Have you noticed that products from your favorite restaurants, coffee shops and donut shops are invading supermarket shelves? More and more restaurants are realizing the profit potential of selling their products in retail stores and extending their brands further into the marketplace. A win-win for brands, it’s expected this shift will only continue to gain traction.
Many well-known quick-serve and restaurant chains are taking advantage of licensing benefits and successfully leveraging their brands to retail stores. According to BrandStrategyInsider.com, some of the benefits of brand licensing are: 1) increased consumer connections; 2) gain of additional exposure in new categories; 3) entry into new distribution channels; 4) ability to enter new regions where the brand is currently not sold; 5) brand managers are able to extend their brands with minimal investment; and 6) the brand owner captures royalty revenue through the manufacturer’s sales of the licensed product which goes straight to the bottom line.
There are also companies and restaurants around the country that are producing their signature food items and entering the market directly or with the help of a co-packer rather than through licensing or cobranding. As reported in the 2012 National Restaurant Association Forecast, 59% of fine dining, 54% of family dining, 41% of fast casual, 37% of quick-service and 35% of casual dining operators retail packaged food. Typically a restaurant starts small by offering products such as dressings, sauces, mixes and seasonings, to promote and extend its brand to provide a source of additional revenue. These products are easy to produce in-house and sell on-site in order to test how receptive customers will be to a take-home option. If successful, the restaurant can work with a co-packer or make the investment in further manufacturing capabilities to replicate the recipe into larger quantities in order to get their products on grocery store shelves. A contract packer or co-packer, can be a smart and economical way to break into the market, as it helps keep costs lower and reduces lead-time in getting product to market. Co-packers are able to both manufacture and package products to then be sold on store shelves. Some co-packers will allow a company to use a private label on the products to market them as its own, which can offer a good chance at success when entering a market with multiple products. One of the most successful restaurant-to-retail brands is Stouffer’s®, manufactured by Nestlé, which started out as a suburban restaurant chain and then transitioned into a very prosperous frozen food
Prepared meals and snacks branded from popular chains such as California Pizza Kitchen, T.G.I. Friday’s, Starbucks and Krispy Kreme are being sold in supermarkets and club stores. While in the past restaurant chains were hesitant about licensing food products, the downturn of the economy seems to have encouraged them to create retail versions with the hope that it would reinforce customer loyalty as the percentage of in-home meals increases, and then translate into return visits when the economy improves. Many consumers at one point or another will be standing at the freezer case searching for a quick and easy meal to take home and the business-savvy chains have made sure that their products are among the available options. Consumers not only want convenience, but are also increasingly seeking familiar tastes. Although store-bought frozen meals are not identical to the meals offered in the restaurants, they are meant to be similar enough to provide consumers with the same satisfied feeling they get when dining out. When they see their favorite restaurant brands on the shelves it gives them the chance to pick up the familiar item to enjoy in the comfort of their own home. Marketing total meal solutions to consumers allows retail businesses to boost product sales and also to increase long-term customer loyalty.
Krispy Kreme is one of the most recent chains to expand its retail offerings. This time the chain has begun selling ready-to-drink varieties of its iced coffees in more than 900 Walmart locations nationwide. Brad Wall, senior vice president for supply chain
and off-premise operations, shared in the Winston-Salem Journal, “Making our premium-quality coffee available to consumers through the convenience of ready-to-drink is part of our continuing efforts to build awareness and equity in our coffee program.” Krispy Kreme officials say the goal to expand their beverage lines is to drive more traffic to its shops and perhaps attract new customers rather than taking major coffee market share from competitors, such as Starbucks, Dunkin’ Donuts and McDonald’s. “You want to go where the customers
are, and if they’re not necessarily coming into your shop in the same numbers they used to, you’ve got to go where they are. And they’re going to the grocery store on a regular basis,” said Warren Brown, owner of Cakelove, regarding his experience with expansion into the retail world.
The grocery manufacturers and supermarket stores are not losing out either, “Grocery manufacturers are more than happy to license restaurant brands due to the fact that it’s cheaper and faster to rent the equity in a well-known name than to create a new brand from scratch,” explains Bill Cross, vice president of food licensing at Broad Street Licensing Group, via QSRMagazine.com. Grocers know consumers tend to prefer purchasing brands they are familiar with and already enjoy over ones they don’t know. The grocers also know that “consumers love these types of products because they identify them with providing a restaurant-quality experience less expensively,” explains Nancy Bailey, vice chairman of Beanstalk, a New York-based global brand licensing agency and consultancy. Therefore, placing these brands on supermarket shelves almost guarantees a profit.
As consumers, we are the biggest winners of all. With restaurants offering their brands in a wide variety of locations, consumers are provided with additional opportunities to enjoy some of our favorite restaurants’ products in brand new and convenient ways. •••