Is Chobani smart to open cafés in grocery stores?

Discussion
Rendering: Target
Nov 28, 2016

Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.

Chobani has opened a Chobani Café inside a new-style Target in New York’s Tribeca neighborhood and plans to open a Chobani Creation Bar in a ShopRite in Stirling, N.J.

The 1,100-square-foot space inside Target’s new Tribeca store near the World Trade Center is an important part of the discount chain’s efforts to figure out smaller formats stores that will work as its traditional big boxes struggle.

For Chobani, the cafés are part of a move to expand yogurt consumption beyond breakfast occasions to other day parts, including lunch and evening snacks, as well as to get Americans used to incorporating the brand when they cook. Chobani-branded foodservice outlets inside grocery stores are also part of the company’s big pivot toward making itself an “experiential” brand.

Chobani opened a standalone store in Manhattan’s SoHo district four years ago.

“Our cafés are a special physical manifestation of the brand,” Peter McGuinness, Chobani’s chief marketing officer, told CPGmatters. “We’re constantly looking for opportunities to expand our cafés in more locations where guests and fans can experience the Chobani brand.”

At Target’s Chobani Cafés, servers handed out freshly popped popcorn coated with yogurt powder infused with Mediterranean herbs to encourage creativity with Greek yogurt. Mixed yogurt with warm oats, mixed ancient grains and pomegranate was also served. Other experimental options included Chobani with pistachio, chocolate and pieces of fresh orange; a Meyer lemon meringue yogurt; as well as a green-tea-and-melon-infused creation.

Said Mr. McGuinness in a Target press release, “It’s a sort of test kitchen for what you’ll see us doing down the road, and for our fans, it’s come to represent an incubation and inspiration destination.”

DISCUSSION QUESTIONS: How do you see Chobani and grocers benefiting from Chobani Cafés opening inside stores? Do you see room in food stores for more vendor shops in other categories?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Good, creative marketing by Chobani that is bound to draw some new interest inside Target. But I don't expect a stampede."
"Great MOVE! Food and beverage are the two things — after air — that humans need to survive. And they drive TRAFFIC!"
"If they are careful which stores to place these cafes in, then they are likely to be successful..."

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16 Comments on "Is Chobani smart to open cafés in grocery stores?"


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Tom Redd
Guest

For the healthy, hip and people with young kids this is a good trend to jump on. Why? They all get deep into yogurt and health stuff until the next trend. Then the yogurt all day long shifts to chocolate-covered spiders or some other health fad.

For Target it would be smart to be prepared with the next trend for the trend-within-trends store and be one step ahead of the Millennials/Generation Zers. These generations are a riot — they are sure all this healthy, trendy stuff makes them hip and helps them live longer, yet do not get the concept that their smartphone-bent necks and laptops and over-gaming will cause them some pain and agony in their older years.

Warren Thayer
BrainTrust

Chobani benefits from a new revenue stream, more exposure and the ability to test and sample for new usage occasions. It has worked with Starbucks in so many supermarkets and other food vendors with storefronts in airports. I was a little surprised to see 1,100 square feet — it’s bigger than I expected. If this begins to take off at all, others will surely follow and then retailers will have a stronger hand when it comes to negotiating. I suspect Target is still more in an experimentation stage than many other retailers, and more likely to try this. Other categories can try, but there’s a limit to how many of these you want to have in your stores. You don’t want duplication or cannibalization, and that could require some unpleasant policing and interesting contracts. Net-net, nice idea. Good, creative marketing by Chobani that is bound to draw some new interest inside Target. But I don’t expect a stampede, for reasons I cited.

Anne Howe
Guest

For Chobani this strategy represents access to the target audience, as described so well by Tom Redd below! But for retailers I think this counts as a viable option to give shoppers an experience that is useful and enjoyable and accrues engagement credit to both brands. It breaks up the mundane trip. It also creates an “engagement space” that can be re-purposed to other brands or used by the retail brand when the Chobani experiment is over, which is inevitable at some point.

Dave Wendland
BrainTrust

For Chobani it’s visibility, reach and trial. For retailers it’s experiential, lively and engaging. I see it as a win-win and I definitely see more room for vendor shops in our future (assuming something as “fashionable” and appealing as Chobani is offered).

Ben Ball
Guest

High marks for creativity and added interest to the Target environment. The first question that comes to mind is that of the payout for Target. If it is a fixed rent deal they are evidently happy with it. If it is a revenue share it is a much dicier proposition since Chobani’s initial efforts seem to be more promotional than profitable. And, of course, there is the question of how Chobani looks at this on the P&L. Is it a revenue generator or a promotional expense? Very different success criteria apply given that answer.

Steve Montgomery
BrainTrust

Supermarkets want to be seen as more “restauranty” and devoting space to Chobani cafés helps them accomplish that. It does so without the supermarket chain having to make the investment, requiring the internal expertise, etc.

The cafés will help change the consumer’s perception of the store and Chobani will get brand exposure that would be very hard to duplicate. Sounds like a win/win unless the cafés’ sales don’t support the costs involved.

Herb Sorensen
BrainTrust
Great MOVE! Food and beverage are the two things — after air — that humans need to survive. And they drive TRAFFIC! They made Walmart the largest retailer in the world and are driving the Costco business as well, with Amazon hot after the food space. These stores-within-a-store are a breed of their own — and very successfully drive both the host’s business and their own. My local Albertsons is a case in point, with Starbucks. Interestingly there is a large, free-standing Starbucks store at the corner of the parking lot for this Albertsons, as well as the in-Albertsons Starbucks. We did a formal research study years ago that showed that this arrangement of stores did NOT compete with each other — two totally different shopping crowds. Just like in the case of Walgreens on the southbound side of Michigan avenue going into Chicago. It was one of the highest performing Walgreens stores. So they opened another store on the northbound side of the store and now have TWO high-performing stores on opposite sides of… Read more »
James Tenser
BrainTrust
So is the in-store Chobani cafe intended as a sampling center or a profit center? From the links provided I could not tell. So I searched and found a menu with prices from the Manhattan store. With prices. Mystery solved. The acceptance of this and similar in-store eatery concepts by supermarkets will come down to profitability per square foot. We already see that where center store merchandising and inventory become more optimized it opens more floor space for high-margin perimeter departments. Our local Safeway has a Starbucks kiosk in the front lobby. Our local Whole Foods has a wine bar. Why not a Chobani cafe in the corner by the deli? Or a Boar’s Head sandwich shop? Or a Progresso Soup stop? Or a DiGiorno pizza slice bar? It all depends on the shopper response and the comparative yield. For the food retailer who defines a strategy of making its stores a destination where shoppers will happily linger, nothing delivers like prepared food and a comfortable place to sit for a few minutes. There’s promise… Read more »
Lyle Bunn (Ph.D. Hon)
Guest

The break during the shopping experience is an excellent opportunity to deliver merchandising messages.

Adam Silverman
Guest

This is a good move! Grocery stores are all about maximizing the real estate of the store, placing products in key locations to maximize sales. It’s a win for Target, which gets another revenue stream. From the Chobani point of view, the initiative must be measured from a brand influence perspective, hence why the marketing team is leading the effort on these stores. Yes they will have a P&L, but the revenue is likely to be measured not only on the basis of sales in the store but on the influence of the cafe on Chobani sales in the region. Just another tool in the marketing mix.

Roger Saunders
Guest

The roots of Chobani from its founding have been to foster healthy eating and a healthy lifestyle. Innovator and Founder Hamdi Ulukaya made certain to weave that quality/characteristic into the product profile throughout the company’s rise to success. And Chobani’s raving fans have fully embraced that characteristic, helping push the privately-held brand past the $1 billion level within the first five years.

Based on the Prosper Monthly Consumer Survey, Chobani consumers provide the brand with an impressive +40.5 percent Net Promoter Score (NPS) rating. Yoplait and Dannon sharply trail those ratings among their consumers.

The Manhattan Soho store is a great treat. It brings in the neighborhood families and people who are employed in the neighborhood, as well as out-of-town business folks working their way from Wall Street up to midtown.

It’s a smart move to selectively roll these mini-marketing machines out to unique, densely-populated areas. They are traffic builders for stores like Target that will benefit from the glow of the Chobani consumer.

Lesley Everett
Guest

Giving customers an “experience” of the product has to be a good move and I’m supportive of that, however, I think this will only work well for Chobani and Target in so-called trendy areas. If they are careful which stores to place these cafes in, then they are likely to be successful — I’m a big fan of getting consumers closer to the brand by providing a great personal experience.

Craig Sundstrom
Guest

Even at (only) 1100 sq. ft., this strikes me as a questionable use of real estate (at least if it’s more than just some temporary pop-up). Technically, it’s supporting only one brand of a narrow segment of grocery, and even if we assume — with fingers crossed — that it will end up promoting the whole dairy area, that’s a lot of space to give up.

As for this being “an important part of the discount chain’s efforts to figure out smaller formats stores,” uh oh … I sure hope that’s promo more than reality because I don’t think this will move the dial much.

Kim Garretson
Guest
5 years 5 months ago

It’s really interesting that Target has chosen Chobani for this experiment, knowing that Chobani’s biggest competitor is General Mills which is based in the Twin Cities with Target, and has been a major vendor a lot longer than Chobani, and I would venture a guess that Target revenues from all General Mills brands swamps that of Chobani by many times. Target has traditionally looked local-first in partnerships like this, so I wonder if they simply couldn’t come to terms with GM, or the Chobani brand was just too tempting to go with rather than a GM brand.

matthew cook
Guest

Okay, I’ll be the naysayer. From a CG company perspective, Chobani is likely to get very little out of this concept. Yogurt companies have for many years tried to put their brands out there in alternate channels, with the same arguments: new revenue and brand exposure. Being in many different channels like food service, C-store, schools, and airlines as a whole package collectively does add volume and exposure; but Target is one concept. I’ll go out on a limb and say that even if Chobani had a cafe in every single Target in the country, the gains would be negligible. Think of the infrastructure and management required just for one cafe (refrigeration, utilities, labor, signage, inventory, point of sale, etc.). And the turns/margins just don’t justify it. My last point would be that Chobani hardly needs the brand recognition.

Tony Orlando
Guest

This concept can work in the urban areas, and high-end neighborhoods, with the foodie crowd. In my town they want it for 99 cents every day, and I have to provide that for them. Follow the money areas, and you will see more of this type of Café concept going on, as price no longer is the deciding factor there as it is in my area.

wpDiscuz
Braintrust
"Good, creative marketing by Chobani that is bound to draw some new interest inside Target. But I don't expect a stampede."
"Great MOVE! Food and beverage are the two things — after air — that humans need to survive. And they drive TRAFFIC!"
"If they are careful which stores to place these cafes in, then they are likely to be successful..."

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