Co-branding deal brings bagels and coffee closer together - SmartBrief

All Articles Food CPG Co-branding deal brings bagels and coffee closer together

Co-branding deal brings bagels and coffee closer together

5 min read


Bruegger’s Bagels and Caribou Coffee have been neighbors in several locations for years, but they’ll get even closer in the Minneapolis/St. Paul market today when they open their first two co-branded stores. The test will expand to a total of six stores in the coming months, including retrofitted Bruegger’s and Caribou stores and brand-new builds by both companies next year.

The concept of co-branded units has become more common in the restaurant world in recent years, but the eateries typically combine sibling brands like Yum! Brands’ KFC and Taco Bell. In this case, the separately owned brands bring complementary offerings to the table.  “When you’re combining two different products, it can be confusing at first, especially if you’re combining a site but there’s no synergy of thought,” said Claude Bergeron, co-CEO of Bruegger’s parent Le Duff America. “When you’re combining a coffee house and a bagel concept, there’s much more synergy with the products right away.”

Caribou’s story starts with a connection to Bruegger’s — literally. When Caribou opened its first coffee shop in 1992 in Edina, Minn., it was next to a Bruegger’s Bagels shop and a door connected the two stores. Today, the brands are next-door neighbors in 10 Twin Cities locations along with an 11th site in Raleigh, N.C. Those stores are some of the best performing locations for both chains, Bergeron said.

The idea to co-brand grew out of that initial relationship. Bergeron and Caribou President and CEO Mike Tattersfield began tossing around the idea about 18 months ago, Bergeron said. Then, about a year ago, German holding company Joh. A. Benckiser Group bought Caribou. “After that, we started looking at this idea more carefully. The two offers are very appealing to the customer and instead of trying to become a coffee house, with all of the beverage offerings, cold and hot, it could make sense that we combine the two,” Bergeron said.

“One of the big advantages, if it works in terms of customer reaction, will be the incredible synergies in the back of the house. In our side-by-side stores, we have our manager, they have their manager, we have our back of the house, they have their back of the house. Putting the two together, if it works, we can provide the same type of customer service, but also increase efficiency.”

During the test, each company will own some stores, and all the workers who will staff each store will be trained in both Bruegger’s and Caribou stores.

Market research, menu planning, design and training have all been figured out. Now it’s down to the customer to determine whether the melded concept makes sense. “The best way to learn is by trying it,” Bergeron said. “Both sides are very curious to see how the customers are reacting. You can run extensive market studies, question many people, do focus groups and all of that, but in the end, you have to put it in front of the customer and see.”

More from Bergeron

On the process of combining two concepts

“Combining the menu wasn’t that complicated. Caribou doesn’t have that many food products, except for some breakfast bakery products, while Bruegger’s brings the food experience. What was more complicated was finding the right service model, and figuring out how to make it more efficient for the customer in terms of ordering. On top of that, there was the goal of adding a drive-thru experience. That part of the thinking was more complicated  — combining coffee with food was much easier.

“The other aspect was like any other relationship. There is this vision of Claude and Mike, and when we shared this idea of combining, the top management teams, at first, looked at us skeptically. Then the weeks are passing by, and they start thinking ‘Oh, this could make sense.’ Then they’re getting very excited about it, and then they’re committed to do it. It was a process, and a process takes time. The chemistry between the two teams has to work, otherwise there are too many reasons not to do it. It took like six or eight months, and now, everybody on both sides is very excited.”

On deciding what the new concepts should look like

“That was the subject of long conversations, long meetings. I have to say that in Minnesota, our stores were mostly our old design, not the new model that we’re going to see Jan. 15 when we open a new [footprint]. So, the Caribou team was not impressed with our design. The way we finally traded off and agreed that of the next four new locations, two will be done with the Bruegger’s new concept and two will be the Caribou design. Then we will ask the customers what they like best.”

On the reasons the two brands fit

“It was a choice. Neither one had a desperate need for the other. We are two companies that are doing well and have pretty much the same type of size and culture. They are very big in the coffee, they do the roasting and they’re very iconic about the way they execute the coffee and beverage offering, and I have visited them enough and seen enough of their roasting, to see they spend the time to do it well. It’s very cultural. On the Bruegger’s side, it’s still the fundamental New York bagel-style process, with 24 hours of fermentation and then boiling and baking in the store in front of customers all day. We both try to be the best in class of our product. That makes the partnership much easier.”