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The move from Bruegger’s and Caribou follows several recent co-location agreements from other restaurant brands, including the partnership forged earlier this week between Philly Pretzel Factory and Rita’s Italian Ice.

In addition, bakery-café chain Tim Hortons will partner with Cold Stone Creamery in some new locations, while Atlanta-based Focus Brands has increased a “co-blend” strategy among its Schlotzsky’s, Moe’s Southwest Grill, Auntie Anne’s, Carvel and Cinnabon chains, including a test of some triple-branded units.

Yum! Brands Inc. made co-locating units a hot trend in the middle of last decade. Following its acquisition of Long John Silver’s and A&W, the company paired the brands with its flagship KFC, Pizza Hut and Taco Bell chains. The practice never went away — even when Yum cooled on the strategy, said Dennis Lombardi, executive vice president of Columbus, Ohio-based WD Partners.

“It’s a tactic that works for some operators at some locations,” he said. “It’s not a panacea, and it’s not a silver bullet. But it’s not the kiss of death either.”

Lombardi added that Dunkin’ Brands Inc.’s divestiture of Togo’s in 2007 was another example of co-branding’s limitations.

The recent spate of dual-branded locations makes sense, he added, because the brands have products that complement those of their co-tenants and are simple enough to easily share the back of the house. “What made the traditional dual-brand concepts problematic is that they’re difficult to run and to train employees to run well,” Lombardi said. “The simpler the concept, the easier it is to dual-brand, which is why something like a Baskin-Robbins is far easier to add than something requiring separate equipment and processes.”

While Yum has largely backed away from the co-branding growth strategy — divesting Long John Silver’s and A&W in 2011 essentially signaled the end of the tactic for the company — in favor of new-unit growth with new prototypes for Pizza Hut and Taco Bell, customers likely will see its dual-located buildings for a while, Lombardi said.

“There’s a pretty significant retrofit cost, especially for the ones built as combo units,” he said. “They’ll just let those run their course, either until a franchisee opts out or undertakes a major rehab.”

Bruegger’s executive Carolan said a co-location strategy with Caribou could open the door to both brands securing better real estate in new markets, especially in territories where one brand is established and the other might not be.

“If this marriage works, the runway is huge,” he said. “It’s a great opportunity to deliver two great brands to a consumer in a convenient, effective way.”

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN