To brand or not to brand—and if so, precisely how. Those are the questions facing concession operators in stadiums, theaters, convention centers, fairs, zoos, airports and elsewhere.
Foodservice branding is a part of our lives in many different ways. According to FoodService Director magazine, the market for branded concepts in all nontraditional sites is expected to hit $7 billion this year and grow at least 10 percent annually through 2002.
The pluses and minuses of fast-food branding are by now well known: brand recognition, a proven track record, quality assurance and confidence, recipe development, promotion, advertising, training and technical support and local pride (for regional brands) on the one side and possible consumer burnout, market saturation, potentially higher prices, and a plethora of franchisee/licensee guidelines, clauses and stipulations and costs on the other.
Branding’s other incarnation involves manufacturers’ products—the Oscar Meyer hot dogs, Pepsi Colas and Starbucks coffees of the world. The minuses are harder to see here, with product familiarity the overwhelming plus, according to many.
Branding picked up speed in the 1980s, as concessionaires saw they could leverage brand equity. The rudiments are as basic as the business itself. Deals can work in a variety of ways: branded fast feeders or franchisees can run their own operations for a percentage of sales, or contractors or venues can franchise or license the concepts. Bringing the chain operation inside obviates the need for staffing, training, equipment and operations expertise. It also brings less revenue, and so the trade-off is something operators must study closely. Consistency is important, and so fast-food franchisors will insist on rigorous systems and controls, both of which will be the subject of frequent inspections.
Going with regional brands lends a familiarity to a foodservice operation. Airports, in particular, are moving increasingly in the direction of regional brands in order to give travelers a "taste" of the town they’re passing through. Menus are more finely tuned to local tastes, and promotions, though not national in scope, can nonetheless prove potent. Regional brands probably also ask a lower payment (percentage of sales or franchise/license fee) from venues.
Not Quite by Leaps and Bounds
"I think [branding is] still at the point of being promising in the concession arena," says Gary Horvath, a partner in the year-old consulting firm of Leisure & Recreation Consulting in Bethel, CT. "The ones that are better in the recreation service venues have been successful, and it’s worked out for both sides, the contractor and the branded concept. One thing the contractors also have found is that sometimes there are regional or local brands that can be very successful, too."
Horvath, who formerly served as a senior vice president with Service America, says well-known national brands do the best in sales. "The quality image that the brands have has gone a long way to stimulate sales. People know what they’re going to get at a McDonald’s or Burger King, and in whatever venue they’re in, they at least know what they’re getting."
Proprietary brands (those brands that a venue or operator develops inhouse) have proven "somewhat successful," he notes, "but not quite the same as a national brand or a strong local brand. It’s difficult to establish that product so that the customer can recognize the brand name. They’re not on television or the radio every 10 minutes."
Still, Horvath believes there has been "some success" in offering branded manufacturer’s products. Consumers are "very comfortable with those products because they see them at the grocery store and they know if it’s a good quality product. I think there is a perception of quality with those brands."
Interestingly, Horvath believes the industry will see more and more major branded companies "trying to get involved in the contractor side of the business. McDonald’s has made some efforts to get involved in some major stadiums." They already operate foodservice in Toronto’s Sky Dome, home of baseball’s Blue Jays. "They stumbled the first few years they got involved in it, but they seem to be doing okay now."
The prognosis for branding then, according to Horvath, is positive, though somewhat more restrained than in its halcyon days. "I don’t see it growing any more in leaps and bounds, but it certainly has its place in the recreation marketplace. We’re seeing more and more of it now on the amusement park side than in the stadium/arena side."
Wealth of Resources
"I feel that just like always, in the past, the branded products most often are better sellers," says Marshall Stone, vice president of operations/concessions for Metropolitan Theatres in California. "They are better products in general. Now, as far as the situations with Taco Bell, [for example] and I really don’t think that is a part of the future. I think it’s part of a fad." Metropolitan Theatres operates close to 50 theaters in California, primarily in Santa Barbara, Los Angeles and Palm Springs.
The big-name consumer products companies also bring a wealth of resources to the table in exchange for using their brands, as Stone points out. "They are coming up with all kinds of different toppings for hot dogs, for example. Coca Cola always is coming up with new products of some kind, be it an orange or experimenting with their light colas and things like that."
In addition, he notes, facilities can take advantage of their major promotions. "With advertising and publicity for their products it’s automatic. We tie in with their national promotions. When Pepsi has some kind of promotion going we tie right into it. The people automatically see it on TV. They automatically think of it when they come into the theater. When you spend $100 million advertising a promotion, it’s got to be noticed by somebody."
Name recognition makes a vast difference, according to Stone. "People walk into the theater and say, ‘Can I have a Coke?’ It’s automatic. I think if you say, ‘No, we only have an off brand’ it might harm your sales."
Branding: Visibility & Panache for Venue
Jack Leonard, a former vice president of marketing for General Cinema who continues to consult with them on international business, sees branding expanding. Starbucks, the leader in the coffee category, is being followed into recreational venues by national packaged brands like Maxwell House. He feels such entries will bring consumers to the category.
"For example, I think Joe’s Coffee Cafe does not have enough panache in a movie theater lobby to attract people to the lobby. You need something, whether it be Starbucks or whatever it is. Starbucks sells cappuccinos and espressos. Even though it’s a very small percentage of sales, that adds to the panache."
As for branded fast feeders, he sees pizza (most notably, thus far, Papa Gino and Pizzeria Uno) as a major growth vehicle because of its simplicity of preparation and ease of handling. Fried chicken, on the other hand, will not grow for the very same reasons.
"What will happen is that as theaters build to incorporate these branded products in their configurations, you’ll get more variety, like hamburgers. But it’s very tough to redo an existing theater with foodservice equipment," concludes Leonard.
‘Work In Progress’
"We buy branded products and wherever it’s appropriate we will make it known to the customer," says Maria Angles, director of concessions for Cinemark USA based in Texas. "One of the ways we’re doing it—and it’s kind of a work in progress—is to brand identify on the menu boards, and on the back of our drink towers."
The drink towers have been ongoing for a while, she notes, but the menu boards will be a first for the company. "We’ve redone all of our food photography and we’re meeting with the agency now to drop in some logos and rework the whole menu board to incorporate some branding on there."
The company currently works with such product brands as Coca-Cola, Oscar Meyer, FritoLay and Ricos. "We’ll probably use some of the candy brands, too, like Nestle’s and Hershey," says Angles.
Angles says it is "important to remember that in the theater environment customers have kind of a preconceived notion that they’re going to get gouged. It helps on our side to be able to offer branded product in lieu of a generic. As long as we’re asking the sky-high prices it makes more sense. If you’re getting an Oscar Meyer hotdog versus Brand X, at least know that you’re getting an all-beef product."
Cinemark USA, which operates 174 theaters in the U.S. and 34 internationally, offers "a little bit of an expanded foodservice area," says Angles, "but it’s not a national branded concept." The proprietary concept the company has used, Mama Rugi, has been changed to one called Studio Eats. The concept can include anything from pizza, sandwiches, fried foods and desserts to coffee and ice cream.
Choosing Local, Themed Brands
Local and/or thematic appeal appears to be getting stronger when it comes to branded concepts. Examples abound:
At Minneapolis/St. Paul Intl. Airport, for example, contractor Host Marriott Services has gone out of its way to give flyers a taste of the region. In addition to locally owned concepts such as D’Amico & Sons, Calhoun’s, La Salsa and the Twin City Brew Pub, a specially developed proprietary concept called the Light House Bar & Grill incorporates design features that are synonymous with the state of Minnesota. Decor touches range from the backdrop of a light house in Duluth that sits on the north shore of Lake Superior with iron ore ships in the background to grain silos that have been cut open and converted into a seating area. Together, they create an ambience that gives patrons a northwoods feel.
The Mark of the Quad Cities, located on the banks of the Mississippi River in Moline, Ill., draws from the Quad Cities area (Moline and Rock Island, Ill., and Davenport and Bettendorf, Iowa). Branded items include Blimpie’s Sandwiches and a pair of local concepts, Whitey’s Ice Cream and Happy Joe’s Pizza. Whitey’s and Joe’s each notched sales of about $100,000 last year. Contractor Ogden Entertainment Services’ proprietary branded concessions include Rio’s Taco Stand, offering tacos, burritos, and chimichangas; and Spyros, serving gyros, Italian beef sandwiches, and Cajun sausage sandwiches.
At the $100-million-plus California Speedway in Fontana, Calif., contractor Sportservice Corp., a wholly-owned subsidiary of Buffalo, NY-based Delaware North, has themed its concessions to appeal to racing fans. They include Super Track Speedway (4 stations), Smokin’ BBQ and Grill (2), Fast Lane Express (1), Racing Classic Express (1), and Pizza and Deli Express (2). The facility has 11 permanent concession stands selling regional favorites, including gourmet pizzas, California chicken breast sandwich, Caesar salad with grilled chicken, a smoked tuna deli sandwich, BBQ beef ribs and chicken, and over-stuffed deli sandwiches. A local operator called Julio’s will also supply pizza, calzones, and buckets of pasta.
Keeping Branding Inhouse
"I think we’re going to see more inhouse brands," predicts Bruce Turner, national director of development for concessions and arena management for Sodexho/Marriott Services, based in Washington, D.C.
"Some of the uniqueness of the national brands has worn off their ability to produce for the venue and for the concessionaire. They have, over time, been diminished by cutting the pie into too many pieces. The concessionaires have also determined it is a worthwhile venture to get into their own brand of pizza or yogurt, making brand images available for the patrons."
To those who suggest that proprietary brands are less effective than their nationally known counterparts, Turner responds that "less effective has two meanings. In generating revenues for the venue, and control of the venue to meet the needs of the individual marketplace, the inhouse brands have more flexibility. They also, in most cases, have a greater return to the venue. So when we start talking dollars and cents, the inhouse brands make far more sense.
Turner views the national brands as "the vehicle by which, originally, we could test variety and new items. Now we’ve found that some of them have worked and others have not worked at all. For example, Taco Bell has fared miserably in the arena marketing area simply because of the lack of speed inherent in the production of the product and the lack of holding time."
Coke, Pepsi Or...
A local, regional or small branded soda program, says consultant Arlene Spiegel, FCSI, president of Hollis Hills, NY-based Market Discoveries Inc., "cannot compare to what Coke and Pepsi can offer an operator. The beauty of going with a Coca-Cola or a Pepsi is that the smallest [venue] on a side street in Anywhere, USA, can still have the benefit of the relationship that a 2,000-unit chain would have. So they’re also helping you be competitive in your marketplace."
Operators who are loyal to a particular brand and concentrate on building that relationship "benefit from lots of marketing support and customer service benefits that they wouldn’t otherwise get," says Spiegel.
"I believe that an operator cannot go wrong—although he should be careful, and certainly exercise due diligence in getting his best option—going with a Coca-Cola or Pepsi. It has to be the best thing to do for an operator because they’ve already spent so much money on brand awareness. There’s also a level of credibility when an operator can capitalize on such a strong brand. And these are companies that will help you with table tents and with their customer service by offering t-shirts, hats, buttons, and helping them participate with staff and customers in a more meaningful way."
No Fan of Branding
Branding "definitely has a place," notes Randy McCann, senior vice president of foodservice at Universal Studios Florida. However, he feels it is going to "slow way down. It’s just like anything else, I think. As you well know if you have kids, it only goes so far. I think people of a more mature taste want to try new and different things."
Several other parks have gone with branded fast food, says McCann, "but they’ve done it for other reasons. They’ve done it because they couldn’t properly staff or properly run their own units. They have an opportunity."
Universal Studios maintains just three nationally recognized brands: Frito Lay, Pepsi Cola, and Haagen Dazs. "Everything else could be internally branded. We use a lot of great products. We choose them because we want the best quality."
McCann calls branding one of his "hot buttons. I’m just not a big fan of branding. I just don’t think it brings much to the table." While a branded product. like hotdogs, may bring higher sales, he concedes, "You always pay more for that branded hotdog, too."
National Branding ‘Overrated’?
Sodexho/Marriott has done literally thousands of surveys on branding, says Turner, and guests’ list of priorities when dining in recreational venues is topped by speed of service. Number two is convenience, followed by quality, taste, and price. Brand name, the research shows, doesn’t show up until number six. What this tells executives, he points out, is that "brand name didn’t make anybody buy. So if it was pizza, they wanted pizza that was fast, tasty and convenient. Whether it was Pizza Hut or inhouse, you could correlate that it really doesn’t matter."
Turner says he feels national branding is "very overrated. Taco Bell has now gotten into grocery stores and gas stations. It is so over-franchised, that brand in particular, and even some of the Pizza Huts and McDonald’s in gas stations. They have diluted themselves to the point where they aren’t special anymore."
Price can be another reason that big brand names can fail, he adds. "Their product sells on the street for $1.89 and then they come to the stadium or arena and they want to sell it for $3.50 or $4.50. Automatically there is a value perception that is negative between the venue and price and the community price. I think that’s been a little hard for them to overcome, as well."
The bottom line is that branding in all its permutations—fast food, manufactured product, national, regional, proprietary—has become an America way of life.