From chocolate chip to peanut butter, everyone loves a good cookie. And no company understands the need to perfect these delectable treats more than cookie manufacturer Mrs. Fields.
But in the past few years, the brand that so many ran to for a little taste of heaven began to experience significant problems. Rather than giving up, the company rolled up its sleeves, improved its balance sheet, established enough credit to support future capital investments, and brought in new owners.
“Rather than licensing out the product, we stabilized it and focused on getting Mrs. Fields back on a growth platform,” said Neal Courtney, general manager of packaged goods. “The message we want to get out there is that we’re back, and we’re better than before.”
There are three divisions within the Mrs. Fields umbrella. The company’s franchise arm includes nearly 300 franchised locations across the US and nearly 100 internationally. The company’s gifting arm offers packages for a wide range of consumer segments, from birthdays to business. And then there is the branded retail arm, which is where Courtney went when he came to the company two years ago.
“We try to drive consistency to ensure that each of our products is the best in its class,” he said. “For the franchise stores, it’s the best cookie you can buy anywhere. For us, it’s the best cookie you can find in the cookie aisle, and gifting is the same way.”
Since its inception, Mrs. Fields has gained a reputation as one of the largest retailers of freshly baked specialty cookies and brownies in the US. The company occupies both the franchise and merchandising sides of the business and, as such, manages each segment differently.
On the franchise side, the strategy is to grow AUV (average unit volume) and store base while offering the best product possible. On the brand and retail (consumer package) side, the strategy of late has been to redesign.
“Our brand carries a lot of equity, so when we recreated the packaging, we wanted to capture that brand but also realistic shots of our cookies,” Courtney said.
Compared to even months ago, Mrs. Fields’ packaging is now more contemporary. Courtney said preliminary results are positive and show the new packaging has impacted sales. Many of the company’s top customers are also seeing more products fly off their shelves than they have for years.
The branded retail side of the business has also changed the caliber of its ingredients. Although the recipe reformulation makes the products more consistent across the company’s channels and creates efficiencies, the changes, such as replacing less-healthy coconut oil with canola oil, adding 50% more of its proprietary vanilla, and using real butter rather than margarine, have also increased the quality of the product.
As with most businesses, the recent turn in the economy has impacted Mrs. Fields. Over the past 18 months, the company has seen between 18% and 20% increases in the price of its commodities. With tight margins to keep and an inability to pass those increases entirely onto the consumer, Mrs. Fields made some back-end changes to lean up its operations.
The company began by looking at its logistics and operations. It consolidated its operations into one central distribution center that’s run by United Facilities. The facility is located 65 miles from the company’s manufacturing facility.
“United Facilities is our central warehouse, and from there we have a hub-and-spoke logistics system,” Courtney said. “United plays a crucial role in ensuring our products go out when customers expect it and in the right quantity.”
Mrs. Fields also increased the size of its customers’ minimum orders. Now customers must order in pallet quantities. The company has also maximized truckloads going out from the United Facilities location.
“We’ve also decreased the depth of our promotional activity and increased the frequency,” said Courtney. “We’re not going as deep on promotions, but we’re trying to promote a little more often, and we’ve seen savings as a result.”
Mrs. Fields’ primary distribution channels are drug and C-stores, but for food manufacturers, grocery is king. “You have to be in grocery to gain credibility,” Courtney said. “If we want to be a big player within the cookie industry, we have to go for that distribution in grocery.”
What’s holding the company back is the investment, the risk, and the competition. Courtney said 85% of the cookie category is DSD (direct sales delivery), whereas Mrs. Fields goes through a warehouse.
“It’s a bit more complicated for us,” Courtney continued, “but we’re trying to use some of the momentum from other channels—drug in particular—to drive distribution in grocery.”
Courtney admits Mrs. Fields’ products are not cheap, with eight cookies costing an average of $2.99. He also understands that what was on the shelf a couple of years ago didn’t live up to Mrs. Fields’ brand standards. With all the back-end, branding, and recipe changes of late, he hopes customers will begin to taste—not only see—the rejuvenation of Mrs. Fields.
“We’ve improved,” said Courtney. “Not that we ever had a bad product, but what’s out there now is closer to what you’d expect from a Mrs. Fields’ cookie. Come try us again.”