One way for niche restaurant operators to attract more traffic is to explore co-branding with another restaurant that has a complementary rather than competing menu. A recent series of articles in Fast Casual discussed the pros and cons of these arrangements. While the article focused on well-known quick serve restaurants, cobranding could work with small locally owned establishments as well.
Writing for Fast Casual, Cherryh Butler notes that the cobranding trend seems to be growing in the U.S. Cobranding and co-locating strategies allow a group of restaurants to effectively serve a larger group of consumers. For example, one person in a lunch party may want to enjoy a bagel at lunch while another person can pick up their salad at an adjoining shop. Multiple types of consumers can satisfy their meal cravings and the restaurants operators score new sales with these arrangements. Bruegger’s and Jamba Juice have opened co-branded units. And, some ice cream shops are taking the plunge by co-branding with coffee shops.
Analysts say the strategy works best when the logistics and marketing plans are thought out well in advance. Cobranding can also succeed when operators serve different day parts. If one of the restaurants typically draws a breakfast crowd and the other draws a lunch or dinner crowd, the owners get extended use out of the physical facility. This strategy should also be explored when seasonality is an issue.
With respect to marketing, some operators are careful to keep the funds in separate pools and to promote their brands separately. Unique identities are also maintained in the restaurants’ physical spaces. But other operators, especially if they own both brands, are mingling marketing funds. Each restaurant may promote discounts or coupons for the cobranded partner’s products.
What do you think of this arrangement? Will media companies be able to generate more revenue by trying to work a deal with two restaurant operators? Or will it be too complicated for the multiple parties to manage?