The challenges faced by restaurants during COVID-19, especially those that do not have strong take-out, curbside, or delivery infrastructures in place, have been well-documented. Perhaps that is why there has been a flurry of announcements about new retail brand extensions—most often in the form of licensing deals—into the food and beverage category in the past few months. The frequency of agreements seems to have picked up of late after a hiatus earlier in the pandemic.
Branded foods in retail settings typically bring in only a tiny fraction of total revenue for restaurant brands, of course, and will likely not save any IP owner whose core business is really struggling. That said, the ancillary revenue from the retail-distributed foods, not to mention the brand exposure, is welcome.
Some examples of recent initiatives:
- Tony Roma’s master licensee for retail products, Ruprecht Company, signed a deal last week with American Trading International to bring Tony Roma’s branded barbecue sauces to international markets, starting with Asia. Broad Street Licensing Group represents Tony Roma’s for licensing.
- Pret A Manger announced an agreement with Tesco last month that brings frozen, bake-at-home croissants (plain butter, chocolate filled, and vegan) into 700 Tesco locations in the U.K. Croissants are top sellers for both the restaurant chain and Tesco. Other Pret A Manger-branded products are under consideration for distribution at Tesco as well.
- Sonic Drive-In and its agent Brand Central paired with Conagra and its Slim Jim brand in January for a meat snack inspired by the flavors of Sonic’s Chile Cheese Coney hot dog. The item joins other Sonic licensed products, including shelf-stable slush bars and pudding and gelatin mixes from Jelsert, frozen novelties from Ziegenfelder, and sports nutrition products from Ghost.
- On the Border Mexican Grill & Cantina announced an agreement in January with JRW, its South Korea-based franchisee for 13 restaurant locations, to serve as its exclusive retail licensee for chips, salsa, frozen meals, dips, and dressings in South Korea, Malaysia, Singapore, Indonesia, Thailand, and Vietnam.
- Patisserie Valerie, a bakery café chain in the U.K., paired with Sainsbury’s in November to distribute 14 top-selling Patisserie Valerie cake varieties, ranging from strawberry gateau and baked cheesecake to triple chocolate delight celebration cakes, at bakery counters in 250 of the grocery retailer’s locations. The partners previously paired for a similar deal in 12 bakeries in 2017. That relationship expanded to 70 stores in 2019 before ending later that year, after Valerie’s parent company went into administration (bankruptcy) and was purchased by a private equity firm.
- Cinnabon introduced its Frozen Breakfast Creations line in September, marking the first time it has extended its brand into savory products in the retail space. The product line, from Completely Fresh Foods, includes six items: cinnamon rolls, frosting-filled pastry, frosted swirls, a chicken sandwich, jalapeño cheddar sausage bites, and a cheddar sausage and egg sandwich.
In addition to the agreements outlined here, a number of restaurant chains have retained licensing agents in the past few months, signaling more deals ahead. Subway hired Broad Street Licensing as its representative for brand extension in a deal announced in January; Brand Central was named the agent for the Brazilian churrasco chain Fogo de Chão in December; and IMG took on licensing duties for Earl Enterprises, owner of Planet Hollywood, Bertucci’s, Bravo! Italian Kitchen, Brio Italian Grille, Buca de Beppo, and Earl of Sandwich, also in December.
Even though total revenues for restaurant-based licensed products tend to be dwarfed by other revenue streams, they can contribute to the IP owner’s financial health. They can also be lucrative for the licensee. When Lancaster Colony announced its second quarter results in February 2021, it attributed its 5.6% increase in consolidated net sales to a 19.5% increase in retail net sales, versus a decline of 9.7% in food service. It called out the retail performance of its restaurant-based licensed products, including Olive Garden dressings, Chick-fil-A sauces, and Buffalo Wild Wings sauces, as notable contributors to retail sales gains.
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