Cinnabon - Why They're Successful

today's video is brought to you by audible you can start listening with a 30-day trial that allows you to choose one audiobook and two audible originals for free and I'll tell you how to do it you simply go to audible.com slash company man or text company man - 500 500 I want to ask is Cinnabon a really good name I mean of course it's fine but is it really good because I don't think I fully understand it the name takes the word cinnamon and replaces the M with a be turning cinnamon into Cinnabon the cinnamon part makes perfect sense but then where does that become from is it supposed to be like fusing the word cinnamon and bun together because they make cinnamon rolls not cinnamon buns and if they do qualifies buns they don't call them buns now am i overthinking it yeah obviously but it seems like that B should have some sort of meaning huh get past it everyone's been to Cinnabon right or at least seen it in the mall they are everywhere there's twice as many Cinnabon today as there were 10 years ago over 1500 of them spread across 50 countries all over North America a good part of South America's sections of Europe Asia Australia this is a shopping mall staple that's been around for decades and is growing faster now than ever before they sell over a billion of these cinnamon rolls every year and are just unlike anyone else so I think this is a perfect subject to talk about why they're successful the main guy here is Richard Coleman in the late 1950s he attended graduate school at the University of Washington a few years after graduation in 1961 he took $1,000 he had saved teamed up with his uncle and together they won a contract to supply his former University's football stadium with concessions for the next three years he would be the guy that supplies all the hotdogs and peanuts to the fans through the rest of the 1960s he grew this concession business by gaining new contracts from different arenas and convention centers all across the country in 1969 Coleman decided to branch out a bit by opening a restaurant called the Red Baron he quickly separated that restaurant into its own company apart from the concession business and called that new company restaurants unlimited this company became an even bigger success through the 1970s he was building multiple chains of restaurants the big ones early on were the steakhouse called clinker dagger and a seafood place called Horatio's both of them had a theme initially they were around the Seattle area but quickly expanded all over the west coast by the 1980s they were operating so many different types of restaurants under all of these different names I know I know you want to hear about these delicious cinnamon rolls and I'm over here talking about these high-end seafood restaurants I'm going to need you to stick with me because it's all about to come together in 1985 when restaurants unlimited was up to 16 locations with various names and themes and foods collectively pulling in about 40 million dollars a year the company was looking for a bit of a side business something a little simpler that wouldn't require too much attention because they did have 16 restaurants to worry about ideally it would be cheap to get started but have potential for future growth if they chose to pursue that their answer was Cinnabon because really there's not much to it they have small locations that are simple enough to operate especially since in the beginning they only sold one thing which could also lead to pretty good margins it's important to highlight that they did not expect much from Cinnabon it was a simple side business that they figured could one day maybe grow to 50 locations so now they have their idea but an important piece of all this is having a good recipe if you're only selling one thing that one thing better be pretty good to develop it they ask for some help from this woman who already ran a bakery in the area her name was Geralyn Brousseau but many know her by her nickname the cinnamon which come on try to say cinnamon without smiling I also want to mention Geralyn Brousseau is also the founder of this organization called peace trees Vietnam they were to remove landmines left over from the war so that's pretty honorable back to Cinnabon once they had their concept and the recipe and everything all set they finally opened the first ever Cinnabon it was in the then called SeaTac mall near Seattle and I'll say they did not exist as one location for long that first one went up toward the end of 1985 and by the end of 1986 there were twenty two of them a bit of an odd thing about Cinnabon is they were never really a local brand usually for something like this they may be known around the Seattle area and then expand down to California and eventually to the East Coast something like that just focusing on a certain area and then once you're comfortable there set out to conquer another area but they never really did that their second location was in Las Vegas and their third one was in Chicago now I suspect the reason they took this approach was because they never really cared about building the brand it was more about getting some quick side money and building them wherever they saw the higher potential for that but I don't think it was hurting them too much they were connecting the dots between the locations and by the early 90s there were hundreds of them all over the country they were able to expand so fast because well they were making tasty cinnamon rolls but mainly because they were using a franchising model that's where other people were running the stands but paying Cinnabon for the use of their name in the recipe by 1995 they were expanding beyond shopping malls and it was looking like they had a Starbucks like potential just thinking that one day there could be a Cinnabon in every mall in Airport and supermarket theme park practically anywhere as a result Cinnabon was sort of taking over restaurants unlimited more than half of their sales were coming from Cinnabon and that was by far the most recognizable part of their business in 1996 after just over a decade Cinnabon was spun off into its own separate company from there they continued to grow on their own up to three hundred and sixty three locations until 1998 when they were bought by AFC enterprises for sixty four million dollars at that time AFC enterprises were the owners of Popeyes Chicken and Church's Chicken in addition to Seattle's best coffee and some other restaurants despite adding hundreds of new locations over the next five years they sold it in 2004 for a third of what they bought it for in addition they sold most of their other restaurant chains and dealt with this accounting scandal around that time so this is a deep subject the buyers were focused brands who still own it today along with some other notable brands through all of these changes over the past 35 years Cinnabon has always been growing and has always maintained a certain level of success so let's look more specifically now at why they're so successful and we've already touched on a lot of it this franchising model that makes it easy to expand and grow brand recognition that extremely limited menu early on that provided high margins and the much-needed simplicity at the time the recipe that they were sure to perfect before selling a single cinnamon roll you know to go along with the recipe specifically the cinnamon I've tasted it and I can confirm that this is not your average cinnamon it's actually Makara cinnamon which is their own trademarked blend that source from Indonesia having that unique taste that separates them from all the other cinnamon rolls out there is important the same thing goes for their gooey frosting and the other parts of their food but it's that cinnamon that stands out for me to go along with this their advertising I have never seen a Cinnabon commercial and that's because Cinnabon has never had much of an advertising budget their most effective methods are free they get you when they're from the smell we all know this you'll be walking by minding your own business and then that cinnamon smell hits your nose and you start floating toward it like a cartoon character passing by a freshly baked pie on a windowsill they know what they're doing and that's a big reason they work so well in malls and airports they even position their ovens in such a way to project that smell toward you and traditionally there's been a lot of word of mouth type advertising I'm sure you've heard someone talk about how much they love Cinnabon in modern times they've capitalized on that through some social media campaigns have you ever seen the show better call Saul it's a perfect example see in the show Breaking Bad the character Saul Goodman had this throwaway line where he specifically mentioned Cinnabon Milwaukee month from now best-case scenario I'm managing a Cinnabon in Omaha so then the Cinnabon Twitter account responded with this funny tweet linking their career site so then moving forward about a year and a half the show spin off better call Saul premieres and then there Saul working in a Cinnabon that's all they've started all of their season premieres and all of a sudden Cinnabon has this free organically created tie-in with a large television show it's turned into yet another form of free advertising that's been beneficial to the company the final reason behind their success that I'd like to talk about is licensing and brand partnerships I'm talking about these consumer products that you see at the stores and at the restaurants and they have really stepped up their game it's now hundreds of millions of dollars worth you must have seen these before it they've worked out deals with Pillsbury to use that Cinnabon flavor and their cinnamon rolls and toaster strudel Keurig to create Cinnabon bakery inspired coffee Airwick if you can believe that so now you can have that lovely Cinnabon scent in your home there's been a vodka and a lip balm in 80 other Cinnabon branded products what about the mini bond from Burger King or the Cinnabon delights from Taco Bell they're working with so many other companies and it's all bringing in revenue while further building the brand so why is Cinnabon successful they've taken advantage of a franchising model that's complemented by the simplicity of the business they've created a unique product that's unlike anything else out there which is partially due to their perfected recipe and trademark blend of cinnamon they have multiple means of cheap yet effective advertising things like that delicious scent going through the shopping malls and being featured on better call Saul and on top of that they have all these partnerships with major food brands I'd say that's a pretty good recipe for success that's a lame line let me know in the comments what do you think of Cinnabon I have to respect to any brand that's created something that's unlike anything else and whenever that's the case I'd like to take a deeper look and see exactly what makes them so unique and successful I also want to ask what do you think of their food because here I'll make a bit of a confession I like Cinnabon I do I even spent 470 on one of their classic rolls to get inspired for this video but it's not my favorite I just feel like it gets a little overhyped I feel the same way about Krispy Kreme they just both have this reputation that's impossible to live up to maybe it's just fun to exaggerate about them I don't know let me know where you stand is this in fact one of the best things you've ever eaten or simply a tasty treat you can enjoy as part of your day at the shopping mall in any other thoughts you have about Cinnabon leave them in the comments as well I'd like to hear what you have to say today's sponsor is audible which gives me a great opportunity to recommend this audio book called the smartest guys in the room it's about the Enron scandal I'm sure you've heard about it I made a video about it a while ago providing a simple overview but this book goes into detail more so than anything else I've encountered there was so much going on over at Enron I've been learning about it for years now and I'm still hearing new things from it and the best news is through audible you can get it for free audible is great you can access an unbeatable selection of audio books members get a credit good for any audiobook you credits roll over to the next month if you don't like your choice you can exchange your audiobook which is important because you get to keep this thing forever to get started simply go to audible.com slash company man or text company man 2 500 500 ok one more thing we all know that the Cinnabon Classic role is not a health food in fact everyone loves to point out how ridiculously unhealthy it is that's the two things they're so tasty but so unhealthy I did not want to be one of those people that ruin the fun but then I started reviewing their nutrition facts and it almost feels irresponsible not to at least mention it so I'll just have peace of mind if I display this for a second and then I'm out of here thank you for watching [Music]

Channel: Company Man

Views: 712,144

Keywords: Cinnabon, Mall, Cinnamon Roll, Business, Companies

Id: aZnYmLgRUVs

Length: 12min 17sec (737 seconds)

Published: Wed Dec 25 2019