5 Top Licensing Trends for Restaurant Brands at Retail: Which Chains Should be in Supermarkets Now?
August 11, 2014
Licensing restaurant brands into supermarket products is nothing new. Brands like Marie Callendar’s (in pies and frozen dinners), TGI Friday’s (in frozen appetizers) and Taco Bell (in chips and other Frito-Lay products) started filling grocery shelves almost 20 years ago. But it has heated up recently.
Whether deals that IMC has strategized and negotiated (like Rocky Mountain Chocolate Factory-branded cereals developed by Kellogg’s) and others (like PF Chang’s in frozen dinners) there are a host of recent deals that have led to hundreds of millions of dollars of sales at retail. Our big question: what brands will be next? What brands should be next?
There are dozens of successful national restaurant chains whose brands don’t yet appear in supermarkets. The old fear – that offering their brands at retail through licensing or co-packing arrangements would hurt their in-store sales – has no evidence to support it. In fact, selling restaurant-branded products at retail now appears to support same-store sales growth by increasing brand relevance and the role the brand plays in consumers’ lives.
In the search for big new opportunities, we recently conducted a survey within IMC’s Vibrant Nation community about what meals, dining options and brands are most sought-after by consumers today. The panel we surveyed, women 45+ who are either empty-nesters seeking to eat well while only cooking for 2 or mothers of boomerang kids who are feeding a newly full household that may include up to four generations from her own family, have strong opinions.
1. Fast-casual is where it’s at
The restaurant brands consumers most want to see at retail are all in the “fast-casual” sector, including chains like Panera and Chipotle. In fact, respondents preferred fast-casual chains almost twice as much as casual chains, brands like Friday’s and Bob Evans that have already filled the supermarket with their wares. Fast-casual should take advantage of this trend while it lasts.
2. Fast food is not
Survey respondents expressed almost no interest in seeing prepared foods from fast-food chains at retail. Fast-food may be an essential part of daily life, but eating it so often on the road has made it something no one wants to see at home. These chains should stay right where they are.
3. It’s time for Mediterranean
When we asked what type of restaurant cuisine consumers want to see in prepared foods, they chose Mediterranean by far as #1 (Italian came in second). Brands like Healthy Choice have worked hard to meet this desire with “Mediterranean-inspired” entrees. As they grow, Mediterranean chains like Zoe’s , Garbanzo, Roti and Little Greek should be developing strategies to meet this consumer need at retail.
4. Leggo the Eggos: Enough Breakfast, Already!
The frozen aisle in supermarkets is already full of prepared breakfast foods – so full of them, that consumers don’t want to see any more branded breakfast products in stores. When we asked what meal (or parts of meals) people wanted to see more of in prepared and packaged supermarket foods, respondents ranked entrees first, followed by appetizers as a distant second. Breakfast ranked last (after soups, seasonings and desserts).
5. Indulgence-Casual: What Consumers Want Most
Even while they rank healthy Mediterranean options as high on their wish list, at the end of the day consumers want food that makes them feel good, and the restaurant chains they want to see delivering supermarket options most are Panera Bread and the Cheesecake Factory, chains that offer healthy food but are best loved for delivering a satisfyingly heavy dose of carbs and sweets. At IMC we call this category the “Indulgence Casual” sector, and brands in this space would do well to meet consumer need with great products at retail.
There was a time when restaurant chains could grow by remaining hard-to-find. One of our colleagues used to drive 100 miles to Cincinnati to eat the Cheesecake Factory as often as she could. But just as Marie Callendar’s (and its famous pies) transformed itself from California’s regional secret to a national brand through successful supermarket distribution, chains that respond to these consumer trends could see meaningful retail sales and same-store sale growth (the goal of all restaurant chains) together.