MIAMI – Last week, Burger King inked a licensing agreement with ConAgra Foods Lamb Weston that will bring BK-branded French fries to Wal-Mart and other retailers, Marketing Daily reports. Increasingly, restaurants, including Starbucks, California Pizza Kitchen and Dunkin' Donuts, are partnering to produce branded products to retail.
Licensing deals has boosted restaurant brands and brought in more dollars. “Restaurant chains have traditionally feared licensing to retail because they worried that it would cannibalize profits and sales by encouraging consumers to eat at home rather than eat out, because it could upset franchisees, and because it might not end up being worth the effort, financially,” said Bill Cross, vice president of food licensing for Broad Street Licensing Group.
“But in these leaner times, restaurant chains are recognizing licensing as an excellent way to simultaneously generate new revenue and promote the brand,” said Cross. “They’re starting to understand that consumers view eating at home and eating out as very different occasions -- that offering them your brand for home consumption doesn’t dissuade them from visiting your restaurant. When people have decided to eat in, they’re going to buy frozen and packaged foods. The only question is whether they’re going to buy products with your brand name or someone else’s.”
Retail licensing has its own set of complications, namely that many products launch but few endure. A strong brand and the right retail partner can help make the venture a success.
“To succeed, there has to be strong buy-in on the part of the brand’s senior management, because brands can no longer just sit back and take in their royalties, even with a strong partner doing most of the heavy lifting,” said Cross. “Today, with retailers reducing SKUs, the brand has to be committed to supporting the retail effort.”