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Cinnabon’s Co-Branding Strategy Provides Another Growth Vehicle for the Franchise (Q&A with Kat Cole, President of Cinnabon)

by Franchise Chatter on August 26, 2012

in Bakery Franchise, Franchise Chatter Exclusive, Q & A Interview

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Founded in Seattle in 1985 and now based in Atlanta, Cinnabon is the market leader among cinnamon roll bakeries. The company serves fresh, aromatic, oven-hot cinnamon rolls, as well as a variety of other baked goods and specialty beverages.

Cinnabon currently operates more than 900 franchised locations worldwide, primarily in high traffic venues such as shopping malls, airports, train stations, travel plazas, entertainment centers, and military establishments. Cinnabon is also a multi-channel licensor, partnering with other companies to provide brand licensed products at foodservice and retail venues.

I recently had the opportunity to interview Kat Cole, President of Cinnabon, about the company’s domestic operations and growth plans.

Prior to her role with FOCUS Brands at Cinnabon, Inc., Kat Cole was Vice President of Training and Development for Hooters of America, Inc., the international company that operates and franchises restaurants and manages the Hooters Brand Entities which generated approximately $1 billion in annual revenue. Outside of her role as Vice President of Hooters of America, Inc., Ms. Cole has been a strategic partner and on site facilitator for integration projects such as regional work on AT&T’s merger with BellSouth and Cingular Wireless.

Franchise Chatter (FC):  How are the Cinnabon stores doing in the United States? What are your plans for growing the brand domestically?

Kat Cole, President of Cinnabon

Kat Cole, President of Cinnabon

Kat Cole (KC):  We are having the best year in comp sales increases that we have had in a decade. We are evolving out of our lower volume locations, opening higher volume locations, and continuing to grow with Cinnabon Express (the micro bakery concept) inside of Schlotzsky’s and other foodservice operations. We are investing in operations and training teams to help our franchise partners drive organic growth and continue to elevate the level of operations in our flagship bakeries, which are at the heart of our brand.

The growth strategy for the brand is multi-channel. In order to build the value of the Cinnabon brand and meet unmet market demand, we are leveraging the power of our brand across multiple channels including franchising, food-service licensing, and consumer package goods in retail. Franchising and operating our flagship bakeries are at the heart of building our brand, and extending our proprietary ingredients and our brand into other channels continues to help us address unmet market demand across the country. The multi-channel growth strategy allows us to leverage marketing initiatives, obtain scale, and build the overall equity of the Cinnabon brand.

FC:  How is your co-branding strategy with other FOCUS Brands companies (like Schlotzsky’s and Carvel) coming along?

KC:  We have co-branded locations with all of the FOCUS Brands family, and they all provide strategic growth opportunities for our brand. Depending on the location, Cinnabon can be the lead brand (full bakery with a Carvel Express added in) or the added brand as a Cinnabon Express (i.e. at Schlotzsky’s or Moe’s Southwest Grill).

We can benefit franchise partners and FOCUS Brands by offering a portfolio of multi-branded combinations that provide a solution for large or higher priced real estate. Co-branding across our brands can strengthen unit level economics and allow our franchise partners to cover more day-parts, attract a more diverse consumer base, and be more competitive if they get in a bidding war over sites with other brands.

The fact that we have established criteria on how we co-brand within the FOCUS family and already know how to work together to support our multi-brand partners is a selling point for Cinnabon and FOCUS Brands. While we are still focused on growing our solo Cinnabon Bakery Café
locations, co-branding provides another growth vehicle that opens doors and expands our potential opportunities.

FC:  What is your strategy for developing new products at Cinnabon?

Cinnabon PhotoKC:  Our strategy for new product development is to stay true to who we are by building on our platform of “quality indulgence” and extending our brand credibility and attributes into products that expand the brand beyond the Classic Cinnamon Roll. Our research development and marketing teams keep the laser focus on core innovation areas like portability and portion size. They watch emerging food trends, factor in franchise partner needs and capabilities, and have goals to address forecasted cost of goods fluctuations in an attempt to allow us to market for margins.

After passing basic operations and consumer testing in our R&D Center, they may make it to our concept store, the newly opened Bakery Café in Atlanta, to be in a living lab, getting feedback from a diverse guest base and from operators in real-time. If there is a level of success there, we involve more locations in the test, gauge impact and overall performance, and make a decision on whether or not it can get placed into the pipeline to expand nationwide or to other bakeries around the world.

Innovation for the domestic bakeries also comes from the work we do in other channels and international markets. Innovation from the domestic bakeries may feed international innovation and international bakery innovation also feeds domestic products. In addition, all of the work we do in consumer package goods and the products we develop for other food service companies may become a new product in the pipeline for our franchise partners and bakery operations.

FC:  Which geographic regions and location types are typically the strongest for Cinnabon stores?

KC:  We are strong from coast to coast, although we’ve seen incredible growth lately in the Mid-Atlantic and Northeast. Our strongest locations are what most people call non-traditional: malls, airports, entertainment parks, casinos, and military establishments.

For more information, visit www.cinnabon.com, follow them on Twitter @Cinnabon, or become a Facebook fan at http://www.facebook.com/Cinnabon.

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