BUST: Clothes & Pizza
Last month, two very different MULO (multi-location) brands, Bob’s Stores and Mod Pizza, had significant financial challenges. MULO retailers and restaurants shuttering their brick-and-mortar operations or restructuring is certainly not major news these days. However, the recent announcements from these two brands prove that just because a consumer category is stable or growing, some businesses within those categories simply can’t stay afloat.
Bob’s Stores, a New England fixture with 21 locations (owned by GoDigital Media Group) throughout Connecticut, Massachusetts, New Hampshire, New Jersey, New York, and Rhode Island, declared bankruptcy and will liquidate its entire inventory of fashions for the entire family. GoDigital also owns Eastern Mountain Sports (EMS) and the future of that brand is unknown at this point. (For more about the sporting goods category, see this recent Street Fight article.)
The other MULO brand that was faced with the possibility of closing its doors (and ovens) is Mod Pizza, which has more 500 locations nationally. The brand has closed 26 restaurants across the U.S. Just as this article was being published, Elite Restaurant Group rescued the brand by buying it, saving it from bankruptcy.
The family clothing category is up, and sales are over $130B. However, big box brands like Target and Walmart and online options have given consumers alternative ways to fill their closets. Some consumers today are also comfortable with buying upcycled or recycled clothes and/or getting free apparel through social media sites like Buy Nothing.
Pizza sales have also been growing over the past ten years and reached a high of close to $50B. However, the number of brands in this space has also grown. Competing with legacy brands like Domino’s (which has close to 7K locations), Pizza Hut, and Little Caesars is challenging.
What else contributes to the growth of some brands while others are struggling?
- High labor costs (and losses due to theft in retail operations)
- Management missteps or too-frequent strategy change
- Cost and availability of ingredients and inventory
- Consumer fickleness
- Changes in population patterns. (The pandemic and its aftermath resulted in huge shifts in where people choose to live.)
- Innovation. Even in the pizza category, major brands have diversified menus to appeal to broader market segments
- Advertising effectiveness. Great campaigns help ensure those consumers know what’s new in-store and drive traffic. Loyalty programs are also booming throughout all MULO categories
Tee shirts and slices are staples of U.S. life, but where today’s consumers choose to buy them is constantly shifting. Big brands pose an ongoing threat to smaller operators and regional brands.
The strong and creative will survive! To learn the keys to growth and profitability from a wide range of MULO brands, please join us on November 7th at Meta’s headquarters in Chicago for Street Fight LIVE 2024.