Friday, November 30, 2012

Cinnabon

From Hooters To High Places: How Kat Cole Turned Cinnabon Into A $1 Billion Brand

Kat Cole, 34, got an unlikely start in the food industry. While in high school in Jacksonville, Fla., she worked part-time as a Hooters girl, serving beer and chicken wings in those tiny orange shorts. At age 19, she got a once-in-lifetime opportunity to help the restaurant chain expand internationally. She hung up her plans to become an engineer and lawyer, opting instead to take the executive path in food retail. In the decade she spent at Hooters, Cole says it went from approximately 100 locations and $300 million in revenue to 500 locations in 33 countries and $1 billion in revenue.

Now Cole hopes to work her magic again. This time as president of shopping-mall cinnamon roll brand Cinnabon, an Atlanta, Ga.-based unit of the FOCUS Brands portfolio, which also includes Carvel, Auntie Anne’s Pretzels and Moe’s Southwestern Grill. Beyond its 1000 franchise locations in 50 countries, Cinnabon has expanded into grocery-store products by partnering with packaged-food kings Pillsbury and Kellogg. It’s also ramping up its presence in other restaurant chains by teaming up with fast-food leaders Burger King and Taco Bell. Cole says it’s about to hit $1 billion in retail sales and will soon be considered one of the “world’s greatest food brands.”

She sat down with me to reveal what’s in store for the company, how she ended up here and why those little shorts were the best thing that happened to her.

Jenna Goudreau: Bring me up to speed on the Cinnabon business.

Kate Cole: It’s becoming one of the world’s greatest food brands. Eventually it will end up in the bucket with brands like Oreo and Hershey.

That’s a bold statement for a shopping-mall pastry.
It’s no longer just a bakery in malls. That’s still the heart, but it’s only the nucleus of a much bigger thing. Several years ago Cinnabon started getting into consumer packaged goods. We own a proprietary ingredient, Cinnabon cinnamon, which is chemically different at the cellular level, making it gooey and aromatic. Because we’ve built credibility in the cinnamon roll space and Pillsbury is the largest seller of refrigerated dough, we joined forces and put our cinnamon in their rolls and our name on the package.

We continued to expand into waffles and pancakes, which led to a partnership with Kellogg’s cereal and other smaller branded partnerships. We now have 60 products—including syrups, sprinkles and Cinnabon International Delight creamer—in grocery and big-box stores like Costco, Wal-Mart, Target and Publix. People go to the grocery much more often than the mall or airport, so it’s a good way to be a regular part of their lives.

You’re also venturing into product licensing. How does that work?

Making products for other restaurant chains is the final frontier and the reason we’re about to hit $1 billion in retail sales, a major milestone for the brand. Licensing is the love-child of franchising and consumer packaged goods because we are now developing products for immediate consumption at other restaurant chains. We’ve got a doughnut product that we developed for Taco Bell called Cinnabon Delights, and we just launched Cinnabon Minibons in over 7,000 Burger King locations. The chains want something that will resonate with consumers, so they’ll pay a premium. The cinnamon, dough and frosting are all proprietary, so with these ingredients we can go anywhere.

How do you mitigate the risks of expanding so rapidly?

Many leaders go wrong by turning their backs on their core and chasing the next thing. My licensing deals would have limited life if the franchises went away, so it’s critical to reinvest in the core. We have about 25% of our domestic franchises remodeled. They’ve got a sexier, sleek look that doesn’t look like Grandma’s bakery. By the end of next year, 50% will be reimaged.

This is not a healthy food. The classic roll has 800 calories. How do you balance business and community responsibility?

There is a place in the market for indulgent brands. Even though there’s a big focus on health, Pres. Obama still has a greasy hamburger every once in a while. We’re not telling people to eat a classic roll every day. Everybody gives themselves discretionary calories. If you’re going to give yourself a treat, give yourself something that is so worth it. It has more pleasure per calorie than anything else that’s out there.

You’ve been running major food brands since you were in your early 20s. Do other leaders raise an eyebrow at your age?


If they do, they’re doing it on the inside. Youth is in my favor. Anytime you’ve got someone young, they’re curious. I’m humble enough to know there’s a whole lot of [stuff] I don’t know. I ask for a lot of help and people are generous when you ask.

Your career path began in an unusual place: A Hooters restaurant in Jacksonville, Fla.

I had a single parent—a mother who worked three jobs and fed us on $10 a week—so I started working as early as the law would permit. I sold clothes at The Avenues mall after school before I was recruited to be a Hooters hostess. By 18, I was a Hooters girl and loved it. When the cook quit, I learned how to run the kitchen, and when the manager quit, I learned how to run a shift.

I went to college at the University of North Florida in Jacksonville, planning to get an engineering degree and then go to law school. When I was 19, I got the opportunity to go open the first Hooters restaurant in Australia. I’d never been on a plane. I didn’t even have a passport. I realized that in Miami you could get a passport in one day, so I flew to Miami, got a passport and flew to Australia the next day.

I was in Sydney for 40 days, came back and within 10 days was asked to open the first restaurant in Central America. Then ones in South America, Asia, Africa and Canada. By the time I was 20, I’d opened up the first Hooters on most continents outside the US and was failing school. So I quit to become the head of Hooters corporate training. I’m a college dropout.

I read that you have an MBA. How did you swing that?

It’s very rare. I moved up quickly at Hooters, becoming vice president of the company, and was urged by mentors to go back to school. I was 29 and thinking: Gosh, I’m already a VP of a $1 billion company. Do I really need to go back and finish my Bachelor’s? I took the GMAT, went through double the interviews at the university and got letters from every CEO I knew, including a recommendation from Ted Turner. I was accepted to Georgia State’s MBA program and did nights and weekends from 2008 to 2010. I graduated two months after I started at Cinnabon.

What attracted you to Cinnabon?

I met the current CEO, Russ Umphenour, and developed a major business crush on him. It felt right. It’s a multi-brand portfolio, and I knew I’d get to learn from the other brands. I was interviewing there, still in school, running the Georgia Restaurant Association and handling a huge, complicated Hooters transaction. The CEO had died, and I was asked to lead the company’s liquidation, dealing with analysts, brokers, investors and the internal team. The whole time I was thinking: Thank God I went to class yesterday or I wouldn’t have known what that meant! I started at Cinnabon after Hooters signed the purchase agreement.

Do you have some supernatural ability of multitasking?

I don’t have kids. The work is incredibly fulfilling and I’ve had fun, so it’s easy to do it. Layering in the education was the most difficult.

What advice would you give other young women hoping to succeed in business?

Get diversity in where your experience comes from. Volunteer. Be a part of some industry organization. I started out as the nametag lady, handing out nametags at the Women’s Foodservice Forum events. They took me in when I was 24 and made critical introductions and gave me volunteer opportunities that allowed me to develop other areas of my career like finance and marketing that I wasn’t getting the technical opportunity to do in my company. It was a safe place to run committees and work on projects in different areas.
At one of their events, this woman was lost and I helped her find her way. It turns out she was the founder of Pink magazine, on a ton of tech startup boards and doing big things. I was just helping her find her way, and we ended up being friends. When you do the right things for the right reasons, it always pays you back.

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