Over the years, some restaurant companies have collected multiple concepts through acquisition and developed their own brands.

Lately, some multiconcept operators are starting to combine several brands under one roof with the hopes of spurring growth and more. That got me to thinking: what insights can I provide the on the best way to develop a co-branded concept so that it drives the best unit economics?

Before looking ahead, it’s wise to revisit the past.

Tricon Restaurants was one of the first multi-concept operators to take a run at co-branding by combining Pizza Hut, Taco Bell, and KFC chains in the same location several decades ago. Another example of a so-called “trombo” restaurant offering occurred when Dunkin' Brands combined its Dunkin' Donuts, TOGOS and Baskin-Robbins chains in a single location. The idea behind such an approach was to eliminate the so-called veto vote by giving customers more choices when deciding where to eat. This approach also sought to expand the dayparts the facility would cover and share in the capital cost of development.

The execution of the Tricon example was a segregated approach that kept each brand’s production areas somewhat separated, instead of integrated. The results speak for themselves since this concept did not grow as management hoped. While plenty of reasons contributed to this initiative missing the mark, one of the more notable factors was the sheer size of these locations and its impact on driving unit economics. Specifically, separating the kitchens led to large back-of-the-house areas that resulted in higher capital costs. A bigger back of the house also required more labor to operate. Due to the layout keeping each concept separate, it became hard to drive efficiencies because each of the three concepts required its own minimal amount of labor.

Fast-forward to today and the industry continues to see a variety of multi-concept operators taking another run at co-branding. What’s notable about today’s attempts at co-branding is that they span a variety of operator segments and menu styles. FAT Brands, for example, is taking a two-pronged approach with some of its limited-service restaurants. One of its co-branded offerings combines Great American Cookies and Marble Slab Creamery under one roof, while another combines Fatburger and Roundtable Pizza in a single location. Among limited-service restaurants with healthier menus, WOWorks is pairing its Frutta Bowls and Saladworks concepts. Dine Brands is testing co-branding of the Applebee’s and IHOP concepts.

Design Recommendations

From a functional perspective, here are four questions to carefully answer to make sure that the concept drives the necessary efficiency to be successful:

• How integrated is the kitchen? A more integrated kitchen has the potential to lower capital costs by using less equipment and workstations across more menu items.
• How versatile is the equipment? To reduce capital costs, try to include equipment that more than one brand can use. Initially, such an approach may lead to some higher equipment costs, but it can lower costs, too, by reducing the back-of-house space requirements and labor requirements.
• How integrated is the labor? The more integrated the labor, the less labor costs. Determining the minimum staffing levels the co-branded facility requires is key. In most likelihood, sales levels will require minimal staffing levels for most the unit’s operating hours. This is why labor represents an important consideration when streamlining labor costs, to drive better unit economics.
• How easy are the processes and procedures? Remembering that we are designing for cooks, not for chefs, is very important. Using the KISS (Keep It Simple Stupid) principle is key here. Sometimes, it is better to buy value-added food products to help keep things simple, as well as drive higher product consistency and quality. Develop similar operating parameters, including time to produce the items and throughput capabilities. It is much easier to operate a kitchen when all the products take a similar amount of time to produce.

Other key questions to ask include:

• Do the offerings expand to different dayparts to drive traffic across more hours of operation? The integrated offering should seek to drive steadier traffic levels across all operating hours, thus resulting in fewer, or, at the very least, shallower sales valleys through the day.
• Do the concepts have similar brand promises? It is better to have the same service parameters for the participating concepts. Integrating menu offerings that have a lot of steps to produce alongside others that do not, can create training challenges, issues with service time, as well as product and quality consistency, and more.
• What other technologies can help enhance the brand experience and drive better unit economics? This can include options like digital ordering via kiosks or apps. Keep your eye on the application of leading-edge (proven) AI technologies that can help simplify operations.

I always remind the brands that we work with that although very few customers walk out of their restaurants mentioning that they had a very productive and efficient experience, if you don’t deliver on this area, it will impact the guests’ experiences, which will result in a lower likelihood of future visits. Keep in mind that efficiency has many tentacles and applying industrial engineering principles will help optimize efficiency across all the design areas.

Co-branding can work, but it is important to consider all the functional, retail and marketing aspects of it. Doing so will help the concept deliver topline sales, while streamlining capital and operating costs, resulting in better unit economics that can fuel brand growth.