K Kellanova

By Charles Passy 

For many Americans, the morning bowl of cereal is a simple affair, perhaps topped with a sprinkle of sugar or fruit and consumed quietly at the kitchen table.

But at Kellogg's NYC, a cereal "cafe" set to open Thursday in Manhattan's Union Square neighborhood, that bowl is designed to be a template for gourmet creativity.

At the 5,000-square-foot space, customers can enjoy their cereal with toppings that range from candied kumquats to rum-roasted bananas to peanut-butter chips. The seating speaks to a similar break-the-mold approach, with options that include couches, bean-bag chairs and even hammocks. And in case all that isn't enough to capture a diner's attention, the cafe will offer Nintendo, board games and free Wi-Fi.

The cafe is owned and operated by the Michigan-based Kellogg and hospitality firm Co.create NYC. It replaces a 1,000-square-foot store the partnership launched last year in the Times Square area and ran until this past summer.

In developing the new space, Kellogg and Co.create NYC officials say they sought to build on the strong response to the previous cafe by offering more amenities and menu options such as Pop-Tart ice cream sandwiches. The goal is to encourage customers to see cereal in a dynamic light and as a food option well beyond breakfast. The cafe will be open from 8 a.m. to 6 p.m. weekdays, varying on weekends.

"It's a great place to read or do work," said Sandra Di Capua, one of Co.create NYC's partners.

Behind the goal is a stark reality: Cereal consumption has been on the decline for several years, as Americans turn to other foods such as Greek-style yogurt, for their morning meal. In the past year alone, Kellogg has seen quarterly sales in its "morning-foods" segment, which includes popular cereal brands Froot Loops and Rice Krispies, decline by 3% to $710 million.

Ultimately, the cafe is about pushing cereal "forward to the modern age, " said Aleta Chase, a Kellogg marketing executive.

Kellogg and Co.create NYC officials declined to say how much the new cafe cost to develop, or how much they are paying in rent. Restaurant-industry insiders say the rent easily could top $1 million annually, which, in turn, could make turning a profit a challenge.

That is especially true given the relatively low pricing of the cafe's menu items -- a bowl of cereal runs $1.50-$7.50 -- and the fact that patrons are encouraged to linger.

"It will attract people who spend their whole day on their laptops and don't spend money," said Arlene Spiegel, a New York-based restaurant consultant.

Adding to its challenges: Other cereal-themed establishments have opened in the city in recent years. Among the latest is Milk & Cream Cereal Bar, a Little Italy spot that offers blended cereal and ice cream.

Still, the Kellogg's NYC team says they see a path to profitability. They note the space could be used for events, from birthday parties to bar mitzvahs.

"The revenue is not just cereal sales," Ms. Di Capua noted.

(END) Dow Jones Newswires

December 12, 2017 19:14 ET (00:14 GMT)

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