the Salt Lake City and Las Vegas markets.
Jones said the company has budgeted a minimum of $5.7 million in the next year for television ads and, possibly, more direct-mail campaigns.
The current TV ads feature Senor Naugle, a tongue-in-cheek, south-of-the-border version of Ronald McDonald who hypes two recent additions to the chain’s primarily Mexican-style menu.
In one ad, Senor Naugle is sitting on Plymouth Rock, soft taco in hand, when a Mayflower full of hungry Pilgrims arrives. He says they liked the taco so much that they threw a thanksgiving dinner to commemorate the event.
In the second spot, the historic battle of the Alamo rages around a fajita -clutching Senor Naugle. The fight, he tells viewers, began because there wasn’t enough of the spicy beef dish for the Texans to share with the Mexican army.
Naugles’ executives said they are considering more promotions and alterations to the menu and to the design of the restaurants.
“The entire concept of how we’re presenting ourselves is being looked at,” Jones said.
The company lost $45.1 million in the 33-month period that ended March 31 and expects to post yet another loss for the final quarter of its fiscal 1986, but it is enjoying an upswing in business since the ad campaign began, said Wayne Withers, Naugles chairman and chief executive. He estimated that Naugles’ 108 Los Angeles-area restaurants have seen a 20% revenue jump since the commercials and mailings hit the market.
Naugles also has reversed a vigorous expansion program that, industry analysts said, caused most of the financial troubles that have plagued the company for the past two years. The company closed 34 restaurants earlier this year, and a sizable portion of the funds for the marketing campaign were generated by the closings, Jones said.