Let’s cut to the chase.
Licensing a brand name does what for your brand or your product?
It reaches new/different consumers: Licensing grabs moms in the supermarket vs. young, male “Super Fans” in Burger King’s restaurants.
Increases brand impressions: Vending machines are meal solutions in colleges, and increasingly replacing cafeterias in offices.
Creates platforms for cross-promotions: Starbucks gives out coupons in its cafés with cents-off their branded frappachinos and coffee ice cream sold in supermarkets.
Raises significant revenue: California Pizza Kitchen reaps nearly $10MM annually from its license with Nestle.
The challenge for restaurant brands transitioning to the grocery aisle is in understanding that the process takes experience and a special skill set. Who in your firm knows what is a fair royalty rate? What’s a fair allowance for slotting fees? What are slotting fees (hint: the rent grocery stores charge manufacturers to carry their products)? Should we let them sell our products in the dollar stores (actually, one of the fastest-growing food retail channels)?
Assuming that a few phone calls, perhaps to suppliers, will translate into successful retail products is just plain wrong. Few suppliers are interested in trading that predictable role for the uncertainty of the retail marketplace where even some food giants have stumbled. That’s why most chains either contract with a licensing agency or hire someone with licensing experience.
With so many brands trying to enter the retail grocery market, we can expect a shake-out, especially with supermarkets shifting their priority to store brands. Strong brands with solid, innovative products will still be powerful tools, for the quick-serve chain as well as for the manufacturer and the retailer. The result is a win for the grocery shopper.
Plan on stopping by our panel at the National Restaurant Show at Chicago’s McCormick Place Sunday, May 17th entitled “The Rise of Nontraditional Foodservice: Don’t Panic, Adapt!” Joining BSLG’s Bill Cross will be retail guru, Jimmy Matorin, whose restaurant industry breakfast on Saturday, May 16th is celebrating its 20th anniversary. Rounding out the panel will be Abbie Westra, Editor in Chief of Convenience Store Products.