Benefits Of Co-Branding
A franchisor explains why companies are putting two brands under the same roof.
Driving the streets of any city, it's hard to ignore co-branding's enormous presence. McDonald's locations exist within Wal-Marts. Baskin-Robbins, Dunkin' Donuts and Togos live happily under one roof.
Where does the idea to co-brand come from? Why are more franchises doing it?
For Yorkshire Global Restaurants, the franchisor of A&W and Long John Silver's restaurants, the idea came about three years ago, when a KFC franchisee in Butte, Montana, approached the company about co-branding his location with A&W. The pairing was so successful that last spring KFC and A&W announced plans to open 300 co-branded restaurants over the next five years. Yorkshire also co-brands A&W with its own Long John Silver's.
To learn more about the whys and hows of co-branding, we spoke with Sid Feltenstein, CEO of Yorkshire, and discovered what makes these pairings such an appetizing proposition.
Franchise Zone:Why did you decide to co-brand A&W with KFC?
Sid Feltenstein: We thought it was a good complement-KFC is more dinner, we're more lunch, so it would extend KFC's day part. The hamburger category is a category they wanted to be in, and they wanted to do it with a branded concept like ours, so it made sense from that viewpoint. And it's worked out very well.
Why did you decide to co-brand Long John Silver's and A&W?
For a lot of the same reasons. We felt A&W would be a great addition to Long John Silver's and would give it a brand within a category where consumption patterns generate higher visit frequency, and they were complementary day parts.
What do you consider to be the benefits of co-branding?
Basically, you can generate a significant increase in sales, and a lot of those increased sales can flow to the bottom line if you're able to bring a customer in more often or appeal to more customers by having two well-known brands under one roof. You're expanding the potential customer base you can attract.
What were the initial steps to get this off the gound? How did the idea come up?
It varies. When we bought Long John Silver's, it was with that idea in mind. We knew what we wanted to do, and since we owned the company, we could just go ahead and do it. Today we're approached all the time by companies that want to co-brand with both A&W and Long John Silver's. They've proven to be very valuable co-branded partners.
What is it about your brands that make them so desirable?
They're well-known brands. A&W is in the hamburger category, where 50 cents of every quick-service dollar is spent, and has tremendous brand awareness and tremendous brand equity. But on the other hand, we don't have the large penetration, the large store numbers that other players have, so people can develop a program with us and have all the advantages of a large brand.
Long John Silver's is a great dinner concept, a great concept that dominates its category. And it's a popular product-fish consumption is growing. People see us as a very valued partner due to those reasons.
What To Look For
Franchise Zone:What would make a company a desirable co-branding opportunity for you?
Sid Feltenstein: If we felt they were good operators, could execute our brand properly, would uphold our standards, had the potential to be profitable and make money-and if they were complementary day parts.
When you co-brand two concepts, as you did with A&W and KFC, what kinds of demands can you make for your restaurant?
"Demands" is probably the wrong word. It's important that the brand is portrayed properly, both on the exterior and interior of the store. You want equal signage and to have your brand image in terms of furniture, decor package and point-of-sale materials. You don't want this to look like a line extension; you want it to look like two equal brands under one roof. The consumer needs to believe this is the true representation of the brand, not just a new product, so you have to be willing to split the signage 50-50 on the exterior, to really display the brand, and preserve each brand's clarity on the interior to be sure the consumer sees it that way. That's very important to us.
What advice would you give to entrepreneurs who've been approached by somebody to co-brand? What kinds of things should they be looking for?
You have to make sure the company [approaching you] is willing to make the appropriate investment in its facility to represent the brand properly. Also, make sure it's a company with a history of operating its businesses well. And look for a philosophical compatibility between the management of both companies, because you have to work very closely, so you have to believe in the same things and get along.
What if somebody was looking for a company to bring in, as opposed to being matched up with somebody else?
Same thing. You want to be sure you're philosophically in sync in terms of how you approach the business. See whether the company you're bringing in has a lot of consumer awareness, complements what you're doing and can add value to your brand.
How does a company judge whether a co-branding relationship has been successful?
If it's profitable. In our case, we consider ourselves successful when we're making money from the investment, and, if we franchise our brand to someone else, that they're making money as well.
Yorkshire Global Restaurants