Plenty has been written about how restaurants have come up with innovative solutions to stay afloat during the COVID-19 crisis. One of the major narratives throughout the past year has been the triple-digit growth in off-premise business–whether through the drive-thru, delivery or takeout–providing consumers access to their favorite brands while dining rooms were closed.
Another off-premise access point for restaurant brands that has also grown at a staggering rate is retail, or consumer packaged goods. You can find everything from Krispy Kreme doughnuts to Starbucks
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Retail has been a good place to be for restaurant brands throughout this past year as consumers were forced to stay home and stock their pantries early on. Even restaurant-retail veterans like Focus Brands has experienced the momentum from the past year.
Focus Brands generates more than $1.9 billion in annual retail sales from more than 100 products across its seven brands–Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s Deli, Moe’s Southwest Grill and Schlotzky’s. Focus Brands’ Global Channels division, which manages this business, debuted several new retail products in the past 12 months for those stuck at home. Cinnabon alone added six new SKUs in Walmart, including its Cinnabon Frosted CinnaSweet Swirls and the Cinnabon CinnaBiscuit Chicken Sandwich.
Because of its extensive history in the CPG space and with its foodservice licensing deals, Focus Brands was uniquely positioned to continue driving sales throughout the past year even as its foodservice outlets were challenged. Cumulative sales for Cinnabon license products in 2020 were approximately $620 million, for example, marking a double-digit year-over-year growth for the brand.
“Our foodservice business slowing down allowed us to recalibrate our resources and push harder in our licensed channels. There was phenomenal demand as buying patterns shifted. Most retailers were trying to keep up with demand and we were able to take advantage of that growth in grocery,” said Dave Mikita, president of Global Channels.
This was particularly helpful to offset that slowed foodservice business. Focus Brands has a heavy shopping mall and airport presence, for instance–two areas hit particularly hard during the pandemic.
Historically, the company has generated 60% of its revenues from its retail channel, versus 40% from foodservice. Mikita said retail grew to an even higher percentage this year and was up almost double digits from the company’s goal in that channel.
“This has been the most business activity we’ve seen in grocery. That is interesting because in a lot of ways, retailers wanted to deliver what they had from their core business, but a lot of folks are now thinking about consumers going back to restaurants and they’re looking for new news in the [grocery] space to keep customers coming back,” he said.
Simultaneously, Focus Brands caught a lift from its partnerships with restaurant brands that were relatively insulated throughout this past year; brands like Pizza Hut, Sonic and Taco Bell. You can order Cinnabon Mini Rolls through Pizza Hut, while Sonic sells Cinnabon Cinnasnacks with cream cheese frosting and Taco Bell sells Cinnabon Delights.
“We expedited our partnerships with those brands to get our branded products, like Cinnabon Mini Rolls, to their customers dining at home,” Mikita said. “We are lucky to have integrated solutions with our partners. Taco Bell has been selling Cinnabon Delights for nine years and those products have historically worked well. There is a shared brand equity that delivers value for both companies and that worked well for us especially this year.”
That’s because Focus Brands’ consumer research shows that consumers craved a stronger interaction with familiar brands, like Taco Bell and Cinnabon, throughout the crisis. This research has been echoed by a number of sources, including the Harvard Business Review.
“In times of uncertainty, that comfort and familiarity is what they’re looking for,” Mikita said.
Though this year yielded “explosive” growth for Focus Brands’ CPG channels, he predicts the interest in this business will continue even as we return to some normalcy on the restaurant side. Restaurant brands have been growing into the retail channel for several years now, however this year proved its value beyond just building brand awareness outside of a brick-and-mortar setting.
Because of that anticipated growth, Focus Brands hopes to launch a consultancy business this year for outside restaurant companies looking to dive into the CPG space.
“We continue to grow, but we’re also getting calls from other companies that want to understand our process and get their ideas on the shelf. If you want to build a world-class brand, you have to be where the consumers are. Right now, everything is about multichannel brand-building,” Mikita said.
Focus Brands also plans to build on its own concepts by adding new occasions, such as delivery, and brick-and-mortar formats. There are also growth categories in grocery the company is pursuing, such as health and wellness with its Jamba banner.
Further, the company plans to ramp up its ecommerce presence to stay relevant with consumers. New research from the NPD Group shows that digital orders in the quick-service space grew by 111% from March 2020 to March 2021, meaning that’s where many of Focus’ customers are interacting with its brands.
“Our challenge is finding a way to do new things in grocery and ecommerce in a way that’s accretive and wouldn’t cannibalize the health of our core business. We want our two pieces of the business to be symbiotic,” Mikita said. “Our North Star for what’s next is the consumer. Where do they want to see us and where do we have the right to win? We think we have a creative license to cross-pollinate ideas and products and to innovate in both retail and restaurants.”