Ice Cream Firm Turns 40 : Baskin-Robbins Starts Program to Revitalize
Every few months, Baskin-Robbins Chief Executive Ronald B. Marley dons a white lab coat, grabs a pink plastic spoon and does his duty to the world’s largest ice cream franchise operation.
For three days straight, six or seven hours at a time, Marley and a quality assurance team taste samples of ice cream from some of Baskin-Robbins Ice Cream Co.’s more than 3,200 dipping stores worldwide.
These quality assurance tests are conducted every eight weeks, and Marley participates “about half the time.”
“It’s a tough job,” Marley quips.
But the 54-year-old former accountant, who has been president of Glendale-based Baskin-Robbins for little more than a year, says he faces a much tougher task: renewing the vitality of the maturing company in an increasingly competitive industry.
This year, Baskin-Robbins will celebrate its 40th birthday, and the company is undergoing something of a mid-life crisis. Sales growth and the pace of new store openings have slowed in the last few years, a host of small competitors has appeared, and supermarkets are taking a large share of the market because many of Baskin-Robbins’ competitors have chosen to distribute through them, Marley said.
Extensive Program
To freeze its competitors’ gains, “we’re changing the basic nature of this business,” Marley said. The changes at Baskin-Robbins, a subsidiary of Allied-Lyons, the London-based food company and brewer, include launching an extensive store-remodeling program, adding new products, spending more on advertising and even offering larger scoops of ice cream.
Baskin-Robbins’ scooping began in Glendale in December, 1945, when Irv Robbins decided to open a store called “Snowbird” that sold only ice cream--an unusual idea at the time.
“There was really no such thing anyplace as a pure ice cream store,” recalls Robbins, now 67, who retired as Baskin-Robbins chairman in 1978. “There were many stores that called themselves ice cream stores, but they were ice cream and sandwiches, ice cream and bakery goods, ice cream and hamburgers, ice cream and this, that and the other thing.
“I just had the crazy idea that somebody ought to open a store that sold ice cream, and nothing but ice cream, and could do it in an outstanding way,” Robbins said.
Robbins soon persuaded his brother-in-law, Burton Baskin, who, like Robbins, had recently returned from World War II, to enter the business with an ice cream store called Burton’s. After two years they combined their five Snowbirds and three Burton’s shops to create Baskin-Robbins.
But the partners’ success created their first failure. “The stores were doing very well--customers liked what we had to sell--but we weren’t making any money,” Robbins said. The brothers-in-law found that they couldn’t give each store in their growing chain the attention needed to turn a profit.
Not Yet Fashionable
“That’s when we hit on selling our stores to our managers,” Robbins said. “Without realizing it at that time, we were in the franchise business before the word franchise was fashionable. We opened another store and another and another, and pretty soon we couldn’t get out of our own way it was going so fast.”
In the early 1950s, with the help of the Carson-Roberts advertising agency (since sold to Ogilvy & Mather Inc.) Baskin-Robbins began developing its distinctive image, the unusual ice cream names, and the “31 Flavors” logo. (Thirty-one was selected to promote the idea that “you could come in every day of the month and have a different flavor,” Marley said. There are actually 545 flavors.)
Baskin-Robbins first went out of California in 1959 by franchising a manufacturing operation in Arizona. By 1965, Baskin-Robbins was available nationwide through 15 franchised distributorships and one in Canada.
“Suddenly we were national because of this (distributor) relationship with local dairies,” Marley said. “We ended up creating the impression in each town that Baskin-Robbins was a local operation.”
Baskin-Robbins has since reacquired some of those operations and now owns five factories, which supply 70% of the U.S. dipping stores, and has seven franchised manufacturing arrangements in the United States and Canada. Baskin-Robbins also has factories in England and Japan.
Money for Expansion
Burt Baskin and Irv Robbins sold the business in 1967 to United Fruit Co. (later called United Brands), partly to avoid estate-tax problems if one of the partners died. Shortly after the sale was completed, Baskin died.
In 1973, United Brands sold Baskin-Robbins to J. Lyons Co. of London. Allied Breweries Ltd. bought J. Lyons in 1978 and changed the surviving company’s name to Allied-Lyons PLC.
Having a corporate parent gave Baskin-Robbins lots of money for expansion and by the mid-1970s, Baskin-Robbins was opening a store every other day. But by 1979, a change in the industry began as “some people decided to make a pretty good ice cream and sell it through a supermarket as distributor,” Marley said.
Between 1971 and 1979, the company’s compound growth rate was 19.51%, but slowed to 8.46% between 1979 and 1984, Baskin-Robbins said. The company will open only about 75 stores in the United States this year. (As a subsidiary of a foreign concern, Baskin-Robbins isn’t required to separately report income and sales figures, and generally doesn’t.)
Design Dates to 1950s
Baskin-Robbins found itself faced with other changes as well. The familiar pink, white and brown stores were originally designed in the early 1950s, when baby-boomers were first booming. But the kids of the 1950s aged while the stores remained child-oriented, with bright colors, an array of signs featuring cartoons and different print styles, sepia-toned pictures of cows and farm scenes, and a smattering of school-desk seating.
“We have always been characterized as a children’s shop,” Marley said. “But as many of those children grew up, their buying patterns changed. Most people that we talk to tend to think it’s a wonderful place for kids. They say, ‘I went there when I was a kid but I don’t go in there as often anymore,’ ” he said.
Moreover, competitors such as Haagen-Dazs have sprung up to serve those aging baby-boomers with fashionable eateries serving ice cream, dubbed “super-premium,” that is higher in butterfat as well as in price and contains less air per gallon than regular ice cream.
So although Baskin-Robbins revenues haven’t declined--franchised ice cream sales were $470 million in 1984 while corporate revenues (including wholesale ice cream sales) were $152 million--”you don’t actually have to experience a downturn before you take action,” Marley said. Baskin-Robbins sold 33.7 million gallons of ice cream in 1984, down 2.45% from 1983, compared to a 0.5% decline to 874.4 million industrywide in 1984.
After spending $750,000 on nine months of research, Baskin-Robbins determined that it must make several changes, Marley said. Central to the program is a $15-million to $20-million remodeling plan that will make each store “a warmer, friendlier place to go,” he said.
Interior Changes
Baskin-Robbins will have several decorating schemes, but in general will do away with the stark white, add earth tones to the interiors, eliminate the school desks and increase the amount of seating, and simplify the “cluttered” array of signs, photos and print styles.
“We’re looking at floors, seating, lighting, colors,” Marley said. “We’re changing the interior of the store to make it more inviting . . . but we’re not going to do away with that image that we have. What we need to do is enhance the feel and respond to the present-day smart consumer.”
Baskin-Robbins also must respond to competition from supermarkets, which now offer a higher-quality product than in earlier years, including super-premium ice cream from Haagen-Dazs and Frusen Gladje.
While ice cream sales industrywide have grown during the last 10 years, super-premiums--aided by supermarket distribution--have grabbed an ever-larger share of the market, manufacturers say. One manufacturer estimates that super-premiums now have 12% to 17% of the ice cream market, up from 8% five years ago and 4% a decade ago.
Marley said Baskin-Robbins holds slightly more than 3% of the U.S. ice cream market and 11% of the California ice cream market. Despite the growth of high butterfat ice creams, the “American-style bulky ice cream” that is Baskin-Robbins’ specialty “is still the heart of the business,” Marley said.
Cold War Gets Chillier
“When these people started making one style of ice cream with a lot of butterfat and coined the term ‘super-premium’--which was very clever--it gave the impression of being very special and it isn’t. It’s just a product with a lot of butterfat,” Marley said.
“People have mistakenly gotten the idea that these things are really terrific,” he said. “They have some very good products, but none of them are any better than what we have.” Baskin-Robbins’ cold war with the super-premiums grew distinctly chillier recently when it sued Haagen-Dazs for trademark infringement and unfair competition over the use of a name similar to Pralines ‘N Cream, which is Baskin-Robbins’ best-selling ice cream. Haagen-Dazs, which introduced a Pralines & Cream flavor last year, is attempting to cancel Baskin-Robbins Pralines ‘N Cream trademark.
Names are proposed by Baskin-Robbins’ flavor development panel, by employees, store owners and the public, but Marilyn Novak, public relations manager, pointed out that “it’s pretty hard to come up with something new at this point.”
A flavor takes about one year to create under the auspices of a flavor development panel, which meets twice a month. Each ice cream is born in a laboratory kitchen that contains a vault of hundreds of flavorings and a battery of machines to test various properties of the product, including chewiness.
Some of Baskin-Robbins’ flavor names are simply descriptive--like French Vanilla, Peanut Butter ‘N Chocolate, or Very, Very Strawberry. But some are more fanciful, or are tied to movies, cartoon characters or special events: for example, Here Comes the Fudge, Quarterback Crunch, Marathon Mint (named in honor of the 1984 Olympics) and Charlie Brownie.
(Some names rejected over the years by Baskin-Robbins include Midnight Espresso, Kareem de Menthe and Statutory Grape.)
Offers Information
To better explain its products, Baskin-Robbins will distribute booklets to store owners discussing its ice cream ingredients and manufacturing styles so that the franchisees can answer customer questions, Marley said.
For example, some of Baskin-Robbins’ flavors have no additives while other flavors are “mostly natural,” containing ingredients “from the cellulose family, the starch family” to retard melting, help blending and improve texture, Marley said.
Baskin-Robbins also will add products to its menu to help franchisers compete more effectively and cope with escalating rental rates at the dipping stores.
The first move in its menu diversification was to add Coca-Cola, and other soft drinks, such as Diet Coke and Sprite. “That may not sound like a big thing, but Baskin-Robbins was designed around selling nothing but ice cream,” Marley said.
Baskin-Robbins also will increase its line of ice cream novelties, such as cakes and pies, and prepacked pints and half gallons of ice cream. Baskin-Robbins is building a factory in Michigan to produce nothing but novelties and prepacked containers.
Advertising Up
And sometime this summer, Baskin-Robbins will introduce a 4-ounce scoop of ice cream and a larger cone in addition to the existing 2 1/2-ounce scoop. The change, which was in response to customer requests for larger scoops, has taken several months because Baskin-Robbins had to have thousands of larger ice cream scoopers specially produced.
To promote the changes, Baskin-Robbins intends to sharply increase its advertising expenditures. This year, Baskin-Robbins will double its advertising budget to between $5 million and $6 million and intends to spend as much as $16 million.
When he retired, Robbins sold his Encino home with an ice-cream-cone-shaped swimming pool in the backyard and now lives in Rancho Mirage. He spends his time serving on corporate boards of directors, collecting classic cars and doing wood working.
Although Robbins no longer has any connection with the company, he said he occasionally stops at one of the neighborhood Baskin-Robbins dipping stores for a cone.
“The product is still the one ingredient that will bring the customer back,” Robbins said. “The fancy ad, the shiny store, the attractive exterior will get them in, but the trick is what you do to get them back.”
