Yesterday we talked about restaurants who can’t see the value in using their retail products to co-market their brand. Today, we’ll finish up our series on “The Five Dumb Things Restaurants Do Going to Retail” with Part 5:
5.) Stick with your licensing program over the long haul: Restaurant time-frames are much faster than retail ones. A chain can launch a new product in weeks, because it’s a command & control structure. The CMO decides to put SPAM-covered broccoli tacos on the menu, the Head of Supply Chain is tasked with finding a vendor to provide them (or their components), and the restaurants are told to put them on the menu, promote them with the wait staff, and in general, shove it down the consumer’s throat.
Just kidding.
Retail is very different. Grocery chains do a “reset” periodically when they decide what products they’ll carry on their shelves. New items are invited in (at a price, called “slotting fees”), and under-performing ones are out (usually at some fee to the manufacturer if that company hopes to keep the shelf space for other products it plans on introducing). These resets used to be 2x a year, but increasingly, they’re down to just one. If you miss the April reset at the XYZ Market, you may have to wait until the following year to get onto their shelves.
Generally, launching a restaurant brand to retail can take anywhere from a 18 months to 2 years.
Yet the average lifespan of a restaurant CMO is about 8 months. Referring back to Dumb Thing #1, you’ll recall we said you MUST have buy-in among senior management for any licensing program. Yet time and again, we’ve seen a program fail because of a change in management. It’s called NIH (Not Invented Here).
Maybe the new guy or gal just wants to let everyone know there’s a new top dog.
Maybe they don’t understand licensing or are even opposed to it.
And sometimes Mr. New Guy doesn’t like Ms. Previous Administration and just wants to sabotage an initiative identified with her. Why make your predecessor look good, especially if the chain is struggling and you might be called on the carpet for non-performance?
So a program that potentially can bring in mufti-million dollar royalties to the brand is jeopardized by petty politics, ignorance or sometimes just indifference.
It’s enough to make a licensing agent buy a villa in Tuscany and grow roses. Why hire us, but then fail to listen to our advice?
In the end, licensing can’t save a doomed chain, nor can it make a dumb executive look smart. What licensing CAN do is make your restaurant a part of the changing food marketplace where its value, equity and performance will all determine its long-term survival.
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.
