Restaurants Go Retail
Ron Green may be in the restaurant business, but he’s made a hefty profit in retail.
Soon after founding Another Broken Egg Café in Mandeville, Louisiana, in 1996, Green began selling mugs emblazoned with the Another Broken Egg logo inside his diner.
“I took a chance and spun the wheel,” Green says of his decision to purchase 100 of the handcrafted stone mugs for $700.
Within two weeks, Green sold all 100 round-belly mugs at $16 a pop. He’s been restocking ever since.
Over the years, Green, who now oversees 24 Another Broken Egg eateries, has sold more than 250,000 mugs and expanded his in-store merchandise to include t-shirts, vases, water pitchers, and more.
For restaurants branded merchandise can bolster brand recognition, competitive positioning, customer loyalty, and revenue, particularly since margins on merchandise can exceed 50 percent. At Another Broken Egg, for instance, Green purchases the handmade mugs for $8.65 and sells them for $18.
For the last 25 years, The Greene Turtle Sports Bar & Grille, a 36-unit chain in the mid-Atlantic states, has sold apparel, glassware, can koozies, and a host of other items carrying The Greene Turtle name.
Spokesman Chris Janush says the branded merchandise, which represents about 4 percent of the company’s systemwide sales, helps the chain build both brand awareness and relationships with customers.
“If we see somebody … wearing one of our t-shirts or hats, for example, we hand them a ‘You’ve Been Spotted’ card that entitles them to a free order of wings on their next visit,” Janush says.
“It’s a little thank you for supporting us and it helps strengthen our relationship with the customer.”
Indeed, effort and strategy will help ensure a restaurant captures the full benefits of branded merchandise.
Another Broken Egg’s success, for instance, has been driven by differentiation.
As the chain has opened new locations, Green has unveiled mugs with city names as well as relevant colors and imagery.
To wit, the exclusive mug at Another Broken Egg’s Burbank, California, eatery features a movie reel emblem, while the purple and gold mugs available at the Baton Rogue restaurant celebrate the in-town LSU Tigers.
“Having distinct mugs helps build the collectible factor and draws connections to the local community,” Green says.
John Bowen, dean at the University of Houston’s College of Hotel and Restaurant Management and co-author of Restaurant Marketing for Owners and Mangers, says it’s important that the merchandise matches brand identity.
“Selling a pint glass at a coffee shop just doesn’t fit,” he says.
Bowen suggests operators place products in an accessible, well-traveled area of the restaurant and have depth to the inventory. Operators should also tie pricing to the restaurant’s image, target customer, and financial goals, perhaps bundling items together to build the value perception.
Janush says it’s key to keep the merchandise fresh and to monitor the trends, specifically colors and styles.
“New items always help,” he adds.
By Daniel P. Smith