Bruegger’s Bagels and Caribou Coffee have embarked on a co-location strategy to mutually build up their businesses by tearing down walls in the Minneapolis market.

The chains are constructing two co-branded units in that market to test whether it would produce the same strong performance Bruegger’s and Caribou have both seen in their restaurants in the Twin Cities that happen to be located next door to each other.

“Common sense prevails,” Bruegger’s chief development officer Paul Carolan said of the move. “Ten of our restaurants in the Twin Cities are right next to a Caribou, with a common shared wall between them. We do way above our average unit volumes in the marketplace there, and when we talked to Caribou about it, they noticed the same phenomenon [in their adjacent locations].”

Caribou is owned by German firm Joh. A. Benckiser, and Bruegger’s is owned by Dallas-based Le Duff America Inc.

Burlington, Vt.-based Bruegger’s has some experience with co-branding, as a Connecticut-based franchisee last year opened a dual Bruegger’s/Jamba Juice location.

In the Minneapolis-St. Paul market, Bruegger’s and Caribou will keep their next-door restaurants, build the ground-up co-located units, and also test remodeled stores where a Caribou location imports some Bruegger’s products, signage and décor elements, and vice versa.

“We’re going to test all the prototypes to see how they behave and see which ones prove to be the best,” Carolan said.

In the partnership, Bruegger’s gets a credible coffee offering from Caribou, and the Minneapolis-based coffee chain adds credible baked goods to its food platform, Carolan added. “When you can marry up coffee that people are rushing through the front door to get with our bagel offerings and food, what a huge leap you can make with your brand,” he said. “It’s much easier to build that credibility — almost instantaneously — than it would be for Bruegger’s to build a new coffee program that could compete with Starbucks, Caribou or Coffee Bean [and Tea Leaf].”

He added that the two chains should benefit from complementary product offerings that would allow guests to make one stop for everything they seek in a meal, rather than having disparate brands vying for the same customers in the same dayparts and force an “either-or” choice.

“I used to work for HMSHost running a lot of different brands in one place, and in one Taco Bell/Pizza Hut/KFC we had, there would be a level of confusion in the customer because you’d be competing for the same thing at the same time,” Carolan said. “You’re trying a real estate play, offering all these choices in one location, but it creates confusion.”