While rapidly expanding Dunkin' Donuts has far higher visibility, its long-flagging sibling brand, Baskin-Robbins, has been making progress on the comeback trail.
In the U.S., the 69-year-old ice cream brand continues to be strategically focused on helping its franchisees grow sales and profits (all U.S. stores are franchises), John Costello, president of global marketing and innovation for parent company Dunkin’ Brands, tells Marketing Daily.
The latest initiatives include introducing online ordering of Baskin-Robbins ice cream cakes, and tie-ins with the fourth installment of Sony Pictures' blockbuster Spider-Man movie franchise.
Sales of ice cream cakes, always an important part of Baskin-Robbins's business, are seen as a key growth opportunity for the brand. Adding the convenience of being able to order custom cakes online for pickup at a local B-R outlet should boost sales and enhance brand differentiation, says Costello. The national online ordering tool just went live, after successful tests in Detroit and San Diego.
Baskin-Robbins's tie-ins with "The Amazing Spider-Man 2," due to hit U.S. theaters on May 3, aim to drive added sales momentum during the core summer ice cream season. B-R locations around the country will be offering red-and-blue Amazing Spider-Man 2 ice cream and ice cream cakes, and milkshakes named after the movie's villain, Electro.
Summer movie tie-ins have worked well for the brand, confirms Costello. In fact, this one marks its third movie partnership in four years (the earlier ones were with 2011's "Captain America: The First Avenger" and 2012's "Men in Black 3").
B-R locations will promote the limited-time movie-themed offerings and launch the summer season with a "Scoop Fest" featuring special deals on single, double and triple scoops ($1, $2 and $3, respectively) from April 22 to 24.
That's being accompanied by a social media promotion, an "Amazing Scoop Fest Contest." Between April 1 and 24, fans 18 and older who take selfies in their "best Spider-Man poses" and tag them on Instagram or Twitter with #BRHero may be chosen to receive daily prizes like movie-themed DVDs and posters and B-R $25 gift cards. B-R will pick 21 winners each day, based on creativity/originality, quality of the photograph and relevance to contest theme. The three entrants who pull the highest scores during the full contest period will each receive a grand prize of an autographed poster and script from "The Amazing Spider-Man 2" and Baskin-Robbins ice cream for a year ($360 worth of B-R gift cards).
Retail Launch Aims to Up Brand Awareness
Baskin-Robbins kicked off this year by launching branded ice cream and frozen treats in U.S. supermarkets.
A separate entity, Boardwalk Frozen Treats, was created to market, distribute, and sell three-packs of ice cream bars and 14-ounce cups of ice cream in grocery stores through an exclusive license agreement. The retail ice cream is being made by Dean Foods, which also manufactures and distributes ice cream products to U.S. Baskin-Robbins franchisees. (Dunkin' Brands receives license fees from Dean based on total gallons of ice cream sold; in fiscal 2013, these fees totaled $7 million, or 1% of total corporate revenues.)
The suggested retail prices for Baskin-Robbins's offerings are between $3.99 and $4.99, which means they'll be competing with brands like Ben & Jerry's and Haagen-Dazs, and premium-priced ice creams are a harder sell to consumers than they used to be, Technomic EVP Bob Goldin told The Boston Globe.
Furthermore, the ice cream/frozen treats category's retail volumes have been slipping, and numerous launches of gelatos, frozen yogurts, frozen novelties and other ice cream alternatives are exacerbating already-stiff competition. On the other hand, the expanding variety of frozen treats at retail has been one contributor to ice cream chains' declining sales, and if you can't beat 'em, it's perhaps better to join 'em and grab a slice of the action.
Licensing for retail can generate additional revenue with relatively little financial downside risk for a brand, and being in supermarkets will enable Baskin-Robbins to reach more consumers within regions where there are relatively few B-R stores. (Its strongest presence is on the West Coast, with about 455 stores in California, where it was founded.)
In addition, according to Costello, a primary goal of the supermarket distribution is actually to help drive traffic and sales for B-R franchises by increasing brand awareness in markets across the country.
In fact, Costello reports that a portion of the retail sales will go to the Baskin-Robbins franchisees' marketing fund.
Having some funding infusion from a source other than the franchisees themselves should help fuel expanded advertising and marketing for the brand, particularly given the currently slow growth of new B-R locations. (Dunkin' Brands CEO Nigel Travis recently told Bloomberg Businessweek that B-R's advertising budget is about $25 million, versus about $350 million for Dunkin' Donuts.)
While television and print still dominate the brand's spending, digital and social media marketing are growing rapidly. Baskin-Robbins has a substantial social fan base, with nearly 7.3 million "likes" on Facebook and more than 93,000 Twitter followers, plus Pinterest and YouTube channels.
The brand's core message is that it offers "more flavors, more fun" -- not just its famous 31 flavors, but also "fun flavors of the month" -- and the new retail, Spider-Man and other initiatives speak to the point that product innovation and an enhanced guest experience are as important to driving its sales as marketing innovation, says Costello.
Another product innovation coming in May -- the launch of Baskin-Robbins Greek frozen yogurt -- is particularly intriguing, given that frozen yogurt's ascendance and the proliferation of froyo chains were major factors in the declines of U.S. sales and store counts experienced by Baskin-Robbins and other leading ice cream chains in the last decade.
Travis has acknowledged that in addition to facing growing competition, Baskin-Robbins, which was seen as a declining brand, "got less support than it should have" for some years, as Dunkin' Brands focused on Dunkin' Donuts' aggressive growth initiatives.
However, since 2010, when it got new management, B-R has been making improvements, including a renewed focus on training and customer service and store redesigns launched last year.
Those efforts have begun to pay off. U.S. same-store sales have shown growth for the past three years (they were up 0.8% in fiscal 2013 ended in December, after a 3.8% gain in 2012). Comp-store sales rose 2.2% in 2013's fourth quarter, systemwide U.S. franchise-store sales rose 0.9%, and the brand's total U.S. revenues rose 4.3%, to $8.15 million.
The chain also increased its number of U.S. stores last year by four. While that may not sound impressive, it marked the first U.S. store expansion since 2006, and was viewed by Dunkin' Brands as a "very significant achievement," Travis told Businessweek. As of year-end 2013, B-R had 2,467 U.S. stores, versus 2,872 in 2006, with plans to add another five to 10 this year. (Dunkin' Donuts is scheduled to add about 400 U.S. stores this year.)
Baskin-Robbins' international business is actually substantially larger than its U.S. business -- and larger than Dunkin' Donuts' international business. In fact, with presence in more than 50 countries, B-R is the #1 ice cream treat brand in the world. As of Q4 2013, the brand had 4,833 international locations — up by 277 compared with the previous year. Total international revenues for the quarter were up 51.5%, to $27.2 million.