Snack chains unleash a blizzard of new products

Nation's Restaurant News, August 11, 1986 by Paul Frumkin

Snack chains unleash a blizzard of new products

In an effort to strengthen sales and attract new customers, snack chains are releasing a flood of new and varied products, including everything from croissant sandwiches and frozen tofu to chocolate chip cookies and decaffeinated coffee.

Dairy Queen and Tastee Freez, for example, are winning a new generation of customers with a combination of soft-serve ice cream, candy, nuts and fruit; Mister Donut and Dunkin' Donuts are seeking to strengthen weaker dayparts with sandwiches; family-oriented Baskin-Robbins is adding a new line of superpremium ice creams; Winchell's is adding muffins, cookies and a larger donut; and Dairy Queen and Mister Donut are testing jointly developed stores that merchandise products of both chains.

And while many of those new products tend to fit comfortably into the chains' existing menu mix, others mark a departure from their traditional fare. For example, the 562-unit Mister Donut--which narrowly missed inclusion in the Top 100 Chains list this year--is rolling out a sandwich alternative called the Delaware Donut--a choice of ham, sausage or cheese baked in a yeast-raised dough.

A similar rollout is in progress at the 1,447-unit Dunkin' Donuts, according to chairman and chief executive Robert Rosenberg. As a part of the chain's croissant rollout, two Croissant sandwiches --ham and cheese and roast beef and cheese--are currently being offered. Other variations on the croissant sandwich are still in test.

The two chains expect those sandwiches will help strengthen sales during the weaker dayparts. "We're positioning [the Delaware Donut] as more of an all-day alternative,' explained Deanne Becker, a spokesman for the Minneapolis-based Mister Donut. "And we think it will move the chain slightly in an all-day direction as well.'

She added that the Delaware Donut is also expected to increase check averages.

Both chains are also rolling out decaffeinated coffee, a product that has steadily been gaining in popularity over the past two years in all segments.

At the same time, Mister Donut is examining another menu item--ice cream. That move, however, is in the context of a year-long, joint-development venture with 4,816-unit Dairy Queen--which has been in test since last November. Menus and systems of both snack chains have been combined in one concept, called, appropriately Dairy Queen/Mister Donut. Both chains are currently operating two test stores each.

"We should complete the evaluation of the test by October,' said Harris Cooper, president and chief executive officer of Dairy Queen. "But right now, things are going well, and all indications look positive. Our original concept of improving the morning daypart with donuts looks to be on target.'

If Dairy Queen decides to add donuts to its menu mix, it would be implemented by one of three possible methods: either by developing its own products and systems; entering into a joint venture with an existing donut chain; or by acquiring an existing donut chain.

"In any case we would be talking with Mister Donut first,' Cooper said.

Dairy Queen's successful Blizzard

Meanwhile, Dairy Queen is reveling in the success of its 1985 rollout of the Blizzard--a soft-serve ice cream product blended with crushed candies, fruits and nuts. Now in about 95% of the units, the Blizzard has captured 22% of sales--and boosted total sales by 15% over last year's, Cooper said.

"It is probably the biggest rollout in the chain's history,' he continued, "and it went a long way toward rejuvenating our same-store sales.'

Much of the new sales are being generated by customers in the 16-to-24-year-old age bracket--a segment the chain had been previously unsuccessful in attracting. "Budget constraints wouldn't allow us to target the teenage market in the past,' Cooper said. "They are the crowd that grew up with McDonald's but never went to Dairy Queen.

"But the Blizzard proved to be a real image enhancer. Suddenly the public was saying, "Hey, these people are doing modern products!''

During the next year Dairy Queen intends to increase the number of existing Blizzard flavors and toppings. There are also plans to introduce a new sundae and a new hotdog next fall-- and another sandwich is in test, but Cooper said that it probably wouldn't be ready for rollout this year.

Grandma Gebhard's, Dairy Queen's premium cookie concept, is currently being tested in one unit. And while it is running somewhat behind schedule, the single unit looks promising, Cooper said.

The 565-unit Tastee Freez is also hoping to stimulate flat sales with its own version of the Blizzard, called Freezee. Launched in April, the new item is currently in about 80% of the chain's stores and is generating a healthy 6% to 8% of incremental sales.

Tastee Freez vice president Jim Braiser said the chain is hoping to attract more health-minded consumers with some products currently in test. "Health, without a doubt, is having effect on sales,' he said. "We're in the midst of looking at several nonred meat and non-deep-fried foods that will address the problem.'