White Castle, Cinnabon, Your Pie: Travelers along the 'alternate revenue' stream
This is part one of a two part series looking at three brands at different stages of the retail product business.
Increasing worker demands for higher wages. Hair-thin margins. Customers who want the latest tech and the highest quality everything. We could go on, but clearly as a restaurateur you know all too well how hard it is to make it in this business on the restaurant customer alone, anymore.
That's why so many brands dip their names into alternate revenue streams, like retail and other out-of-the-dining room partnerships, to sell products of all kinds, which both bring in another source of cash, and get that brand name out in front of new customers in the places they shop.
To get a better grasp of how brands fare on their trip down these types of alternate revenue "streams" go, this website spoke with two large QSR concepts and one pizza brand, each at a different stage of the journey.
'Restaurant-brand sandwiches will never sell in the grocery channel'
White Castle, for instance, was a pioneer in restaurant-branded grocery products back in the 1980s when then-CEO Bill Ingram noticed a curious and widespread practice among many customers: They seemed to be hoarding huge orders of sliders. Ingram initially figured these customers were just frequent party hosts. Nope, the customers loaded down with all those bags-full of the little cardboard-boxed sandwiches instead had a date with what was then brand-new technology, according to White Castle Vice President Jamie Richardson. .
"When he asked if they were hosting a party or other special event, invariably customers shared, 'I keep these in the freezer, then re-heat them in a new appliance I just bought — a microwave oven!'
"Bill started exploring how White Castle might benefit from this emerging trend, and the White Castle Food Products Division was created. Today, this important part of the business represents over 20 percent of total company revenue, and has allowed this iconic brand to truly have a national presence coast to coast."
A better testament to the absolute gold mine in both the value of a little customer curiosity, as well as retail restaurant products may be hard to find. But to be fair, Richardson made the whole process sound a lot easier than it ultimately was to actually bring the first fast food sandwich to the grocery aisle. Back then, since nobody had done it, nobody saw any value in it. But Ingram had strength in his convictions, which proved to be a very good thing for the brand.
"When our visionary, Bill Ingram first thought we might encounter success in this space, he approached food manufacturers and offered to license our name so we could enter the market," Richardson said. "Each potential partner we approached declined - sometimes not so politely!
"The general feedback was, 'Restaurant brand sandwiches will never sell in the grocery channel.'
"Thank goodness Bill didn't listen to 'the experts' (and) instead, he assigned a team from White Castle and we built our own manufacturing capacity. Today, we have three dedicated manufacturing sites that crank out sandwiches to feed the craving masses morning, noon and night. ... (for) a significant presence in freezer aisles in grocery stores, club stores, discount stores, convenience stores and vending in all 50 states, with emphasis on ... "Original Slider" hamburgers, cheeseburgers, and jalapeno cheeseburgers.
"In addition, in 2018 (White Castle) also added chicken sandwiches, breakfast sandwiches, a veggie slider, black bean slider and desserts on a stick to its line-up."
The brand's trailblazing in this category laid the groundwork for many brands to come. One of those that has been extremely active and innovative in alternate revenue stream products is Cinnabon which seems almost to come out with new partnerships and retail products monthly.
A 'Focus' on outside retail channels at Cinnabon
The Focus Brands QSR concepts have products everywhere, within the fast food universe and beyond. Focus Brands Senior Vice President and President of Global Channels Dave Mikita told QSRweb that spinning off restaurant brand products is part of Focus Brands' DNA with all its concepts, which also include Auntie Anne's and Carvel, among others.
It all started more than 10 years ago with the first Cinnabon partnership.
"Our first meaningful partnership with the Cinnabon brand was with Pillsbury and their refrigerated dough cinnamon roll business," Mikita said in an interview with this website. "It was a perfect match. We were looking to provide our fans with greater access to the brand during an occasion when accessibility to our bakeries was limited — in this case, early morning at home — and Pillsbury was looking to add greater value and differentiation to their refrigerated dough cinnamon roll business.
"It was a natural fit. ... The partnership delivered great value to both brands, and continues to do so almost ten years after the original contract was signed."
And in Focus Brands' case, success breeds success across concept boundaries. For instance, Mikita said because of the success with that initial Cinnabon retail product Focus has attracted other quality partners, resulting in more products and presence for that brand, as well as others in the Focus family.
For instance, this Tuesday, Oct. 2, Cinnabon sister brand, Auntie Anne's pretzels announced it is launching a newly reformulated frozen retail product for groceries that customers can take and bake at home in the microwave, toaster oven or oven. The new line of pretzel dogs, pretzel nuggets, soft pretzels and pretzel pocket sandwiches is now available in nearly 20 major chains, including Target, Albertson's and Meijer.
"As our Global Channels licensing business has grown, we continue to add new and exciting partnerships, like we did this summer with Holiday Inn Express ... to create new success stories that have added new occasions for our fans to enjoy our signature Cinnabon flavors."
Your Pie steps into the 'stream'
And now even Your Pie is taking a turn at this retail product production with its very first foray into new product channels around a newly created bottled Ranch dipping sauce from the restaurant that is now being introduced in the brand's newer markets. They have great hopes for this initial product.
"Opportunities could be endless if this test proves positive," said Your Pie founder and President Drew French in an interview with QSRweb. "We already have a few other ideas in the works. Of course, the details and the process for scale need to be worked out, but we are already encouraged by the response from our customers so far."
But these types of alternative revenue streams are fraught with potentially lethal under-currents, as well as wicked twists and turns in the "stream's" path. On Friday, on this website, we'll talk to these brands about the challenges and lessons learned along their trips down these retail product ventures.
All but last photo: iStock
Final photo: Your Pie
Topics: Burger/Steak/BBQ, Chicken, Coffee/Bakery/Donut, Customer Service / Experience, Food & Beverage, Hot Products, Marketing, Marketing / Branding / Promotion, Research & Development / Innovation, Sandwich
Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.