CASE STUDY Little Caesars and Kmart Though Kmart is one of the world's largest mass, merchandise retailers, it has sustained substantial revenue losses over the last decade. Primarily a take-out-only...

CASE STUDY Little Caesars and Kmart Though Kmart is one of the world's largest mass, merchandise retailers, it has sustained substantial revenue losses over the last decade. Primarily a take-out-only concept, Little Caesars, once financially strong and growing faster than its chief rivals Pizza Hut and Dom- ino's, had less than half the units of Pizza Hut. As of mid-1995, there were over 600 Little Caesars in various Kmart units. The expansion by Little Caesars into mass merchandising sites provided access to a new market segment of dining in consumers that went previously untapped by the pizza franchise. The heightened brand awareness was also expected to result in increased sales at freestanding units. The relationship between Little Caesars and Kmart is that of the standard franchisor-franchisee contract. Kmart is a franchisee of the Little Caesars franchise system and thus must pay franchisee fees and royalties. The opportunity to own and operate a fast-food unit in a Kmart was not offered to any of the Little Caesars freestanding unit franchisees. Some franchisees openly expressed concern over the co-branding decision, fearing the Kmart units would cannibalize sales of existing freestanding operations. As both companies entered the year 2000, their individual struggles continued. Little Caesars announced the closing of many of its stand-alone locations due to a company restructuring effort. Kmart did likewise. CASE QUESTIONS 1. Did Little Caesars make a mistake when selecting Kmart as its co-branding partner? Why or why not? 2. Conduct primary and secondary research to determine the current state of this co-branding partnership. Do both firms view the venture a success? 3. In your opinion, what does the future hold for Little Caesars in terms of its co-branding efforts?