Building up your brandBuilding up your brand

Each year, more than 20,000 food and beverage items are introduced in supermarkets across the United States.

In the food and beverage business, there’s always something new and different. That’s why restaurant chains and other foodservice establishments must remain up-to-date on all the new ideas.

That’s also why the restaurant industry is fertile ground for an entrepreneur who can take a new idea and turn it into a nationwide chain.

One of the latest is instant ice cream, pioneered by Jerry Hancock and his Sub Zero chain, which has 25 locations in nine states.

At Sub Zero, liquid nitrogen is used to instantly freeze ice cream in front of astonished customers. According to USA Today, founder Hancock said he’s planning to add 144 units in Texas and 120 more in Southern California over the next decade.

“We focus on the show,” he said. “Lighting is a big thing, so we light up the fog so you can see the nitrogen going into the ice cream.”

Being different

But, observers asked, is Sub Zero on the way to becoming a big chain? The answer is: perhaps. Sub Zero and other instant ice cream chains have a good chance of becoming successes because they’re different.

Most retail organizations are focused on being better, when the real advantage is being different — pioneering a new category.

Costco, the first membership-only warehouse club, not only is the leader in the category, with sales last year of $99 billion, but it also has been growing over the past decade at a rate of 10 percent a year.

Starbucks, the first high-end coffee shop chain, not only is the leader in the category — by a wide margin — but it also has been growing over the past decade at a rate of 14 percent a year.

Dollar General, the first “dollar” store, not only is the leader in the category, but it has been growing over the past decade at a rate of 10 percent a year.

In the battle for consumer supremacy, it’s extremely helpful to create a new category in which you can be first. Chains that are not first and are not defined by a specific category are seldom successful.

What’s a Cost Plus World Market? With 259 stores in 30 states and revenues in the past decade of $9.2 billion, the chain has lost $114 million during that period.

What does Cost Plus World Market stand for? What’s the category? Like many other chains without well-defined categories, it’s a chain in trouble.

What's in a name?

(Continued from page 1)

Next to being first in a new category is being able to pick the right name. A great brand name is short, simple, easy to spell, easy to pronounce, yet unique and different.

What a good brand name doesn’t need to do is to describe the category. McDonald’s is a better brand name than Burger King because it is unique — in the same sense that Starbucks is a better brand name than Koffee King. And Papa John’s is a better brand name than Pizza King. And Budweiser is a better brand name than Beer King. Much better to put the category into the brand’s slogan, “Budweiser: The King of Beers.”

Unfortunately, Sub Zero has fallen into the same trap as Burger King and many other restaurant chains with names that try to connote categories. Nor is the Sub Zero name unique and different, thanks to the refrigerator with the same name.

Another success story is Five Guys. What’s behind the success of the rapidly growing chain? First of all, Five Guys is a name that is truly unique and different. And its growth rate is astounding. In the past five years, Five Guys has grown at an average rate of 63 percent a year.

Second, Five Guys is the leader in a new category called better burgers. But there’s a big difference between marketing a better burger and creating a new category with the same name.

For years, both Burger King and Wendy’s have marketed what they were calling a “better burger.” But consumers never really perceived the two chains as being in a different category than McDonald’s. Better maybe, but not different.

Five Guys is perceived as being different. It’s made from fresh, not frozen hamburger meat, and offers food that is cooked to order, not cooked for the holding bin.

How did Five Guys create a new category?

If marketing a “better burger” doesn’t automatically allow a chain to create a new category, then how did Five Guys achieve this?

The same way Starbucks did. Starbucks didn’t create a new category called “better coffee” by introducing a better coffee. Starbucks created a new category by charging higher prices. The coffee at Starbucks might be better, but that fact alone is not enough.

At Five Guys in Atlanta, a regular hamburger costs $5.79. At McDonald’s in Atlanta, a Big Mac is $3.69, and the most expensive hamburger on the menu — a Double Quarter Pounder — is $4.69.

So why don’t many other chains just charge more?

Unfortunately, that won’t necessarily work because there might just not be a big enough market at higher prices. Rolls-Royce is a terrific brand, but it sold only 384 vehicles in the  U.S. last year. How many people can afford a $250,000 automobile?

There’s another problem. You can’t change a position once you have established a strong brand identity in customers’ minds. Take McCafé, for example. It hasn’t slowed the growth of Starbucks and eventually could even follow the fate of the Angus Third Pounder.

Only time will tell.

Laura Ries is president of Ries & Ries, a marketing consulting firm located in Atlanta. Her e-mail address is [email protected].