Restaurants Find Their Way to Supermarket Aisles
By Tom Ryan
Starbucks Corp. in April
launched a new line of coffee-flavored ice cream in supermarkets. While
used largely in the past as a marketing tool, supermarket placement is
now being counted on as an additional revenue stream at a time when restaurant
traffic is down.
Indeed, many are putting
more marketing punch behind such efforts. Last month, Starbuck’s coffee-shop
patrons were handed coupons containing such grocery-store deals as $1 off
ice cream and $1 off 10-ounce packages of Starbucks brand coffee.
“If consumers are
coming in less frequently, they can still treat themselves at home,” Greg
Price, vice president of global consumer products at Starbucks, told The
Wall Street Journal.
Among other chains, Burger
King plans to sell Apple Fries, originally developed for its restaurant
kid meals, in 10,000 grocery stores nationwide this fall. California Pizza Kitchen
in March began shipping microwaveable Flatbread Melts sandwiches to supermarkets
through a licensing arrangement with Kraft Foods. Grocers have been selling
Dunkin’ Donuts coffee since 2007, Taco Bell hard tacos and beans since
1995, and White Castle burgers since 1987. For retailers, restaurant brands
offer immediate brand recognition.
“If people can save
a few dollars and save some time by eating at home, these types of familiar
brands… make it easier and more cost-effective,” Meghan Glynn, spokeswoman
Kroger, told the Journal.
The downside of these
deals, according to the Journal, is that new brands can confuse
consumers already bombarded by choices and many chains are trimming SKUs.
Many restaurant brands also carry higher-price tags than similar items.
But name recognition
can drive success. As the recession deepened, grocery sales of frozen California
Pizza Kitchen pizza increased 19.6 percent last year to $159 million. Kraft
pays California Pizza Kitchen an annual royalty, which last year amounted
to $6.6 million. While a faction of the chain’s overall revenues, it’s
all profit because Kraft covers R&D and advertising costs.
restaurant sales are down,” said California Pizza Kitchen co-chief
executive Rick Rosenfield.
“People are trading down
to supermarkets and we’re softening the blow by being there for them.”
Do you expect to see more restaurant brands on grocer’s shelves in the
future? Who benefits more – grocers or restaurants – from
restaurant brands reaching grocery shelves?