Three Brands in One Unit: Better Way to Leverage Capital?

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Beautiful Brands International, FreshBerry Frozen Yogurt Cafe, rex's chicken, Smallcakes, Desserts, Equipment, In the Store, Franchising, Growth

Cobranded stores with two quick-serve brands in one location have been an industry mainstay for years. But Tulsa, Oklahoma–based Beautiful Brands International (BBI) is taking the concept a step further with three brands in one unit.

The company recently opened two tri-branded stores that include its Rex’s Chicken, FreshBerry Frozen Yogurt, and Smallcakes Cupcakery brands under one roof. The first opened in Durant, Oklahoma, while the second opened in Raleigh, North Carolina.

John Lenzmeier, master franchisee for Freshberry and Rex’s in North Carolina, opened the Raleigh location. He says he “wanted to be in a broader food business than yogurt,” and that the idea to open a tri-branded unit came after meeting with BBI founders David and Camille Rutkauskas last year.

“I thought the concepts would work well together,” Lenzmeier says. “Warren Buffett’s got a big stake in Dairy Queen, and that’s burgers and ice cream. So this is chicken and yogurt. He seems to have made a few dollars along the way.”

Lenzmeier’s unit is not set up like typical cobranded units, which usually have two distinct counters for each concept. Rather, his unit includes one counter from which customers can order Rex’s or Smallcakes items, and a wall with FreshBerry self-serve machines.

Operationally, Lenzmeier says, the unit is run as one restaurant, but separate marketing campaigns are usually run for each brand.

Lenzmeier says one of the biggest benefits of having three brands in one restaurant is the fact that it can cover multiple demographics and dayparts.

“You’ve got your chicken as the base and the sides, and the yogurt business has a different schedule than the chicken business,” he says. “And the cupcakes, probably 70 percent of that is takeout.

“By putting the three concepts together, I think you better leverage your capital investment and appeal to three different [kinds of] people—some people may not like the chicken, but may like the yogurt or the cupcakes, that type of thing.”

Another benefit of the three brands, Lenzmeier says, is that customers who come in for one item may leave with another.

“They come in for the chicken and end up taking a cupcake home, or a family will come in after school and the kids will get chicken, and mom gets some yogurt,” he says. “We do have a fair amount of that cross selling with folks who come in the front door.”

Still, Lenzmeier—whose experience prior to opening the tri-branded store included running two FreshBerry shops—says it’s a challenge to ensure that each brand “gets its proper attention.”

“It’s not that it can’t be done, but you have to learn three different product lines, and you have to be good at all of them,” he says.

By Sam Oches