Beth Kowitt

Mrs. Fields looks beyond the mall

April 16, 2014: 5:00 AM ET

Stale sales are pushing the cookie-maker beyond its traditional base and into an alliance with TCBY.

By Beth Kowitt, writer

A rendering of a combined Mrs. Fields/TCBY

A rendering of a combined Mrs. Fields/TCBY

FORTUNE -- It's a sorry state of affairs when Mrs. Fields is struggling to make it in the mall.

For the past five years the iconic cookie purveyor has seen its sales slip because of declining traffic in lower- and mid-tier malls and an influx of competition from the likes of Cinnabon, Auntie Anne's, and Wetzel's Pretzels. The math is tough: The typical Mrs. Fields outlet needs to sell 200 cookies a day just to cover the rent. Not surprisingly, it's hard to attract new franchisees when your existing operators' sales are dropping.

To reverse the tide, Mrs. Fields is making a big change, moving beyond the mall and into the street. Going forward, about half of all new Mrs. Fields will open up outside of malls in locations shared with frozen yogurt chain TCBY, says Neal Courtney, CEO of Famous Brands International, which owns both chains. (Private equity firm Z Capital Partners in turn owns Famous Brands.) The new co-branded format will also have retail space for Mrs. Fields' gift merchandise -- treats in tins, baskets, or boxes -- which is currently available only online.

"We've got franchisees who have invested life savings into these brands," Courtney says. "They're barely making it and costs are continuing to go up, so we've got to do something different."

MORE: How companies are using wearables in the workplace

Courtney is quick to point out that Mrs. Fields is not abandoning the mall, currently home to about 95% of its outlets; most new locations that Famous Brands opens in malls will also be joint Mrs. Fields and TCBYs, and some existing Mrs. Fields will be converted to the co-branded concept. A recently converted Chicago location has already seen a sustained sales increase of 60%, according to Courtney. The move also helps differentiate TCBY, which operates in a very saturated frozen yogurt field. Expect to see additions to the menu like frozen-yogurt cookie sandwiches.

There are currently about 250 TCBYs and Mrs. Fields locations apiece. Combined sales for the two brands are about $250 million.

Courtney says the company had considered non-mall locations for Mrs. Fields before. But the brand doesn't work as a standalone concept in strip centers. Cookie buying tends to be an impulse purchase -- perfect for a shopper wandering around a mall -- rather than a destination activity. But TCBY has historically shown the ability to attract customers at street locations, and Courtney thinks both TCBY and Mrs. Fields will benefit from being paired together.

MORE: Is this tiny gadget the future of smoking?

Cedrik Lachance, a managing director with real estate research firm Green Street Advisors, says that brands like Mrs. Fields are at the wrong end of an industry shift. Sit-down restaurants like the Cheesecake Factory (CAKE) and California Pizza Kitchen are thriving as anchor tenants in higher-end malls. But when it comes to tony properties, the prospects aren't good for chains like Mrs. Fields. Rents are high, shoppers are gravitating to healthier foods options, and the cookie seller lacks the cachet sought by luxury mall operators. That relegates the cookies to lower-tier malls, which are struggling because their core shopper is still struggling.

Consumers should expect to see more co-branded mall concepts moving forward. For some chains, it may be their best hope.

  • Wal-Mart goes all, like, 'granola' on us

    The world's largest retailer and No. 1 purveyor of groceries in the U.S. is making a huge push into Whole Foods' territory of organic food.

    By Beth Kowitt, writer

    FORTUNE -- Wal-Mart Stores (WMT), better known for its low prices than health-food focus, is making a big push into the organics business.

    The retailing giant already sells 1,600 organic products, but the company today is announcing a a new line of goods MORE

    Apr 10, 2014 12:01 AM ET
  • Jamba Juice tries something new: Serious juicing

    Whether consumers will kale up to the bar is another matter.

    By Beth Kowitt, writer

    FORTUNE -- There's one major juice-related trend that Jamba Juice (JMBA) has missed over the past half-decade or so -- and that's serious juicing. Now, the $230 million-a-year purveyor of fruit smoothies says it's pushing hard into the pulverization business.

    The Emeryville, Calif. company, which has long sold the staples of the fresh-squeezed realm -- orange and MORE

    Jan 29, 2014 11:38 AM ET
Search This Column
View all entries from this: Week, Month
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.