The Full Menu: Fast-food chains are building niches among kids of all ages.

All kids are not created equal. Fast-food restaurants are tailoring menus and promotions as some chains woo tweens and others court the preschool set. McDonald’s and Burger King have divvied up the kid audience – and refined their branding in the process. Meanwhile, second-tier chains are spiffing up their own programs and watching for a cue to subdivide.

The upshot for kids is that toys are getting better, and more chains have them. For marketers, competition is more about tie-in properties than price or taste. For agencies and premiums suppliers, the pressure is rising and margins are falling.

Burger King will redefine kids’ promotion again this fall when it sponsors the Backstreet Boys’ tour with a CD and video giveaway that takes premiums beyond toys. The Miami-based chain has aggressively pursued teens and tweens for nearly a year with a slate of Big Kids Meals programs pegged to entertainment properties like Nickelodeon’s Wild Thornberries TV series (in February) and Universal’s The Flintstones II: Viva Rock Vegas film (May).

McDonald’s is testing bigger portions for Happy Meals and running multi-pronged promos: A May-June effort adds Britney Spears for big kids to a tie-in with long-term partner Walt Disney Co.’s Dinosaur.

“It’s always been a mistake to think there’s a kid market,” says Ron Paul, president of restaurant consultancy Technomic, Chicago. “There are kids markets, plural. The only common denominator between a five-, 12- and 15-year-old is that they’re not adults. But they don’t all want the same thing.”

Most second-tier chains don’t have the volume to warrant separate pitches, which are tough to execute in-store. Non-burger chains like Milford, CT-based Subway and Dallas-based Pizza Hut have stepped up kids’ marketing, while others “see the Big Two so far ahead they can’t afford to compete,” says one agency exec.

BK and McD can’t afford not to do more.

GROWTH CHARTS

“All kids want to be big kids, faster,” says Richard Taylor, vp of U.S. marketing at Burger King. “There’s an emotional component, so we treat them differently.”

The Big Kids Meal, launched last July, gives kids seven to 11 bigger portions than Kids Club meals, but the same toys. That could change, but for now, BK designs toys for the seven-to-11 crowd while keeping younger kids in mind.

“We identify the right properties, then develop premiums with broad appeal [for a] three-year-old to a 12-year-old,” Taylor says. “You don’t need two separate premiums. Give a sophisticated but large and colorful toy, and it’s doable.”

“We look for dual-gender appeal and play patterns appropriate to the property,” says Gaetano Mastropasqua, senior vp-client services at Equity Marketing, Los Angeles, BK’s agency for Big Kids Meals. “Younger kids aspire to older toys [that accommodate] their fine-motor skills.”

Once they hit 12, kids are less interested in toys – unless they’re collectors (see story, pg. 41). BK’s self-liquidating offers skew older: A Backstreet Boys CD or video purchase-with-purchase deal could interest teens and young adults. The CD will feature an advance single from the group’s next album (due in October) and five never-released live songs. The video has backstage footage and personal interviews with the band. It’s the first national CD promo from a fast-food chain. Word is that the Boys developed the CD offer and pitched it as part of their tour sponsorship. Sources say McDonald’s looked hard at the band, but likely was outbid by BK.

It’s unusual for a QSR to sponsor a concert tour. “Music tends to have very narrow appeal. It’s deeply niched,” Taylor explains. “We needed something with broad appeal, and they have it.”

Big Kids Meals will have their own Boys premiums. “We try to keep an open mind about premiums, as long as it delivers something of value to kids,” Taylor says. “Upcoming promos will “take the concept of premium to a new level,” he adds. BK is looking at sports tie-ins and will keep partnering with Nickelodeon. (Holiday plans are tied to the Rugrats in Paris movie.)

McDonald’s, king of the pre-tween set, is scoping out teen properties and testing tween programs overseas. A New Zealand campaign, McSpin, lets kids earn free CDs by collecting purchase points. The program is testing now via a partnership with Sony Music.

The company is also offering more purchase-with-purchase premiums like last year’s Toy Story 2 candy canisters and Tarzan sound straws. “As the tween taste for variety expands, it’s hard to swing them into what we want them to buy to get a toy,” says vp-national marketing R.J. Milano. “This gives them the flexibility and autonomy to choose their favorite food and still get a toy.” Large-portion Happy Meals now in test have the same toys as flagship Happy Meals.

At the same time, McD is extending its Disney promos to tweens. A Hatch, Match & Win game pegged to Dinosaur dangles a Britney Spears prize – with cash and precious gems to tempt adults. Happy Meals feature Dinosaur character toys.

“We segment by occasion, not by age group,” Milano says. “We take an all-family event and do a total communications plan with specific ads for different ages. Disney’s a great cornerstone for us because we can use one property to reach many different audiences.”

McDonald’s most successful all-age property has been Teeny Beanie Babies, thanks to adult collectors. The chain scored its second all-age hit this spring with Teletubbies. The clip-on (McD says they’re hugging) key-chain dolls didn’t bring in crowds like Teeny Beanies, but the TV-tummied quartet are popular with older girls. (Ironically, BK tied in with Teletubbies last year to lackluster results.)

McDonald’s is still pursuing its trademark infringement suit against BK. McD filed suit last June, saying it trademarked the phrase “Big Kid’s Meal” in June 1998 (September promo). The judge dismissed McDonald’s August request for an injunction, so BK can continue to use the name as the suit plays out. (BK trademarked “Burger King Big Kids Meal,” but not “Big Kids Meal,” because it thought the phrase was too generic.) Mediation was set to continue through May, with a pre-trial conference set for Sept. 26.

McDonald’s Happy Meal continues to be the gold standard. “We treat the toy business as a business,” says Milano. “We have the smartest, most creative toy experts working for us worldwide. Some work for McDonald’s, some for our agencies. We set the same creative benchmark [for toys] as we do in every facet of our business, and look for toy expertise from our agencies.”

In December, McDonald’s added a scholarship sweepstakes to Happy Meals. The Ronald Scholars campaign awards $1.6 million in scholarships through 2000, with four $25,000 winners during each of 14 Happy Meal promos this year. Instant-win gamepieces in Happy Meals carry a $25,000 prize or an “educational fun fact.” Supporting TV, print, and radio ads running throughout the year via Leo Burnett, Chicago, feature scholarship winners.

BIGGER GETS BETTER

McDonald’s and BK have raised the bar on toy quality, leaving smaller chains anxious to catch up. But none can match the buying power of the Big Two, whose super-sized orders command better rates with factories in China.

“We leverage our size and quantities to get the highest quality” at manageable prices, Milano says. Sometimes that means global purchasing; other times, local tastes dictate a different toy for each country.

Also, chains’ taste for more sophisticated toys has pushed promo agencies to improve their offerings. “Premiums companies and agencies have gotten more sophisticated creatively and more disciplined in all aspects than they were 10 years ago,” says Kathy Vosters, ceo of b. little & co. and a former BK exec. “You need a bigger, tighter infrastructure to make 180 million premiums than you did to make five million.”

Sources say QSRs push for volume discounts, pressuring shops to whittle their margins to raise toy quality without upping the price.

BK has kept its marketing budget a consistent percentage of sales (Taylor won’t say what that percentage is). Sales are up, so spending is up. McDonald’s is squeezing more out of its premiums budgets, too. That makes it tough for smaller chains to keep up. “McDonald’s has the money to fund research and multiple approaches,” says Technomic’s Paul. Most chains don’t.

One of the strongest second-tier players is Subway, which has aggressively built its kids meal program over the last three years. Tie-ins with Nickelodeon have lent the sandwich chain popular preschool properties like Blue’s Clues, a departure from Subway’s old generic, educational toys. New York City-based b. little handles.

Pizza Hut launched Pizza PlayStuff last March, delivering toys with pizzas for an extra buck. The program has been scaled back to dine-in and carry-out customers, who can buy a toy for $1 with purchase of pizza or get one free in a kid’s pack. PlayStuff premiums include K’NEX building sets and Zoo Dough modeling clay kits. The premiums change every six weeks.

When the program launched, chief marketing officer Randy Gier predicted: “This could make the burger chains’ meals obsolete. Pizza Hut is the only company that will deliver the coolest toys to your front door.”

Pizza Hut sister chain Taco Bell extends its teen reach with 71 Teen Supreme centers in Boys & Girls Clubs of America. The partners expect to have 100 centers offering teens career, education, and service opportunities by 2001.

After all, kids eventually outgrow toys. Then they start looking for jobs.

Hungry consumers without cash are getting a taste of the latest banking convenience. The Ticket Machine from World Cash Providers works like an ATM: Shoppers insert bank cards to withdraw money, but get a receipt instead of cash. They take the receipts to the register, buy lunch, and get the change in cash. The machines have helped some fast-feeders boost check averages 32 percent, World Cash claims. Franchisees also get access to World Cash’s customized databases.

QSRs have tapped online couponing, too, as a cheap alternative to direct mail. KFC franchisee Harman Management is testing two online coupon offers via ecoupons.com, a year-old site that carries local discounts pegged by Zip Code. Harman offers sandwich and family-meal discounts to the moms and college students among ecoupons.com subscribers. Shoppers print out coupons and redeem them at Harman’s 310 KFC restaurants in California, Colorado, and Washington. Moms and college kids were specifically asking ecoupons.com for KFC deals. Pizza Hut franchisees in six states also use the service.

Cox Target Media, St. Petersburg, FL, in February linked its Val-Pak mailer with coupons.com, Palo Alto, CA, to put Val-Pak local offers on the year-old site. Shoppers provide their Zip Code to get coupons they can print and redeem in-store. Optional software puts an icon on the screen that flashes when Val-Pak posts an offer in the user’s Zip Code.

The system does not, however, take your order.