With a new chief executive and an ownership shift to a single private-equity group, Famous Brands International, parent to the TCBY and Mrs. Fields Cookies chains, is refocusing on innovation and new growth.
Neal Courtney was named chief executive of the Broomfield, Colo.-based company in July, after serving as interim CEO since February, following the departure of former CEO Tim Casey toMexican Grill.
Courtney, who was previously Famous Brands’ chief operating officer since May 2012, had been with the company for eight years prior to that.
On Monday, Famous Brands also said it appointed Michael Chao chief financial officer, filling a position that had been vacant for about four years. Chao was previously vice president of finance, treasury and investor relations at Vail Resorts Inc.
In July, global asset management firm Z Capital Partners became Famous Brands’ sole shareholder, acquiring a minority stake owned by The Carlyle Group since 2008. Terms were not disclosed. The two investor groups had recapitalized the company’s debt in late 2011, becoming majority shareholders.
Over the past two years, Famous Brands moved its base from Salt Lake City to Broomfield, and both brands launched initiatives to re-energize sales and spark new growth, including menu innovations at TCBY that will be revealed later this week.
TCBY has about 650 units, with about 275 in the U.S. Mrs. Fields has about 400 locations, also with 275 in the U.S.
Courtney spoke with Nation’s Restaurant News about his plans for the two almost fully franchised brands going forward.
What does the ownership change mean for TCBY and Mrs. Fields?
For me, it’s great news because it streamlines decision-making, it reduces potential complexity and bureaucracy, and we can really just move a lot faster. Board meetings are going to become a lot more efficient.
There has been a lot of news from both chains about new prototype units. Can you bring us up to speed?
I can tell you we’re going to be more focused. We will still focus on innovation and exciting change, but at the end of the day we won’t do as many things. We’re going to focus on a few things and do them really well. When you try to juggle 10 balls, you end up with 10 balls on the floor.
TCBY has been working on its health profile. There is a new self-service format and talks of fresh yogurt bars, juice and smoothies. Are those still in the works?
With TCBY’s new self-serve model, we’ll have net store growth for the second year in a row. We continue to see momentum with franchisees, so we’re seeing some great multi-unit growth. We’ll open about 50 domestic stores this year, all self-service, and about 50 percent of the system now has self service.
We’re also still very focused on the health aspect of our yogurt. We were the first to market with the frozen Greek yogurt and we have two high-profile flavors: honey vanilla and wildberry. We’re trying to forge this idea of healthy indulgence. We’re emphasizing and stressing our Super Fro-Yo. We haven’t done a good job of communicating what Super Fro-Yo means. For us, it’s a real point of differentiation versus the competitive marketplace.
We haven’t started testing the fresh yogurt yet, but it’s still one of our priorities. Smoothies, juices and other healthy drinks are also still in the plans. But, really, our core equity is great frozen yogurt that has tremendous health benefits.
I continue to be very bullish on our position. I think we’ll continue to see net store growth. And there will be consolidation in the [frozen yogurt] space, which we’re in good position to take advantage of.
Dual branding and growing internationally
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Mrs. Fields was looking at a new kiosk with specialty coffee and testing a new chocolate bar beverage concept. How is that going?
The coffee kiosks have not been doing as well as expected, with three open in California. There are learnings and we’re doing some things to improve capture rate and drive up ticket. We’re still trying to figure out where we fit in the whole coffee arena. Our coffee is great, but it’s tough to compete with, Dunkin’ and Caribou.
The chocolate bar concept also has been disappointing. We’ve only opened in our prototype store downstairs in our headquarters building, and that’s doing much less than anticipated. It’s a new platform for the consumer and very unique. That’s not to say it won’t work, but we need to figure out how to position it, and get it out to the franchise community as well to see how it will work.
Our core equity with Mrs. Fields is cookies and chocolate. Our focus in 2014 is finding a great licensing partner to co-brand, and building our kid’s program. We also see an opportunity to build the cookie-cake business, both on the consumer side and business-to-business in the corporate world from a catering and gifting perspective. We’re going to put 100 percent of effort behind improving the quality of our cookie. Really getting back to basics.
And the company is growing dual-branded locations?
There isn’t a big population of dual-branded units, but domestically that will be a major focus for us, especially in malls. We had five dual-branded locations open in the last 12 months that outperformed our average store by more than 40 percent.
In malls, fro-yo has been very, very popular. We’ve found that when you combine TCBY with Mrs. Fields, the consumers are two totally different individuals. The person looking for a cookie isn’t the person looking for frozen yogurt. So it created an incremental occasion. With the momentum on the frozen yogurt side and the number of opportunities in malls, you’ve got a pretty good formula for success. They’re highly complementary and not cannibalistic.
Are the chains growing internationally?
We’ve had some great momentum there and opened in several new territories over the last 12 months. Mrs. Fields is in Saudi Arabia and Thailand. We just renewed China for TCBY, and we’re in negotiations for Mrs. Fields in India. We’re in 22 countries now with both brands.
And how are sales?
At TCBY, same-store sales are down, but that’s consistent with the industry. There’s been so much growth in the frozen yogurt space. The size of the pie isn’t getting bigger so we’re stealing share from one another.
Mrs. Fields’ sales are expected to be flat for the year, and that’s relatively unchanged from the prior year. Unit growth has been slow. The mall environment is very difficult, and until we can improve the economic model and get our sales up, it’ll be 2014 before we start seeing momentum on the Mrs. Fields side. I’m confident that by getting back to basics, focusing on the product, the experience and creating memories, as well as having a great kid’s program and a killer cookie-cake program, that will help turn the tide.