Insomnia Cookies – Case Study

insomnia cookies picture of 8 cookies in a box

About Insomnia Cookies

Started in 2003 by a college student in his dorm room, Insomnia Cookies is a chain of bakeries in the United States that specializes in delivering cookies to the doors of individuals and companies alike. Creator Seth Berkowitz got the idea from his time at the University of Pennsylvania where he would bake and deliver cookies to students on campus late at night. After the local newspaper ran a story about his cookie delivery business, Berkowitz started getting up to 30 orders a night and soon realized he needed help in order to expand the business.

Deciding to turn his hobby into a fully-fledged business, Berkowitz launched Insomnia Cookies mirroring the hours he would deliver to fellow students on campus – from 10 am all the way to 3 am daily. The summer after graduating, Berkowitz opened three shops around the country but it took some time for him to come up with the best business model. At first, he tried a delivery-only model. Then he tried selling from trucks. Then ultimately, he ended up opening brick-and-mortar shops.

Today, Insomnia Cookies has 46 locations across the country, with an average of two new locations opening each month. The company has 25 corporate employees and more than 800 people working in its retail shops. With over 150+ locations across the United States, the company continues to grow and diversify their product offerings expanding to include cookie cakes, brownies, and ice cream.

Key Takeaways

  • Insomnia Cookies’ mission statement is to provide dependable late-night food delivery to college students.
  • Although many chains offer food delivery, few are open longer than the bars are and offer a flavour to satisfy everyone, including vegans and those who cannot eat gluten.
  • 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing, so creating a marketing representative program where students promote the business around campus works as a win-win for the company

The Bakery Industry

The baking industry generates more than $30 billion in revenue each year. The American Baker’s Association reports the economic impact of baked goods produced and sold in the U.S. totals $423 billion. The market for baked goods is expected to grow around 1 percent per annum in the coming decade. Consumption is affected by changes in disposable income, consumer preferences and economic conditions. With Krispy Kreme Doughnut Corp. has acquired a majority stake in the cookie chain in 2018, Insomnia Cookies were able to make a dent in the highly fragmented market.

 

Insomnia Cookies Business Model

Large commercial bakeries will continue to dominate the competition in the market because the other firms are small and the market is highly fragmented. However, with their business model, Insomnia Cookies have been able to carve out a dent for themselves in the industry. Being in full control of the operation of each of its locations gave Insomnia Cookies much greater power to be innovative and directly engaging with employees.

Berkowitz was quoted saying, “building a strong team from the start is one of the most important ways to transition from a college startup to a successful, growing business. You need to surround yourself with great people and let go of the reins to let people come in and help you.” This approach gave Insomnia Cookies the ability to hire managers to work together not only for the benefit of the network but for the company as a whole.

 

Insomnia Cookies Success Factors

Insomnia Cookie

Niche Audience

Offering a very specific product, to a target market of college students at a very precise time (late nights) the opportunity to employ new media to accomplish the Insomnia Cookies mission statement of providing dependable late-night food delivery to college students are limitless. The company’s main goal is to pursue overall revenue growth through customer retention and franchise growth through high visibility and brand awareness. In order to reach this goal, Insomnia Cookies needs to identify what it does for its customers and communicate that.

 

Product Differentiation

Needing to become thought leaders and integrate the importance of a “cookie break” in the minds of students, Insomnia Cookies needed to create online content that would turn browsers into buyers as college students have plenty of options for late-night food delivery. Insomnia’s strength, and differentiation from a run-of-the-mill bakery, comes from its late-night delivery services and that word of mouth is incredibly strong on college campuses.

The company’s Senior Director of Marketing, Megan Bruton, was quoted by CNBC that college campuses were “where the business started and with good reason. It is music to any college student’s ears after a long night of studying, or being out until the bars close.” Although many chains offer food delivery, few are open longer than the bars are and offer a flavour to satisfy everyone, including vegans and those who cannot eat gluten.

 

Successful Positioning

College was the perfect place for a simple business plan as college students don’t always have the most motivation when it comes to cooking and baking and often lack the time to bake a warm, fresh, chewy cookie for themselves. Berkowitz strategically positioned his shops to be located near campus to attract the students pulling an all-night study session or those who happen to get a case of the late-night munchies. Insomnia Cookies also offers marketing partnerships with sampling events for college students. Opening near a college campus is a popular business model because college students are somewhat restricted to local options, stay up late studying or partying, and word of mouth travels incredibly fast.

 

Word of Mouth Marketing

An initiative the company does offer is a campus marketing representative program. Qualified students can get paid to promote the store through hosting sampling events and posting promotional material around campus. In a recent study, 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing, so creating a marketing representative program where students promote the business around campus works as a win-win for the company as the organization receives positive publicity that they are supporting college students and generating word of mouth advertising through campuses.

 

Insomnia Cookies – Looking Ahead

Consumers are increasingly looking for healthier options as wellbeing diets and fads sweep the nation. With low industry growth, it will become more and more important for Insomnia Cookies to cater to a larger variety of tastes and dietary preferences including those who are wheat intolerant and vegan.

Some reports value Insomnia Cookies at $500 million and the company does not plan on slowing down anytime soon. Looking to continue to grow to college towns worldwide, Insomnia Cookies continues its operations relying on word of mouth marketing and strategic store placements near its niche audience to sell dozens and dozens of cookies f

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