When Brand Expansion Becomes a Brand Implosion

Sometimes marketers can expand a brand so dramatically, that the net consumer effect is to undermine the very element of the brand that made it stand out to begin with.

In the mid 90s, Boston Market was flying high as a franchise, with it stock jumping 143% on its first day of trading alone. Boston Market was a pioneer in the concept of home meal replacement, which levered the trend that started in the 1980’s of consumers moving a majority of their meals from being made in the home to being eaten or sourced from outside the home.

Versus fast food, Boston Market provided high quality meals that seemed a good substitute for a traditional family dinner. However, Boston Market wasn’t making a lot of money, mostly due to poor real estate and franchising decisions, as this article by Kurt Helin from Entrepreneur lays out.

So in 1997, the chain launched a line of sandwiches called Boston Carvers in order to boost profits. It was this marketing blunder that finally sunk the company. By trading consumers down from high dollar ring family dinners of rotisserie chicken and meatloaf, to fast food level sandwiches, Boston Market basically pull the rug out from underneath its brand. Besides cutting revenue, it also made the chain seem just like any other quick serve restaurant in the eyes of the consumer.

In 1998, Boston Market declared bankruptcy and was subsequently swept up by McDonalds, which brought it back to profitability and recently sold it.

Another more recent example of brand implosion is Krispy Kreme Doughnuts. Four years ago, they were Wall Street’s consumer darling, a Southern institution based upon hot doughnuts that would have consumers waiting outside for the neon “Hot Doughnuts Now” sign to light up. With consumers clamoring at your doors, what self-respecting marketer wouldn’t push his brand to the limit by expanding as fast as possible. And that’s just what Krispy Kreme did.

Except one small problem: all this expansion led from their own stores into grocery chains and gas stations. Which meant the doughnuts lost the one thing that drove all that consumer buzz and word of mouth activity in the first place: they weren’t hot anymore. A cold doughnut is just that: a cold doughnut. As Andy Sernovitz points out in this post about the Krispy Kreme debacle, “Nobody tells their friends about food you buy in a gas station”.

The stock, which traded in 2003 at almost $50 a share, can now be had for less than three bucks.