Article
QSRs fight for shoppers' dollars
Food court brands step up efforts to maintain market share in light of reduced retail traffic.
February 2, 2009
In general, quick-service restaurants have seen an uptick in sales as consumers have trended down from casual dining. But the decline in foot traffic in shopping malls has QSRs in those locations working harder to attract customers.
"(Foot traffic) is down," said Geoff Hill, president of Cinnabon, which has most of its 485 U.S. stores located in malls. "2008, primarily in the enclosed mall segment, was a tough year."
Sales at non-anchor tenant stores in U.S. malls fell by 11.3 percent in November compared to the same month the previous year, according to the latest data from the International Council of Shopping Centers' U.S. Mall Report.
ShopperTrak, which reports on retail trends, found last month that retailers should expect more declines this year. According to the company's Retail Traffic Index, total U.S. foot traffic could decline as sharply as 16.4 percent for the first quarter.
According to ICSC, year-over-year food court sales fell about 1 percent in the Northeast and West and rose about 1 percent in the Midwest and South for November, the last month for which data is available.
Same-store sales for Cinnabon's mall locations have been flat, Hill said, adding that those results are typical of other mall food stores. The fourth quarter was boosted by the brand's historical marketing of the holidays as Jollybon season.
"We held our own," Hill said. "It wasn't the best Jollybon season we've had, but we kind of fought through it and held our own throughout."
NexCen Brand's mall-based stores Pretelmaker, Pretzel Time and Great American Cookies also are holding their own, said NexCen president of franchise management, Chris Dull.
"Foot traffic might be a little lighter these days, but people are still treating themselves when they browse the malls," Dull said. "As a result, cookies and pretzels are proving themselves to be relatively recession-proof products."
Rebranding, value positioning
But QSR operators in malls are stepping up their marketing in order to maintain sales. Cinnabon, for example, is moving forward with a rebranding campaign, and brands like Pretzelmaker are focusing on local-store marketing.
"We certainly look at this (recession) as a blip, but we're also looking at the brand, looking at what's it going to look like five years from now, what happens eight years from now," Hill said.
Cinnabon's plans include introducing new brand messaging, redesigning its stores and emphasizing the brand's specialty beverage offerings. The new positioning statement, "Life needs frosting," will launch to consumers in March. The intent is to promote its indulgent offerings, like its signature cinnamon rolls, as a treat for any occasion, whether for celebrations or even a pick-me-up.
"Even though mall traffic is down, there are still a lot of people in the mall," Hill said. "We want to be in a position where they can come and experience that pick me up, that celebration, that hug that they might need that day."
Hill said the store redesign will launch later this year and "change the look completely of our bakeries." The new design also will draw attention to the brand's Chillata blended drinks and its coffee.
Additionally, the company plans several product developments over the next two years, including items that tie into consumers' search for value. One new product that was successful over the past holiday season was a rollout of Cinnabon Bites, four-packs of bite-sized classic or pecan rolls.
More smaller-portioned items are likely to roll out later this year, Hill said, as the brand focuses on debuting products that have a lower price point but maintain the company's emphasis on quality.
"We're not going to give up our quality heritage," he said. "We're going to offer value, saying to people, 'Spend two to three dollars on a snack and get the world's best fix,' if you will."
Team effort, local marketing
With Cinnabon and NexCen chains all franchisee owned, operators are getting creative as they try to draw shoppers to dine at their stores. Jeremy Roy, a Humble, Texas, NexCen franchisee with one Pretzelmaker store and 10 Great American Cookies stores, has focused on differentiating his concepts.
One initiative is what Roy calls an "aggressive bonus plan" for Great American Cookies managers and employees. The plan emphasizes teamwork and customer service.
In addition to monthly store bonuses for increasing sales over the previous year, the new bonus plan teams high-volume stores with low-volume ones. The team with the highest percentage increase in cookie cakes sold over the previous years is rewarded.
"This encourages the manager of the high-volume store to work with the managers of lower-volume stores to maximize their cookie cake increases," Roy said.
Managers also are responsible for coming up with a local-store marketing idea for their store. Roy said his stores do advertise on TV and radio, but local efforts, from using the brand's Cookie Man mascot in the mall to sponsoring summer reading programs, are usually more effective.
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Roy's stores also are going to launch a so-called Happy Hour between 2 p.m. and 4 p.m., with specially priced offerings rotating on a daily basis. Some deals include $1 soft drinks or buy-one-get-one-free offers.
In addition, the stores are also increasing their focus on customer service, a particularly important component during the economic downturn.
"I strongly believe that the differentiating factor in where consumers spend their money will be how they are treated and appreciated as customers," he said.
