Cinnabon's Long-Overdue Revamp Positions the Company for Growth
After 25 years of cranking out gourmet cinnamon rolls and selling them in malls, Cinnabon is busting a move. Its plan: transform into a bakery-cafe chain, adding egg sandwiches for breakfast and paninis for lunch. It's a change that could help Cinnabon make the leap out of dying malls and into the lucrative bakery-cafe niche, where it will have instant brand awareness.
As the smash success of Panera Bread (PNRA) has shown, there's plenty of opportunity in bakery-cafes. This evolution has the advantage of being fairly easy to execute, as Cinnabon can use its basic cinnamon-roll dough for many of the other dishes. A broader Cinnabon menu could bring customers in for breakfast and lunch, not just a snack.
Perhaps just as important, bakery-cafes thrive beyond indoor malls, which have struggled mightily in the downturn. Right now, Cinnabon's fortunes are closely tied to the malls. With a broader bakery chain, it could diversify its location types and move to newer open-air shopping centers, restaurant rows in urban cities, and office towers -- wherever diners congregate.
Despite being primarily associated with oversized cinnamon rolls that much of America is on doctor's orders not to eat anymore, Cinnabon hasn't done too badly in recent years. Since 2004, when it was purchased by multi-concept restaurant-chain operator Focus Brands, Cinnabon has slowly grown from about 600 restaurants to 770. It's also branched out by adding Cinnabon mini-stores to the menu of sister Focus company Schlotzky's. Cinnabon has tried a lot of different angles over the years, and they didn't all work. A foray into selling Cinnabon-branded packaged food for grocery stores seems to have fizzled out -- the company's current media kit makes no mention of it. Cinnabon's look has been redone several times, and there's a new decor scheme for the bakery-cafe transformation, which emphasizes dark-brown wood reminiscent of the chain's key cinnamon ingredient. But company management has been unafraid of experimentation, an instinct that should serve them well as they try to jump into another restaurant niche.
One step that already looks promising is the addition of cupcakes -- itself a currently hot niche -- to Cinnabon's menu. No doubt they'll help spice up the bakery-cafe menu, and the product, which naturally includes a cinnamon-roll flavored cupcake, has won raves from early tasters.
The move into bakery-cafe signals that Cinnabon managers realize its time for a new direction that renews the brand for the 21st Century. If they can make the leap into a new niche, it should help Cinnabon avoid ending up like that other famous '80s treat brand, Mrs. Fields, which had to reorganize in bankruptcy in 2008. Selling nothing but dessert just doesn't work well in an era of diet-consciousness and frugality.
Photo via Flick user Bob B. Brown