The current impact and carryover of advertising on sales in the restaurant industry

A common source of conflict in the relationship between restaurant franchise and franchisee involves advertising fees. Conflict arises when the franchisee feels that he or she has not received an adequate return on his or her advertising investment, This paper reports the results of a study conducted on both the short-term and long-term effectiveness (duration) of advertising among restaurant chains. The findings suggest that only a small proportion of restaurant chains enjoy immediate, positive returns to their advertising fees. However, over half of all chains examined realized a significant carryover effect of advertising. Several explanations are offered as to why these results are found and recommendations are made as to how restaurant chains should react to these findings.