June 15, 2011
By Nancy Bailey, MediaPost
Restaurant brand licensing is not a new phenomenon. For years, casual dining and quick service brands such as T.G.I. Friday's, Taco Bell and Boston Market have been staking out space in grocery store freezers in an effort to increase consumer touch points and create new revenue streams.
While these brands have shown no indication that they're giving up their supermarket claim anytime soon, they are starting to get a bit squeezed on those shelves as more restaurant brands throughout the restaurant industry, driven by a convergence of economic and lifestyle trends, increasingly try to hone in on the store action.
From casual dining to mid-tier, fine dining and regional restaurant brands, the benefits of entering the grocery aisle are becoming more pronounced for a broader array of restaurant brands than ever before. People care more about the quality, taste and sophistication of their food than in the past, but many of them, time-strapped and dollar-conscious, are avoiding the restaurants that feature specialty or gourmet cuisines in favor of more accessible options.
That is translating into a huge opportunity for new restaurant brands. Brands that can effectively exhibit quality, freshness and epicurean sensibilities help streamline the decision making process for consumers. Brand guidance, particularly from those that have established themselves as authorities within their category, creates a certain level of ease for consumers. In fact, there is a ground swell with grocery retailers asking major food companies to provide them with restaurant branded products.
Furthermore, fine dining establishments and niche restaurant brands can continue their regional and categorical momentum into the grocery aisle through brand licensing -- as a "toe-in-the-water" approach to expansion. As consumer restaurant spending takes on a barbell effect, with most of the spending happening at quick-service restaurants and fine dining establishments, there are opportunities for higher-end establishments to follow casual dining restaurants into the grocery aisles as a way to increase their presence and extend their foothold.
The lasting effects of the recession on consumer habits, directly resulting in increased in-home dining occasions as both everyday occurrences and for entertainment purposes, have been a catalyst for restaurant brands across all categories to seize opportunities to enter the aisles and, ultimately, consumers' homes.
As private label products and some lower-tiered grocery brands continue to compete on price, brands that can communicate quality, freshness and the gourmet experience of dining with white linen napkins and forks of varying sizes, will represent the next wave of food licensing. Expect fine dining brands to follow the likes of Rosa Mexicano, Smith & Wollensky's, and The Palm to fill a void for convenient grocery options that not only impress guests and excite the palate, but most importantly, don't completely empty the change purse. Much as celebrity chefs who have given consumers exposure and access to cuisine of epicurean pedigrees, fine dining establishments have contributed to their refined palates. By taking a page from Giada's, Bobby's and Emeril's respective and proverbial "cookbooks," fine dining restaurants will also rush to the grocery aisle, hoping for an invitation to the next dinner party. The demand for quality and the need for convenience will allow trusted brands to succeed on the shelf.
While extension before expansion may sound like a cart-before-the-horse concept, it is a highly effective strategy for the restaurant business. Regional niche restaurant brands like Peter Luger's and the aforementioned Rosa Mexicano can use brand extension to accomplish dual objectives. From an expansion standpoint, extension into the aisles allows these brands to create national brand awareness through food licensing with lower cost of entry to the supermarket shelves than the commitment of physical expansion. Expect others to mirror this strategy as a means to test new markets, create supplemental revenue streams and gain introduction to new customers who did not previously have access to their brand experience.
As Yogi Berra famously said, "Nobody goes there anymore. It's too crowded." The grocery aisles and the freezer sections are chock-full of new brands and, subsequently, new competition. As the aisles also become crowded with shopping carts, the opportunity for new participants in this market will continue to manifest itself. As long as restaurant brands from all tiers continue to extend their most valued characteristics and realize that grocery products are for a different occasion that does not cannibalize their core business by making it unnecessary for consumers to visit their restaurants, the potential for success at checkout is very likely.