A Tale of Two Cracker Barrels

When I saw that Cracker Barrel, the southern-fried restaurant chain, had recently licensed its brand to John Morrell Group, a division of Smithfield Foods to develop branded supermarket meats, I assumed that it had cleared any potential conflict with Kraft Foods, the manufacturer of Cracker Barrel, the supermarket cheese brand.  But I guess I was wrong, since Kraft just responded to this restaurant-licensing deal with a lawsuit alleging that the license will create confusion and damage the value of Kraft’s cheese brand.

There aren’t many examples of two multi-billion dollar companies using the same brand name in different-but-related product categories (like cheese and restaurants), but that’s been the case for almost 50 years between Kraft, which introduced its cheese in 1954, and Cracker Barrel Old Country Store, Inc., whose first restaurant opened in 1969.  Given that they had each built their businesses while carefully avoiding each other’s turf, the restaurant chain’s deal with Smithfield now looks like a case of licensing-to-provoke.

While all of us at IMC are strong advocates for smart licensing deals, (and we have led our industry in presenting information on restaurant-brand licensing, we are even stronger advocates for smart partnerships, and it looks like all three of the big companies now involved in this dispute should have considered other ways to find a creative solution to their individual growth plans before ending up in court.

What might those solutions have looked like?  A partnership approach would have looked first at taking advantage of these two companies’ respective strengths, in brand equity, business model, and distribution.  What about having Cracker Barrel Old Country Store serve as a distribution point for Kraft’s own low-growth categories, including cheese?  Kraft-branded ingredients on Cracker Barrel’s menu (Saltine-breaded chicken?) could have delivered marketing benefits for the food giant; and sales of Kraft snack foods might boost sales in Cracker Barrel’s roadside country stores.

And if Cracker Barrel-branded meats are such a good idea, why not have Kraft’s own Oscar Mayer division take it on themselves (instead of pitting a Kraft adversary against it) and agree to share the rewards with the restaurant chain, using the promotional resources of both companies to build a brand together?

Or if Cracker Barrel Old Country Store, Inc. actually believes that it should be in the food business, maybe it should resolve this conflict once and for all by buying Kraft’s Cracker Barrel cheese business and letting Kraft be its licensee (or co-packer)?  It would no longer have to worry if its own advertising was indirectly supporting another company’s business.

When you start thinking about partnerships instead of just licensing, it can change your views from a 1-way transaction to a 360-degree perspective on the best way to build brands, produce great consumer products, and make money.   It can also keep you out of court.