Carvel, eager to expand into new markets beyond the East Coast, announced an important, eight-unit deal that will give the ice cream chain its first locations in Houston.
But this one has a twist: The eight locations will be co-branded. With a concept that doesn’t yet exist.
Carvel recently announced a deal with Berg Hospitality Group to open eight locations inside its soon-to-be-debuted concept, Buttermilk Baby. The first location of Buttermilk is expected to open in September.
Buttermilk Baby will feature a menu of Southern dishes, including breakfast, chicken sandwiches, burgers and salads. Carvel treats including milkshakes, sundaes, the brand’s signature soft-serve and its custom ice cream cakes.
The idea is simple: Carvel’s name will help bring attention (and treats) to Buttermilk Baby. And Buttermilk Baby will help Carvel establish Texas as a new market. “It’s a good collaboration,” said Mike Woodward, SVP of franchise sales for Carvel parent Focus Brands. “Both of us can win.”
Carvel operates just more than 300 locations in the U.S. and generated $111.7 million in system sales last year. Its unit count is concentrated along the East Coast, particularly the Northeast.
Focus, which operates seven brands total, including Jamba, Cinnabon, Auntie Anne’s, McAlister’s Deli, Schlotzsky’s and Moe’s in addition to Carvel, has been using co-branding increasingly to speed expansion. “Having Two brands under the same roof allows you to cast a much wider net,” Focus CEO Jim Holthouser said on a recent episode of the Restaurant Business podcast A Deeper Dive. “You can appeal to a lot more customers.”
Carvel has been at the center of some particularly innovative co-branding strategies. For instance, Focus is combining Carvel and Cinnabon into what is an entirely new type of concept called Swirl. The concept will include both Carvel and Cinnabon products but also new items that combine the two, such as a cinnamon roll with ice cream in the middle. “I think over time, we will look at this as kind of a stand-alone brand,” Holthouser said.
A rendering of a Carvel-Cinnabon concept called Swirl. / Image courtesy of Focus Brands
But again, Cinnabon is a known concept, as is Carvel. This is a rare time in which an established brand is co-branding with a new concept.
In this case, however, Ben Berg, the owner of Berg Hospitality, originated from New York. His grandfather was a Carvel franchisee in the 1950s. “Carvel has my favorite soft serve and is the originator of soft-serve ice cream,” Berg said in a statement. “With the brand being from the Northeast, I am happy to bring it to my new home.”
When he decided to add ice cream to the new fast-casual concept he was creating, Carvel made a lot of sense. “What a better brand to partner with than Carvel,” Woodward said. “He’s got the concept, but needed that dessert component. This helps us bring Carvel to a market like Houston.”
It works for the operator in another way, he said, by increasing the value of the concept. “The two concepts play off each other really well,” Woodward said. “It becomes more valuable to the franchisee.”
Carvel has been pushing into newer markets. The company sells ice cream at retail and uses data from those sales to determine what markets might work. Houston was one of those markets, Woodward said. The company is looking at Denver, Los Angeles, Dallas and Kansas City.
If the Houston strategy works, it will open additional locations there.
“Carvel is like the UConn Huskies,” Woodward said, referring to the University of Connecticut men’s basketball team, for which he played in the early 2000s. “It’s been a powerhouse brand in the Northeast for a long time. And now we’re going to take them national. This is a way for us to get into that national stage.”
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