INTENT ON FAILURE: WHY MOST RESTAURANTS FUMBLE THE BALL WHEN GOING TO RETAIL

| March 5, 2013 | 0 Comments

When we were hired by a large restaurant chain as their brand licensing agency, the company’s then CMO was keen to have a greater retail presence of the brand. Because they  perennially chased the category leader, our client saw brand licensing at retail as a means of casting a bigger shadow. Our company has been helping restaurants to successfully extend their brand into retail for years, but that didn’t stop the CMO from chiding me after approving a particularly desired deal.Retail

“Don’t **** this up,” he growled as I walked to the door.

Surprisingly, it’s restaurants themselves who often do just that when they try to extend their brand to retail. Many restaurants want to be in the grocery space because they’ve seen how others such as Friday’s and California Pizza Kitchen have developed major footprints there (and earn hefty annual royalty checks). But retail lives in a different universe from running a restaurant, and is full of things like resets, slotting fees, promotional spends, bounce-back couponing and other pitfalls they often have limited experience with. Wrapping their arms around this new business (while also doing their own jobs) sometimes freezes a brand team like deer in headlights, or can slow the initiative down to the point where nothing happens in a timely fashion. While the right program can do well, most of the failures we’ve seen have been due to what airline crash investigators call “human error.” Or to use a sports analogy, it’s sometimes a case of management fumbling the ball, often on the goal line. Their program fails, in some cases having never even gotten out of the huddle.

I thought I would lay out some examples of “what not to do when trying to extend your brand to retail.”

#1 Let the experts do their job: I can’t tell you the number of times retail licensing experts are hired, then their advice is ignored by management. Sometimes it is because the licensing team is undercut by decisions made in the C-suite. And perhaps it’s just human nature where we all think we’re smarter than everyone else. Note to selves: if you hire an outside consultant or agency, let them earn their money.

#2 You Aren’t the Only Game in Town: Consumers are hungry, they need to shop for food, and they have a whole lot of options to choose from. While you may see the specialness of your brand, the consumer doesn’t usually have time to ponder brand specifics as they navigate supermarket or convenience store aisles. They’re looking to grab something familiar, special or on sale. And with more restaurant brands vying for space at retail, what are you doing to make yours stand out on the shelf?  With grocery stores, c-stores and even drug stores like Walgreen’s and CVS offering a gradually expanding selection of foods, your customers are often finding restaurant-like foods without even going to your restaurant. So if you plan on attracting them in the supermarket, convenience store or the new drug stores-on-steroids, you need to think about offering incentives to trial like bounce-back coupons, tie-ins with your restaurant marketing, and even tag lines on your TV or radio commercials. You can’t be passive.

#3 Know your consumers, both in your restaurants and at retail: Given the multitude of choices grocery consumers now have, you have only seconds to catch their attention and prompt them to pick up your brand’s food/beverage item and put it in their basket. If you’re known for great breakfasts, don’t blow it by trying to offer light snacks or sandwiches to start with. Franchisees worry items at retail will mean fewer visits to their restaurants. Never has, never will.

#4 Get Over Yourself: If you think your core menu signature items are too precious to be at retail, then you shouldn’t waste your time (or an agency’s) with a licensing program. Consumers know the difference between a frozen product and one served to them in a restaurant. They purchase the former for a specific meal occasion and convenience; a visit to a restaurant is an event in their lives. Keep in mind that most Americans eat 4-6 meals per day (including snacking), so if your definition of a “heavy user” to your restaurant is a customer who comes in twice a week, you’re only capturing a small fraction of the possible meal occasions.

#5 Stay the course: One of the biggest reasons restaurant licensing programs fail is what I call “licensing fatigue.” In the first few weeks and months, everyone inside the chain is excited and impatient for results. But remember that grocery stores were the only retailers who made money during the Great Recession. While not EVERY food retailer made money, enough of them did that they’re feeling pretty cocky. So convincing them to take yet another restaurant brand takes work, incentives (see #2 above), and patience. And while a restaurant executive can add or delete things from the chain’s menu in a matter of weeks, the retail food business moves much more slowly.

If you hire a qualified licensing agency or bring the right person in-house, you can avoid these mistakes. But keep #1 above firmly in your mind!

About the Author:

Bill Cross is Vice President of Restaurant and Food & Beverage Licensing at Broad Street Licensing Group. Check out his daily blog and follow him on Twitter @Bill_CrossBSLG.
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