Branded vs. Proprietary Foodservice

The debate has gone on for many years–should you implement an existing branded foodservice program or are you better off developing your own unique proprietary brand?  The answer to both is YES!  There is no right or wrong answer as both have their pros and cons.   Branded foodservice offers the quickest path to implementation since production processes and consumer recognition have already been established.  Proprietary brands, on the other hand, usually take longer to implement, but can be more profitable and almost impossible for your competition to mimic.

Since branded and proprietary foodservice each present their own opportunities as well as challenges, below is a helpful overview to help you determine which type of foodservice  program is best for you and your store operation.

 Branded FoodserviceProprietary Foodservice

Advantages

  • Product Recognition. Ramp-up of consumer awareness of the brand is minimal.
  • Confidence. Trust is already established for the brand in the minds of the consumer.
  • Consistency/Quality. Time and investment have been established in the brand already.
  • Brand Support. Most branded foodservice companies provide you training & marketing.
  • You’re in Control. As the owner of the brand, you determine your brand’s path.
  • Competitive Differentiation. It is your brand and you competition cannot use it.
  • Product Cost Savings. In some cases, you can save substantial product costs by having your own proprietary brand.
  • More Mystique. Your own brand can achieve a higher acceptance level when executed well.
Disadvantages
  • One-Size-Fits-All. Branded companies are interested in their brand first, your store second.
  • Higher Costs. Cost of goods; marketing promotions, licensing or franchise fees all erode your profit margins.
  • Lack of Control. You are buying a branded concept – the branded company sets the rules on how to use its brand.
  • Geography. Branded concepts like market share and error on the side of overdevelopment.
  • More Time-Consuming. You must manage every aspect of your brand, from procurement to retail sale.
  • Organization Challenges. Training, supply chain, operations and marketing all have to be in perfect sync.
  • You’re Second Fiddle. The big foodservice brands command the attention of suppliers and consumers.
  • More Money. It is your nickel: every idea, every product, every marketing piece is paid by you.

 

Building a successful foodservice business within your store can enhance your bottom line like no other initiative can.  High margin foodservice items can help offset loss-leading products and categories that are on the down cycle of their life.  The choice between branded or proprietary foodservice is largely dependent upon how your organization is structured from an infrastructure standpoint as well as your comfort level.  If you have the wherewithal and people-power to launch and manage a proprietary foodservice operation, your gross profit margin potential is much larger.  On the other hand, implementing a branded foodservice program at your store allows you to capitalize on years of brand-building and operational know-how – and still turn a handsome profit.

The blurring of lines from drug stores carrying convenience store category products, to quick service restaurants offering “grab-and-go” packages, to branded foodservice operations in alternative locations such as kiosks, has forced many store operators to expand their foodservice offerings in order to meet the demands of their customers.  Convenience will always be paramount for stores, but adding a branded or proprietary foodservice operation allows you to expand your customer base and still deliver your core products.  There is no right or wrong answer when it comes to branded and proprietary foodservice–the important choice is selecting the best program for you.

About the Author:

John Matthews is the founder and president of Gray Cat Enterprises, Inc., a strategic planning and marketing services firm that specializes  in helping businesses grow in the restaurant, convenience and general retail industries.  With more than 20 years of senior-level  experience in retail and a speaker at retail-group events throughout the U.S., Matthews has recently written two step-by-step manuals, Local Store Marketing Manual for Retailers and Grand Opening Manual for Retailers, which are available at www.graycatenterprises.com.


 

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