Despite mall malaise, Cinnabon rides sugar high
"It's a beloved brand that we're bringing relevance back to," says President Joe Guith about Cinnabon.
From his previous experience working at KFC and Coca-Cola, Cinnabon President Joe Guith gets fired up by the opportunity to revive a brand that isn’t performing up to its potential—this is his sweet spot.
Three years ago after joining the well known treat purveyor, Cinnabon was just starting to round the bend with comp sales increases and unit growth. Now, as its star continues rising with savvy media appearances, new products, continued sales growth and a beautiful new store design, Cinnabon is hitting a new sugar high even as its mall-based turf is battered in a multi-front war.
“It’s a beloved brand that we’re bringing relevance back to,” Guith said of the revival. “We’re packaging it up and delivering it to you in a way that’s more relevant, we’re creating a store that’s bigger and bolder and more updated, and it resonates with our guests and they want to come back.”
The CEO shared an experience at a store that’s located in a “B mall, at best” where he chatted with two women strolling through the mall at 7:30 on a weeknight. They were waiting in a line for cinnamon rolls that was five or six people deep, and they shared their intense enthusiasm for the newly refreshed location.
“When we show up, people just get pumped up,” he said about chatting with the two enthusiastic customers. “The core promise is that Cinnabon is the best, probably the most craveable item in food—the best cinnamon roll in the world has huge extensions both within our franchise and in our license business.”
Warming up the kitchen
Under the umbrella of Atlanta-based Focus Brands, which includes Auntie Anne’s, Carvel, McAlister’s Deli, Schlotzsky’s and others, Cinnabon has 837 U.S. units—248 of which are located in shopping malls. Of that total, approximately 30 are in the new store concept, which is a dramatic freshening of the previous restaurant design. Internationally, the brand has 588 bakeries in 55 countries.
Saying it’s been 15 years since big changes at Cinnabon, Guith said the new store template is a cross between a French patisserie and a home kitchen, the latter element intended to connect with younger consumers who may remember parents cooking Cinnabon-branded products in their homes for a dash of warm and fuzzy nostalgia.
Like many brands that have recently updated their stores, the new Cinnabon locations communicate a bolder personality with brighter colors, chic herringbone and patterned tile, warm wood tones and big, gooey cinnamon rolls front and center under a baker’s case that sits between tablet-enabled cashiers. Other in-store updates include a greater focus on merchandise sales, more digital technology and minimizing costs so Cinnabon 2.0 costs franchisees no more than the previous, dated design.
On the food side, the company’s newly expanded BonBites program took a regionalized product with middling success to a fully national product that’s been an enormous hit after the franchisor worked to lower the per-unit food costs following the limited product test. Guith said the Bites—which are priced as much as the larger, traditional rolls—have improved customer frequency and higher margins for its franchisees.
The company also turned its attention to premium beverages, which complement the existing product line, and resulted from intense tweaking to “pull out a lot of cost” for franchisees and customers alike.
The mall factor
Addressing the elephant in the room, Guith said “malls aren’t going away,” and said the brand will continue adding mall locations even as it pivots toward non-traditional locations including airports, transit stations and travel centers to reach travelers wherever they roam.
Even as he predicts that malls as a whole will face a significant “reconciliation of the footprint,” saying he could see 20 to 30 percent of American malls eventually closing, he still plans to ramp up from 250 in-mall locations up to 300 by the end of the year.
“There are hordes of A and B malls that we’re not in today,” he said. “There’s absolutely going to be a day of reckoning here. It will probably accelerate, but there will be centers that survive and we will be there.”
As he surveys the greater franchised food industry, Guith is particularly interested in Chick-fil-A, which he said shares some cultural similarities, including a focus on multi-unit franchisees who can build multiple units to saturate new markets.
According to its most recent franchise disclosure documents, Cinnabon’s initial investment ranges from $182,750 to $327,300. It does not publish financial performance representations, which typically include average unit volume estimates.
Guith isn’t worried about studies that say consumers want healthier foods. “You know what the hottest concepts are out there—it’s burgers, burritos, fries, pizza and donuts—none of these are remotely low calorie,” he said.
“What it’s telling us is people are being healthier, they’re being more conscious, but they also want to live and they still want to indulge. But when they do it, it damn well better be awesome.”