Last month, Auntie Anne’s announced its first-ever drive-thru location, in Wylie, Tex. The location is part of a restaurant cobranded with Jamba, its sister chain in the Atlanta-based Focus Brands system.
It’s only the latest in what has become a growing trend of cobranded restaurants. The trend, which appeared all but dead not that long ago, has been resurrected over the past year-plus, driven by demand for takeout sales, the availability of kitchen capacity, real estate issues and the need for companies to find new sources of revenue.
Famous Dave’s, for instance, is cobranding with a couple of different brands. It agreed to cobrand with the Italian chain Johnny Carino’s in a 25-unit deal in October. A location in Colorado, meanwhile, has cobranded Famous Dave’s with the steakhouse Texas T-Bone.
The Dave’s cobranding is unusual in that it’s a casual dining restaurant doing it—typically, cobrands have been the purview of limited-service chains with narrow menus. But casual dining concepts that also have specific menus have started looking at cobranding as a way to use excess kitchen capacity and potentially broaden their appeal—or at least generate stronger sales through takeout and delivery.
Before the pandemic hit last year, for instance, the burger-centric casual diner Red Robin announced plans to spend $91 million to add the Donatos Pizza concept to all 550 of its locations. The company expects to complete the rollout of the program to 400 company-owned units by 2023, when it expects to generate $25 million in annual profit from the addition.
There is a short line to walk between operating an actual dual branded restaurant and an existing concept that simply operates another restaurant as a virtual brand. Generally, cobranded locations offer menus of both of their concepts to all customers, while a virtual brand is for delivery only. It’s a good bet that many virtual brands will evolve into cobranded ideas down the line if they haven’t already—Red Robin, for instance, operates Donatos virtually in many markets, helping generate interest in the brand.
Of course, there are plenty of traditional cobrands right now, driven at least in part by the proliferation of so many multi-branded operators.
Fat Brands, the owner of Fatburger and Johnny Rockets, has been on a buying binge for the past three-plus years. It has been cobranding many of its concepts since then. Its Buffalo’s Express chicken wing concept was developed in part as a cobrand with its flagship Fatburger chain. There are 100 Fatburger-Buffalo’s cobranded locations out there.
In 2018, the owner of Which Wich acquired the gelato chain Paciugo Gelato Caffe. Last year the company began cobranding the two concepts.
Late last year, the parent company of Saladworks acquired Garbanzo Mediterranean Fresh and Frutta Bowls, and earlier this year bought The Simple Greek. The company has plans to expand Garbanzo and Frutta Bowls in part through cobranded locations.
The modern version of cobranding appears more of a revenue generator for existing operations, or a way for multiple concepts with complementary dayparts of menus to share space—rather than what they were when the concept became popular in the mid-1990s.
In 1995, Sid Feltenstein bought A&W Restaurants and merged it with Long John Silver’s, and the company began cobranding the two concepts and then worked with what is now Yum Brands to cobrand with its chains, KFC, Taco Bell and Pizza Hut.
Yum acquired A&W and Long John Silvers in 2002 and then pushed cobranding heavily for years, convincing hundreds of operators to combine the various concepts. The idea at the time was to eliminate the so-called “veto vote,” where one person in a group would nix a restaurant because it sold tacos and they wanted chicken or fish.
By 2011 that idea had largely proved a bust because there are just so many veto votes and the restaurants are not exactly operationally simple.
Yum sold A&W and Long John Silver’s and the two concepts have been largely closing cobranded units. “Cobrands are more difficult to operate, no question about it,” A&W CEO Kevin Bazner said. “When Yum really was pushing hard, they got people into the cobrand business that really didn’t want to be there. And it showed.”
But Bazner isn’t entirely dismissive of the cobranding idea, either. His concept has 303 such locations, about half the number it operated at the time of its Yum sale. He expects that to settle at around 250, but then expects it to stabilize.
He believes investment in the restaurant is key for cobranding to work. “The biggest issue for us with cobrands with Long John Silver’s and A&W was that operators just weren’t reinvesting in the business,” Bazner said. “Not only is that not good for business, it’s not good for the brand.
“It’s more complex than a single brand for obvious reasons. And then you get the condition of the asset. If you don’t invest and reinvest it’s just a downward spiral. You become less relevant.”