Expanding more than just waistlines

Since 1985 Cinnabon has been steadily expanding to malls, restaurants and kitchens across the world. The pastry peddling chain has more than 1,100 locations throughout 54 countries. By year’s end, consumers will have scarfed down more than 100 million cinnamon rolls. Bloomberg Businessweek’s article “Cinnabon President Kat Cole: Hustling the Gut Bomb” reveals that the chain’s success comes from its exceptional branding efforts.

The brand “Cinnabon” is mentioned every 10 seconds on social media. The chain seems to have a cult following, making the bakery’s signature item, the Classic Roll, an iconic image. Consumers in focus groups admit to experiencing anxiety on the way to Cinnabon because they fear someone in line will get the last fresh roll. Consumers pay $3.69 for a Classic Roll, but it’s not the price they’re worried about. Customers in focus groups have “expressed horror” at the company’s considerations to cut the calories in a Classic Roll. For the die-hards, it’s the roll’s 880 calories that drives a change in demand. Cinnabon’s market research has shown that many of their customers are simply looking to splurge on an unhealthy treat. Since other firms offer similar sweet replacement goods, cutting the calories in a Cinnabon would change demand immensely. The customers who are looking to eat something because it’s unhealthy will find other places to get their sugar fix.

Cinnabon reached its current point of notoriety through seemingly avoiding competition. Rather than compete with food industry giants, Cinnabon teams up with them. The Cinnabon brand can be found on General Mills products, Keebler cookies, Taco Bell menu boards, Burger King menu boards and even on Green Mountain Coffee Roasters in the near future. With Cinnabon’s products stretching beyond their own physical locations, annual retail sales reach $1 billion. It’s an interesting concept for Cinnabon to expand their reach by offering their products in stores that might have otherwise been competitors. Cinnabon is a small firm when compared to the restaurants its products are sold in. “The brand punches way above its weight,” said Kat Cole, the president of Cinnabon. She told Businessweek that rolls essentially sell themselves through appearance alone. “Its almost pornographic,” she said. “It’s just so over-the-top, it’s a sensory experience.”

3 thoughts on “Expanding more than just waistlines

  1. This is a really interesting strategy that Cinnabon adopted. They are taking advantage of the economies of scale of the larger companies that they are teaming up with, while at the same time keeping costs within the company lower by not having to pay for the organizational and labor costs that are prevelent in larger companies. By cooperating with larger firms and allowing their products to appear in what would otherwise be competitor’s restaurants, Cinnabon is enjoying publicity that would be extremely costly to a smaller company.

  2. 1. When we discuss franchising, we can ask whether Cinnabon is cutting its own throat by trying to co-opt various (potential) competitors and to seek a free ride on the marketing efforts of others. To me these efforts will undermine their current dominant sales route, with which their brand strength is associated. In the extreme, they will put themselves out of business, not grow their business.

    2. Economies of scale? There are certainly few to no physical economies of scale, lots of people bake all sorts of similar products. I wouldn’t be surprised if in fact Cinnabon uses others to speed their geographic spread. Given their one-product company, direct logistics costs are likely high. (Perhaps tying with others lets them deliver to these firms’ distribution centers rather than to their retail outlets.) There may be EOS in marketing; we need to think about that when we get to the economics of advertising. I’m not sure what we will conclude [or at least don’t want to put a “spoiler” here].

  3. In a recent Bloomberg Businessweek article (http://www.businessweek.com/articles/2013-11-22/the-70-proof-cinnabon-vodka-made-for-people-who-like-that-kind-of-vodka#r=hpt-fs) Cinnabon announced its newest distribution piggy-backing strategy: Cinnabon Vodka. Pinnacle Vodka — part of the parent company, Beam — agreed to replicated the taste of the gooey pastries for its vodka. It took a reported 15 different recipes before Cinnabon approved that the taste had been successful recreated. The Cinnabon flavored vodka will be the newest addition to Pinnacle’s fleet, which already includes flavors like cake and pumpkin pie. The Cinnabon brand can be found on more than 70 grocery store products, which makes up about one-third of the company’s $1 billion global retail sales.

Leave a Comment!