From Cinnabon to Carvel: How GoTo Foods is Driving Global Growth

[00:00:06] You're listening to Retail Disrupted, a podcast that explores the latest industry developments and the trends that will shape how we shop in the future. I'm your host, Natalie Berg.

[00:00:30] On today's episode, I'm speaking to Dave Makeda, who is the president of international and retail channels at GoToFoods.

[00:00:38] Formerly known as Focus Brands, GoToFoods is the second largest food and beverage licensor in the world, with over one and a half billion dollars in revenue globally.

[00:00:47] Its international franchise business includes over 2,000 franchise locations operating in 60 plus countries.

[00:00:55] Dave has been a GoToFoods since 2012, and before that he held leadership roles at the Coca-Cola Company, the Home Depot, and several early stage high growth businesses.

[00:01:06] Dave has over 20 years of experience in operations, marketing, and business development in both retail and food service industries.

[00:01:15] He received his undergraduate degree in industrial engineering from Penn State and his MBA from the University of Virginia.

[00:01:23] And in case you haven't clocked it yet based on his current and previous employers, Dave is based in Atlanta, where he lives with his wife and three children.

[00:01:32] Dave, it is a pleasure to have you here. Welcome to the podcast.

[00:01:37] Well, thank you so much. I'm excited to be here.

[00:01:39] Likewise, I am really looking forward to our conversation and learning more about GoToFoods and your strategy and also the trends that you're seeing in the food and beverage space.

[00:01:48] For sure.

[00:01:49] So let's start out with some introductions.

[00:01:51] You have seven iconic brands in your portfolio.

[00:01:55] They're the franchisers of over 6,000 restaurants, cafes, ice cream shops, and bakeries.

[00:02:01] Tell us a little bit more about the business, about your brands, and also about the market that you're serving.

[00:02:07] For sure. So GoToFoods, as you said, is a portfolio of seven iconic brands.

[00:02:14] We have restaurant brands, Schlotzky's, Moe's, and McAllister's.

[00:02:18] And then we have snack brands, Jamba Juice, Cinnabon, Antients, and Carvel.

[00:02:22] And we're able to serve a bunch of consumer needs states through those brands.

[00:02:27] To the point you made earlier in the introduction, approximately 4,500 of those locations are in the United States.

[00:02:34] And then we have over 2,000 plus locations internationally through a franchise model.

[00:02:38] Franchisees are the center of our, the core of our ecosystem.

[00:02:42] But yeah, so that's the company. We're a portfolio company.

[00:02:46] And then we have a platform that sits below that, that provides all of our shared services, accounting and digital and things of that nature.

[00:02:54] But yeah, and our goal is to continue to grow either organically and through acquisitions.

[00:02:59] So we're at seven now. We may not end at seven, but you know, every year we open more locations.

[00:03:04] Great. And I want to come back to international in a little bit, but I guess if we could just pick up a little bit more on how it works from the franchising aspect of the business model.

[00:03:16] Because I'm conscious a lot of our listeners will have a retail background, but franchising is, of course, a lot more prevalent in the QSR sector.

[00:03:24] So I think there's probably some interesting learnings that we can explore there.

[00:03:27] Now, I would guess that the big benefit for a franchisee would be buying power, but also, I guess, that initial support to get the brand up and running.

[00:03:36] Sure.

[00:03:36] However, I am definitely not the expert here. So I'm going to hand it over to you, Dave.

[00:03:40] What are the main benefits for a franchisee?

[00:03:42] No. And I love franchising, right? Because at the end of the day, it's all about helping entrepreneurs create a business in a more risk-free setting.

[00:03:52] Right. So as a franchisor, what we do is provide a playbook and kind of a scaffolding we wrap around their business for the life of the business.

[00:04:00] So obviously, when they come to GoToFoods, they're like one of our brands. They want to be part of the family and build a business on their own.

[00:04:07] We help them with all the things you mentioned, site selection, where do you help set your location, look at consumers.

[00:04:15] We help them set up an infrastructure supply chain, all of those things.

[00:04:18] But then once they're up and running, we have dedicated teams here in Atlanta and actually throughout the globe that help them year in and year out continue to run that business, whether it's coaching on new products, menu innovation,

[00:04:31] bringing new products in via supply chain, helping them understand their consumers.

[00:04:36] Again, they're buying a playbook, but it's not static.

[00:04:39] As consumers change, we change our approach to help them and ultimately make them more successful.

[00:04:44] You know, I think you can start a business on your own and kind of it's a make or buy decision.

[00:04:48] I could do it all on my own or I could have somebody help partner.

[00:04:51] That's what the franchise model does. But I love it because it's heart and soul.

[00:04:55] It's fostering entrepreneurism, which is fantastic.

[00:04:58] And again, we do that domestically and internationally.

[00:05:00] Now, for most of our domestic franchisees, they're smaller in nature and then we help them grow.

[00:05:07] We have some that have, you know, 100 locations, but a lot of our franchisees have five, 10, 15 locations.

[00:05:12] When you look to our international model, most of our partners internationally are running countries.

[00:05:18] So, for example, our partner in Saudi Arabia runs over 200 Cinnabons, a handful of Jamba juices and, you know, they are a large conglomerate.

[00:05:27] So slightly different partnerships, but it's the same business model.

[00:05:32] It's that scaffolding that allows them to be successful.

[00:05:34] We're going to come back to your business model.

[00:05:37] We're going to come back to strategy.

[00:05:38] But first, I wanted to get your take on the QSR landscape more generally.

[00:05:42] And I wanted to do this pretty early on in our conversation because, again, a lot of our listeners will be more retail focused.

[00:05:48] And I think there's probably a lot of crossover here with things like technology, automation, health and wellness, value, sustainability, etc.

[00:05:57] So, Dave, what would you say is keeping the industry up at night?

[00:06:02] What are the big trends or the sources of disruption that you're seeing in the industry?

[00:06:07] Well, I mean, I think job one is traffic and keeping traffic coming into your locations.

[00:06:12] You know, anybody, we're all consumers.

[00:06:14] We all drive down the street and any given day you're going to see a new restaurant pop up.

[00:06:19] Some will be franchised.

[00:06:20] Some will be, you know, just sole proprietorships, somebody who has a cool idea for a chicken shop.

[00:06:26] At the end of the day, it's our job and what keeps us awake at night is making sure that our franchise partners, because again, to my earlier point, they've partnered with us to help downside risk mitigation and to grow.

[00:06:38] Keeping them informed on consumer trends, new innovations, what they need to do to keep feet coming in their shop on a regular basis, coaching them on operational efficiency.

[00:06:48] Everything from how do we want to handle greeting a guest to finding, you know, the best mix of products for a given area.

[00:06:56] Making sure we deliver those solutions in a way that keeps customers coming in is probably our biggest concern.

[00:07:04] We want healthy franchisees.

[00:07:05] We want growing franchisees.

[00:07:06] And it starts with delighting a consumer.

[00:07:09] It's why you go to your favorite restaurant.

[00:07:11] You have a great customer experience.

[00:07:13] You have great food.

[00:07:14] The menu changes to meet your trends.

[00:07:16] We help our franchisees do that.

[00:07:19] And that's why they partner with us, because hopefully because of our scale and the depth of experience here at our headquarters, we can provide them with tools and insights that they may not be able to get on their own.

[00:07:30] And what are you seeing from consumers?

[00:07:32] Because there are a lot of things happening right now, right?

[00:07:35] There's the need for digital, you know, the need for, you know, as I just touched on, value in the current climate.

[00:07:42] But also consumers are demanding sustainability.

[00:07:45] They don't want to pay for it.

[00:07:46] They don't want to, you know, to make any sacrifices, but they're expecting these things from brands.

[00:07:51] So I guess from your perspective, are there any kind of overarching consumer themes that you're seeing?

[00:07:57] I mean, I love the way you just laid all that out because I think you just did.

[00:08:00] You could probably answer the question as well as I could.

[00:08:03] You just laid out some of the complexities, right?

[00:08:06] That we have to help our partners manage through with consumers.

[00:08:10] Obviously, they want high quality food.

[00:08:13] In today's time, certainly over the last couple of years, value is a big piece of the equation, right?

[00:08:18] And whether or not you've got the right price points on your product, you better be delivering value so that the price point you have on your product is worth it.

[00:08:26] Certainly digital and the ease of access and simplicity, you know, has changed over time, generation to generation.

[00:08:32] You have to have a good digital platform.

[00:08:34] You absolutely have to be able to allow people to order on their terms with a way that is quick and efficient and largely uses, in most cases, their phone.

[00:08:44] And then you've got to deliver on that order accuracy.

[00:08:47] So those are some of the things that we need to make sure we stay on top of.

[00:08:50] And again, back to a franchise model, our partners should expect that of us, right?

[00:08:54] Most of our partners don't have the infrastructure to create the newest app or to understand how to integrate that with Apple Pay or potentially,

[00:09:01] what may or may not be a changing trend within the supply chain.

[00:09:05] We need to deliver that to them because that consumer is complex and they're ever evolving and they have more choices often than they have time.

[00:09:11] We need to make sure we're in that consideration set.

[00:09:14] Does that make sense?

[00:09:15] Yeah. And I like that you've called out ever evolving because it is perpetual, isn't it?

[00:09:20] It's not something you kind of do and then tick off the list.

[00:09:23] It's you've got to always be evolving, always be ensure that you're staying relevant to customers, which is easier said than done.

[00:09:30] No. And, you know, it's so interesting. I mean, we try to be as data driven as possible.

[00:09:34] You know, it's interesting and this is an interesting tie.

[00:09:36] And I think if you look at the food service industry historically in the in the folks that ran franchise that ran franchise companies and you go back decades, it was largely very much operator driven.

[00:09:51] And as you look now, it's so much more insight data driven.

[00:09:54] And you see this in a cross-pollinization over the last decade of who's coming into franchise companies.

[00:09:59] It's largely people who came from consumer package goods companies.

[00:10:03] My senior vice president of marketing spent 10 years at Procter and Gamble. Right.

[00:10:07] So it's it is we're much more focused on understanding the consumer, understanding the analytics that drive their behavior, the insights so that we can better position from a restaurant standpoint what we're delivering for them.

[00:10:19] And I think you see it in the folks that are coming to the industry and where they're coming from.

[00:10:22] It kind of shows that, you know, we have a process and I don't want to dwell too much on franchise, but I think it's relevant.

[00:10:28] We have we stood up a couple of years ago in analytics and insights team here go to foods and we have the ability to solicit immediate feedback from consumers via our apps in our in our receipts.

[00:10:39] So we see real time. What are consumers like by brand? Are they happy with the level of service?

[00:10:44] Are they getting the right level of variety in the food offering is the value there so we can adjust real time that level of sophistication?

[00:10:51] I don't you know, it wasn't there 10, 15 years ago. It has to be there now for us to for us to remain competitive.

[00:10:59] Now, as I said at the start, go to foods has been named the second largest food beverage licensor in the world.

[00:11:05] What do you think has contributed to this accomplishment and how do you plan to continue to beat out the competition in the long run?

[00:11:12] So that's a great question. So I think, you know, it's taken time. We've been at this for over 15 years.

[00:11:18] And I think it starts with at a macro level. We obviously are a franchise or franchisees are the heart and soul of our ecosystem.

[00:11:26] However, we believe that building being a world class builder of brands, you have to be on the channel.

[00:11:32] Your brands have to be at the occasions that are relevant for consumers in the format or package that is relevant for them for that moment in time.

[00:11:40] And that may or may not be in a mall, an airport or at a brick and mortar location.

[00:11:44] So if we're going to have world class brands, then we have to allow ourselves the flexibility to be there where they meet consumers where they want to meet us.

[00:11:52] And I think that that lens has helped us as we look to this type of a business model where we are on the channel and licensing is a big piece of that.

[00:12:02] Now, I'll pause for a second because I don't like the term licensing is technically accurate.

[00:12:07] But I think what we do is much broader than selling a logo to put on the hood of a NASCAR.

[00:12:11] What we do from a licensing standpoint, we have a standalone business unit that has dedicated business development people who go out and work with partners like Yum or Subway or General Mills or Nestle to understand how we can share our brand equity to help them reach their goals.

[00:12:28] We then have a dedicated culinary team of professionals that take our brand equities and translate them to a new relevant format and package, like I just said, for that given partnership.

[00:12:42] So the Taco Bell, that looks like a deep fried Cinnabon delight going through a drive-through.

[00:12:47] For Publix, that looks like the newest Carvel ice cream cake on shelf.

[00:12:52] We help translate those brand equities to new formats for the occasion.

[00:12:57] And then we're off to the races.

[00:12:59] So our licensing division, which was just ranked the number two largest with $1.5 billion in sales globally, I think we've been successful, to get back to your original question, because one, we look at it as a way to build world-class brands.

[00:13:13] Two, we've invested in an infrastructure to do that effectively with blue chip partners.

[00:13:17] But we never lose sight of the fact that the emotional connection for these brands is made at a brick and mortar.

[00:13:22] So whatever we do, multi-channel has to be accretive.

[00:13:25] We can't put a product out there that's going to take away from an occasion in one of our locations as a franchise, because that's where we want to keep driving people back to, because that's that emotional connection.

[00:13:35] Yeah, and I'm glad that you touched on licensing, because I think the lines between retail and food service have been blurring for a long time now.

[00:13:43] And I know that GoToFoods has taken part in a variety of retail collaborations with, as you just mentioned, Carvel ice cream cake sold at the big box retailers.

[00:13:51] And I have very fond memories growing up and getting a Carvel cake for my birthday.

[00:13:55] I love it.

[00:13:57] But you also have Auntie Anne's frozen pretzels at Walmart, pre-packed Cinnabon donuts at 7-Eleven, Cinnabon delights at Taco Bell, Cinnabon mini rolls at Pizza Hut, and so on.

[00:14:08] So I think it's clear that collaboration, both with retailers and other food service brands, is an important part of your strategy.

[00:14:15] But how do you foster and maintain these partnerships?

[00:14:20] So, you know, it's interesting just to take a step back when you look at this line of business, right?

[00:14:25] So for the franchise system, we need our franchisees healthy and happy.

[00:14:30] But we've created a base of, you know, 6,500, close to 7,000 locations growing at a good rate every year.

[00:14:36] And that base is there every year, and you just keep fostering it, keep watering it, and it grows.

[00:14:41] And if you're doing the right things, you know, everybody wins.

[00:14:43] It's our multi-channel business, all of that business has to be re-won every couple years.

[00:14:49] These are not evergreen contracts.

[00:14:51] If we're not delivering from a brand standpoint, you know, we're lucky enough to be going on, I think it's year 13 with Taco Bell, one of our key partners.

[00:14:59] If we weren't delivering for them, we wouldn't continue to have that business.

[00:15:03] It's very easy to be disintermediated.

[00:15:05] They would go to somebody else for another product or two on their menu.

[00:15:07] So we have to keep re-winning that business.

[00:15:10] We do that through that dedicated process that I shared with you.

[00:15:13] It's not just selling a logo and collecting a check.

[00:15:16] It is bringing in the right infrastructure from a client standpoint to manage them with business routines.

[00:15:22] I alluded to my head of marketing.

[00:15:25] It's bringing them marketing insights, helping them understand their consumer and how our brand can reach them in a more effective way.

[00:15:31] It's the culinary team that continually evolves and iterates almost as an extension of their own culinary team when it comes to developing new products.

[00:15:38] So we really are an active partner in the journey with them.

[00:15:41] We're not just selling the mark.

[00:15:42] And it allows us to continually add value and renew that partnership because, again, we take nothing for granted.

[00:15:48] It's not like a built-in base, an annuity, a book of business.

[00:15:51] If we're not winning it, they're not going to stay with us.

[00:15:54] They'll find another brand that's a better partner.

[00:15:56] So we have to make sure we're delivering value beyond the power of the mark.

[00:15:59] Does that answer the question?

[00:16:01] Yeah, yeah, absolutely.

[00:16:02] And I'd like to stick with the theme of grocery and CPG or FMCG, as I should say, from our European listeners.

[00:16:09] I love it.

[00:16:10] I'd like to get your thoughts on how and I guess firstly on the trends that you're seeing in this space.

[00:16:16] I know we touched on some of the trends that you're seeing in the QSR landscape, but there's obviously a lot happening within grocery and CPG as well.

[00:16:24] You know, the shift to digital is still something that, you know, we're all still trying to figure out however many years after COVID.

[00:16:30] But how is GoToFoods adapting to meet customer demands based on some of these trends?

[00:16:38] What are you seeing and how are you responding to that?

[00:16:41] You know, it's interesting.

[00:16:42] So at a macro level, and this I think benefits us, you know, consumers still want trusted brands for given occasions, right?

[00:16:51] I think we saw a shift during COVID, quite frankly, where consumers gravitated to things they could trust, that they had belief in.

[00:16:58] And brands were it, right?

[00:17:01] I think prior to COVID, maybe you were having consumers looking for more artists and unique things, things that were made in store versus packaged.

[00:17:09] And then COVID kind of changed that.

[00:17:11] And we haven't seen that trend change that much.

[00:17:13] The love of well-known brands continues, which is good for us because we have industry-leading, category-leading brands, certainly in snack.

[00:17:20] So continuing to evolve those brands and categories where we have a right to win.

[00:17:24] And then looking at trends like things that, consistent trends that don't seem to be letting up snacking, functional benefits.

[00:17:33] So if you look at, you know, our Jamba fruit snacks we just launched with General Mills in the snack aisle, it's got, you know, there's vitamin C in that.

[00:17:41] You know, whatever those functional benefits might be that you can add in, but ultimately making sure they understand consumers are on the go.

[00:17:47] They're looking for portability.

[00:17:48] They're looking for sometimes snack as meal replacement.

[00:17:51] And, you know, we feel like our brands are well-suited for that.

[00:17:53] But it helps the consumer still really gravitate to strong brands, which gets back to why it's so critical we keep our franchise system healthy and at the center of this ecosystem because they shine the penny for us, right?

[00:18:05] They're the ones that if people have a great experience, if they go in and have a great Auntie Anne's pretzel when they're in the airport, they're more inclined than to look for that Auntie Anne's product on shelf and grocery.

[00:18:15] Yeah.

[00:18:16] I guess in that case, the store really is a form of media for you.

[00:18:21] And I guess it's essential that they have a great experience, that the quality is great, which then has a knock-on effect for selling those products on grocery shelves.

[00:18:29] At the end of the day, you're absolutely right, right?

[00:18:33] The emotional connection.

[00:18:34] And by the way, go outside of GoToFoods and, you know, look at other people that believe in multi-channel brand building like Starbucks, right?

[00:18:40] I think that there is something to be said for that seminal experience in a brick and mortar.

[00:18:45] Having said that, certainly for us, I think now that we're at the size we're at in the scope of this business that we've built, in a lot of cases, and this puts a heavy burden on us in the licensing division, if you will, in this multi-channel retail division.

[00:19:03] We may be the first time that the consumer is experiencing our brand.

[00:19:06] If you go to Albertsons on the West Coast and you want a Carvel ice cream cake, you may have had it growing up, which is fantastic.

[00:19:12] We hear that a lot.

[00:19:14] But there's no Carvel brick and mortar west of the Mississippi.

[00:19:18] So, by the way, we're selling those franchisees if anybody's interested.

[00:19:21] But at the end of the day, that might be your first Carvel ice cream cake experience.

[00:19:26] So if it comes out of my team, we need to make sure that that offering delivers on those brand equities because we might be forming that consumer expectation of that brand.

[00:19:33] Same with brand Cinnabon.

[00:19:34] I mean, the vast majority of dollars spent on brand Cinnabon in the U.S. are multi-channel products, not brick and mortar.

[00:19:41] We have 90,000 points of distribution in total for this business unit, and there's 1,000 brick and mortar locations.

[00:19:46] Most often, people are experiencing the brand outside of brick and mortar.

[00:19:49] We better make sure we deliver on that experience, especially if they've never been to a brick and mortar because ultimately we wanted to go try a brick and mortar.

[00:19:56] So it is a very symbiotic thing, but you can't often say it's where they get that first experience because it could have been through a packaged good product, and it better be a good one.

[00:20:08] Otherwise, we might lose them.

[00:20:10] Yeah.

[00:20:10] No, that's really interesting.

[00:20:12] On the topic of stores and bricks and mortar, I wonder if we could just spend a little bit of time talking about this.

[00:20:18] And when I was prepping for the podcast, I noticed that you launched a new Carvel store concept earlier this year.

[00:20:25] It has a new logo, digital menu boards, a new POS system, and even new freezers to better display the products.

[00:20:33] So I'd love to hear more about store reinvention and what you're doing to stay relevant to customers both today but also in the future.

[00:20:42] It is a great question, right?

[00:20:44] And we have – a lot of times you do things that are right for the brand, and it's hard to quantify an ROI.

[00:20:51] Updating our physical stores, and this is any retail.

[00:20:54] I mean you could say this.

[00:20:55] Certainly we'll talk about our restaurants and shops.

[00:20:58] You see a demonstrable lift, close to double digit, sometimes more than double digit.

[00:21:02] And we have empirical data that would show an ROI on that business case.

[00:21:07] So our ability to keep those stores refreshed so that consumers find them relevant or excited to go to them is something, again, that as a franchisor we provide those insights on.

[00:21:15] So we talked about Carvel, which is a great example.

[00:21:19] Okay, on a regular frequency, we want to review the brand.

[00:21:21] We want to make sure that we update it.

[00:21:22] We just updated our Cinnabon brand.

[00:21:24] Let's refresh it.

[00:21:26] Okay, what does that look like as far as a store experience?

[00:21:28] Okay, it might be the digital experience.

[00:21:30] That needs to be updated.

[00:21:31] The POS system, can they order on a tablet?

[00:21:33] Can they flip it around?

[00:21:34] Do we have the right loyalty program in place?

[00:21:37] And then the physical layout of the store.

[00:21:40] If it's more grab and go and it's less dine in because we're a society that is more on the move than it was, how do we readjust footprint?

[00:21:47] How do we make sure that the operating environment fits the consumer need?

[00:21:50] And then all the things you touch on, like the color palette, the logo, what does that get refreshed?

[00:21:55] And then for us, it's interesting because our multi-channel business is so big, we then have to flow all that in to our package goods, right?

[00:22:03] So the Carvel, I'm so glad you brought that example up.

[00:22:06] You know, Carvel, we reimagined the brand.

[00:22:08] We redid all the logos.

[00:22:09] We redid working on refreshing the stores.

[00:22:12] And, you know, we help our franchisees do that and, you know, sent them to do that.

[00:22:16] Well, then, you know, Carvel, I think our Carvel ice cream cakes, last check, we had six of the top ten ice cream cake SKUs in the nation are Carvel ice cream cake SKUs.

[00:22:25] Again, it's a massive category for us.

[00:22:28] Well, we need to get all those boxes updated.

[00:22:30] We need to work with the rich food products who makes that product for us and flow in new packaging and make sure that all that fits.

[00:22:36] And in the case of Carvel, I've got to make sure that all the delivery trucks in the northeast are rewrapped because we have DSD delivery in the northeast.

[00:22:43] So I need to make sure the trucks are updated.

[00:22:44] And for Carvel, in a lot of cases, in retailers like Publix, we pay for the Cold Vault.

[00:22:51] So the Cold Vault has logos.

[00:22:52] So it's an ecosystem.

[00:22:54] And it starts with the store, but you've got to flow through every consumer touchpoint so there's not dissonance.

[00:23:00] And the consumer says, oh, I recognize that brand.

[00:23:02] And it plays off one another.

[00:23:04] So it's a little more complex, you know, I think, than if you were just single channel brick and mortar.

[00:23:09] That would be a lot easier.

[00:23:10] Yeah.

[00:23:10] Yeah, I can imagine.

[00:23:12] Sorry, I might be long-winded on that one.

[00:23:14] But we're living it right now.

[00:23:16] That's really interesting.

[00:23:17] But on the topic of branding, I've noticed that, you know, you're pretty actively pursuing pro-branded spaces.

[00:23:24] And I just wonder if you could talk to that in a little bit more detail.

[00:23:27] So, you know, what are the benefits of putting, say, a Cinnabon and a Carvel under the same roof?

[00:23:31] It's all about consumer choice and capturing more occasions.

[00:23:34] You know, if you think of a consumer, you can think of it as 21 occasions in a week as far as meals.

[00:23:39] And there's, you know, different day parts or share of stomach, however you choose to articulate it.

[00:23:44] We want more of that.

[00:23:45] And by having multiple brands co-located, you get operating leverage.

[00:23:49] I mean, the operator nerd in me would say, oh, you know, look where all the synergies are for that franchisee.

[00:23:54] Ultimately, again, these are sole proprietorships or franchisees.

[00:23:58] It's not go-to foods.

[00:23:59] But we provide a model where they can get their dollar goes further because they have multiple brands in the same footprint.

[00:24:04] But then we, more importantly, we deliver more on the consumer.

[00:24:06] Maybe, you know, if you've got a Carvel Antians, maybe you're in the mood for savory.

[00:24:12] Maybe you want sweet.

[00:24:13] Maybe you want cold versus hot.

[00:24:14] And what we've done is we've shown that it's accretive, that you capture more occasions, more share of that stomach.

[00:24:20] And you're not just trading out or cannibalizing.

[00:24:22] So the math works.

[00:24:24] So, yeah.

[00:24:24] So I think, you know, we'll always have standalone locations.

[00:24:28] But co-branding is a big piece of our equation going forward because it gives consumers more options.

[00:24:33] And you see that internationally as well.

[00:24:35] It's not just domestically.

[00:24:37] So, yeah, that's a really nice segue into international, which is the next thing I wanted to ask you about.

[00:24:42] Now, this is very much a global podcast.

[00:24:44] A lot of our listeners are based here in the U.K., but also the U.S., France, India, Germany, Poland, Australia.

[00:24:52] It is a real mix of nationalities.

[00:24:55] And I know they'd be interested in hearing more about the international side of your business.

[00:25:00] So can you tell us a little bit more about your operations outside the U.S.?

[00:25:04] What are some of your biggest markets?

[00:25:06] And are you targeting a similar customer or is it maybe a slightly different demographic abroad?

[00:25:12] That's a great question.

[00:25:13] So our international footprint, we have over 2,000 locations in about 60 countries.

[00:25:19] I think I shared with you I was actually in London last week enjoying that amazing city where we have partners that do both Antians and Cinnabon.

[00:25:28] Our plan internationally is not a whole lot different than domestically.

[00:25:32] We believe we have compelling consumer brands and we want to grow access points and invite consumers in to try them.

[00:25:38] Our multi-channel approach internationally is a little bit earlier in the curve, a little more nascent.

[00:25:43] So one of the reasons I was in London last week was we were looking to start to expand potentially in grocery with Cinnabon products beyond just our brick and mortar.

[00:25:51] Again, always making sure the franchisee is at the center of that ecosystem and that they're benefiting.

[00:25:56] But realizing that sometimes consumers, especially if they're in an outlying smaller town, may want to taste a Cinnabon and just can't get it.

[00:26:02] So we want to make sure we're satisfying them.

[00:26:05] So as we look to growth, we will continue to drive brick and mortar.

[00:26:09] And actually, it's growing at a very fast rate.

[00:26:11] But we do believe there's an opportunity to overlay multi-channel to satisfy consumer needs.

[00:26:16] You know, it's interesting.

[00:26:19] We have a significant footprint internationally in a lot of key markets.

[00:26:24] I think I shared before we got started when we were talking that we have over 200 Cinnabons in Saudi Arabia alone.

[00:26:30] In the Middle East, we have some wonderful large partners, brands Cinnabon, Antians.

[00:26:36] We just opened our first Jamba in a beautiful mall in Riyadh.

[00:26:40] I was just there about two months ago.

[00:26:42] And it's a showcase location for us, for the Jamba brand with Sonomi Group, who's our partner in Saudi Arabia.

[00:26:49] We have hundreds of Antians in the Pacific Rim, in South Korea, in Thailand, in the Philippines.

[00:26:56] We actually also are – we have our seven brands domestically.

[00:27:02] Internationally, we also are the master licensor for Seattle's Best Coffee.

[00:27:05] So we actually have several hundred coffee shops in the Pacific Rim, Japan, et cetera.

[00:27:09] So we believe there's – people love American brands no matter where you go.

[00:27:14] It starts with a quality product.

[00:27:16] It's not just the brand.

[00:27:17] But if we can deliver quality for those consumers, we believe there's room to grow.

[00:27:20] And we do believe we can accelerate that growth through multi-channel retail, not just traditional brick and mortar.

[00:27:27] Yeah.

[00:27:27] You know, I wanted to ask you a follow-up question here because I think the challenge running a global retail business or a global food service business is it's always about getting that balance right.

[00:27:39] Because you need to maintain operational efficiency at scale.

[00:27:42] But at the same time, you need to ensure that you're adapting to local preferences, right?

[00:27:47] So I think that's the big challenge because you're not going to have much of a business if you're hemorrhaging money.

[00:27:52] But also, you're not going to have much of a business if you're not relevant to customers.

[00:27:55] So I'd love to get your thoughts on this, Dave.

[00:27:57] How do you strike the right balance here?

[00:28:01] So it is a challenge, right?

[00:28:04] And I think, you know, especially in emerging markets, markets where we're just starting out, you know, it's a little bit harder to get those economies of scale.

[00:28:10] I think to, you know, to open 10 new Cinnabons, and I'll go back to Saudi Arabia just because it's an easy example, or anywhere, anywhere in the Middle East where we already have a footprint, we have supply chain established.

[00:28:20] There are people on my team that live in Dubai, that live in Egypt, that live in Morocco.

[00:28:24] We've got an infrastructure.

[00:28:26] And we've got great partners.

[00:28:28] That's an easier equation.

[00:28:29] When you're looking to, hey, we're going to open now in Kazakhstan.

[00:28:32] That's a new market, right?

[00:28:34] How do we lay that track?

[00:28:35] We have to be thoughtful.

[00:28:36] We have to find the right partner.

[00:28:37] They have to understand that it's a little bit longer burn.

[00:28:41] We still understand the market.

[00:28:42] We still have people with experience.

[00:28:44] We understand partners that can do work for us there.

[00:28:46] But the economics are a little bit different out of the gate until you start to get that operating leverage.

[00:28:50] And I think it's just, it's understood that, you know, that's the curve we move down.

[00:28:56] In international markets, we are typically targeting, and I've touched on this, larger partners.

[00:29:02] Our model, we look for somebody who can take an entire country and help us grow it or a big chunk of the country.

[00:29:09] So they tend to be well-established.

[00:29:11] They're not individual proprietors who may be starting their first brick and mortar.

[00:29:15] If you look at Sonomi Group in Saudi Arabia, they are the largest operator of malls.

[00:29:20] They have multiple retail brands.

[00:29:22] So for them, they can afford to spend a little more on the front end, knowing that it'll grow on the back end.

[00:29:28] And that's typically how we do this.

[00:29:29] So our partners are funded enough to have, they realize it's a long game and they have a vision that it'll grow over time.

[00:29:35] It doesn't change the fact we still have to provide the same level of scaffolding there that we do everywhere else.

[00:29:41] We have to give them consumer insights.

[00:29:43] We have to give them relevant brands.

[00:29:44] We have to give them supply chain.

[00:29:46] And, you know, that's what our local regional teams do.

[00:29:48] If you go to a Cinnabon in Japan, that role will be less sweet than a role that you would have necessarily in Saudi Arabia because local palates are different.

[00:29:59] And we need to understand that and we need to help develop for that.

[00:30:02] Auntie Anne's in Hong Kong sure as heck better feel like an Auntie Anne's for somebody who knows the brand because they expect it.

[00:30:07] They're buying that known commodity.

[00:30:10] But, man, it looks and feels a whole lot different because we had to deconstruct and reconstruct it for that environment.

[00:30:15] And, by the way, some of their number one sellers are cream cheese filled pretzel sticks.

[00:30:19] You wouldn't even find that on the menu in an Auntie Anne's in the Park City Mall in Lancaster, Pennsylvania.

[00:30:24] But, boy, they sell a heck of a lot of them in the Pacific Rim.

[00:30:33] Thank you for listening to Retail Disrupted.

[00:30:35] If you enjoyed this episode and would like to support the podcast, please leave a rating or review or share it with others.

[00:30:41] It really makes a difference.