With a reimaging effort completed in half of its restaurants, Schlotzsky’s continues to expand its menu, with pizza and salads among the traditional sandwich offerings, and grow its tri-branded locations with sibling brands Carvel and Cinnabon.
As a result of these efforts, the 356-unit Schlotzsky’s has seen its customer demographics skewing younger and more female, and same-store sales increases continuing for a sixth year, said Kelly Roddy, president of the Austin, Texas-based Schlotzsky’s division of Focus Brands, which also owns Carvel and Cinnabon.
A company spokeswoman said the results have boosted revenue at the remodeled locations for the 40-year-old brand and resulted in new franchise agreements, including 25 for the tri-brand stores in central Texas and New Jersey.
EARLIER: Focus Brands grows tri-branded locations
Roddy spoke with Nation’s Restaurant News about Schlotzsky’s initiatives.
Of your 356 units, how many are the new prototype and how many are reimaged?
We will have 35 of the new prototype and new look open by the end of the year. The entire system will be 100 percent reimaged — having painted all the new colors, all the new graphics, all the new signage, all the new menu boards.
How many are co-branded and tri-branded units?
By the end of December, 165 of the restaurants will have Cinnabon and around 30 will have Cinnabon and Carvel in the tri-brands. Everything that opens starting next year will be a tri-brand. We’re targeting somewhere between 40 and 60 openings next year.
What are the major changes of the reimaging?
We’ve changed the prototype to the more vibrant, hip new colors. We’ve changed the wall coverings from Old World deli style to a new, hip, more relevant art and design with quirky and unique sayings on the wall like “No Shirtzsky’s, No Shoezsky’s, No Schlotzsky’s.” It makes the restaurant more fun. We’ve gone to softer seating with some booths in the restaurants.
Have you made any changes to menu offerings?
All our salads, instead of being packaged, are made to order and served on plateware. All of our soups are served on plateware. We’re also doing “Pick 2” offers in all our restaurants, so you can order a half a sandwich and soup or half a sandwich and salad or soup and salad.
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What changes have you seen in customer demographics?
It has brought in a younger demographic and also increased our female customer count. Prior to the new prototype, we were at 52 percent male and 48 percent female. And now we are 52 percent female and 48 percent male. We believe we’ve kept all the male customers and we’ve just increased our customers. Our frequency of 18- to 25-year-olds was our biggest increase. Of the new customers we are seeing in the restaurants, it is mostly 18- to 25-year-olds that increased. The second biggest increase was 25- to 35-year-olds. That’s obviously good for us. Before we were doing anything, we had a 45- to 55-year-old consumer that was pretty much pretty higher income, predominantly male and aging. We needed to attract a younger customer. I think we’ve been able to accomplish that with the healthier menu options and the new, more relevant design.
Do the tri-brands require a larger footprint?
They are the exact same square footage: anywhere from 2,800 to 3,200 square feet. We were at 72 seats before and our newest store here in Austin is going to have 85 seats.
Have sales of any menu items increased?
We’ve doubled our salad sales and our soup sales have increased significantly. This is our sixth year in a row of positive comps.
What’s on the horizon?
We are really going to be going after pizza sales. It’s a smaller percentage of our sales now. We don’t serve it on traditional pizza dough. We use our sourdough bread as the crust. We use pesto and put it through our cheese-melter oven. Rather than being a 20- to 30-minute pizza that you would get from the pizza chains, you can have a made-to-order pizza through the drive-thru in three to five minutes. … We’ve done some tests and doubled the pizza sales.
Have you changed the pizza offerings?
We introduced an entire new assortment of flavors in September. The initiative to drive sales is a marketing campaign that will launch next year. We’ll offer the personal size eight-inch and also a 10-inch. … Right now, less than 10 percent of our sales are pizzas. In the test stores where we’ve put marketing behind it, it’s nearly 20 percent of sales.
Focus Brands is an affiliate of Roark Capital Croup, the private-equity firm in Atlanta, and also owns the Moe’s Southwest Grill restaurant brand.
Contact Ron Ruggless at ronald.ruggless@penton.
Follow him on Twitter: @RonRuggless
Restaurant brands are learning to love on-campus locations as growth vehicles and testing grounds for new operations or service techniques.
Nation’s Restaurant News recently spoke with movers in the segment, including Bojangles’ Famous Chicken ’n Biscuits, Denny’s, Einstein Bros., Moe’s Southwest Grill and Beef O Brady’s to share lessons learned.
Bojangles’ Famous Chicken ’n Biscuits opened its first on-campus restaurant Monday at the University of North Carolina–Greensboro. First-week sales surpassed $50,000 for a unit of about 600 square feet, said Eric Newman, executive vice president of Charlotte, N.C.-based Bojangles’. That kind of performance makes higher-education locations “a valuable tool” for accelerating the brand’s already rapid growth, he said.
“[Non-traditional growth] can bolster what you already have and increase market share in penetrated markets, or be a spearhead to introduce more people to the brand,” Newman said. “It’s a great addition to reach people you’re not reaching normally at certain dayparts.”
For instance, he said, Bojangles’ can drive strong sales at lunch from students at the on-campus unit without cannibalizing sales from its three locations in Greensboro near the university.
“You’re basically serving a contained market not leaving campus for mealtimes during school hours,” Newman said.
Bojangles’ also operates on-site restaurants at Charlotte’s convention center, football stadium, transit center and airport, as well as in Union Station in Washington, D.C.
Last week, Denny’s reported that this year franchisees would open five restaurants, rather than the 10 it had previously planned, on college campuses, where the chain operates both food court restaurants and fast-casual counter-service units.
Denny’s chief executive John Miller said the chain plans to grow on campuses, but said the timing of new-store development complicates plans. On campuses, Denny’s is dealing with two new types of franchisees: universities and contract foodservice organizations, like Sodexo or Compass.
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“We are very excited about the 11 university units we have opened since the beginning of 2010 and the attractiveness of the Denny’s brand in new distribution points,” Miller said. “Although we do not expect to open any more university units in 2011, we remain focused on building our pipeline for 2012 and beyond.”
High-volume lessons
Einstein Bros. Bagels also has a growing presence on campuses around the country. Sixty-five percent of the brand’s 240 licensed locations are located at higher-education institutions, said Jeff O’Neill, chief executive of Lakewood, Colo.-based parent company Einstein Noah Restaurant Group. Recent campus openings include units at the University of Virginia, the University of Wisconsin and the University of Arkansas, he added.
“This is a great third leg of the stool and a good, balanced growth opportunity for us,” O’Neill said. “A lot of young kids are looking for fresh-baked and healthier choices, so [on-campus expansion] is working for us, and we’re getting strong unit growth as well.”
He added that higher-education openings and other on-site growth with partners like Aramark or Sodexo make a “beachhead in our franchising push” and help get locations in new markets quickly. Also, these locations average about 800 square feet, compared with a typical 2,500-square-foot Einstein Bros. unit, so brand officials learn a lot about through-put.
“Our location in the Denver airport is the single largest sales venue across the company,” O’Neill said. “They’ve got to be ready to roll, but they do a good job keeping the line moving and use handheld terminals for line-busting.”
Extra credit for unit growth
Paul Damico, president of Atlanta-based Moe’s Southwest Grill, also loves ringing up large sales figures in small spaces at colleges and other on-site accounts. But he particularly likes having campus restaurants as a growth vehicle that is incremental to Moe’s traditional expansion.
“Almost every brand wants to get into this because you get lifelong customers at a young age,” Damico said. “Students are educated consumers who want great food that is better for them, and they’re willing to pay more for it. To be part of their campus meal plan makes it so much easier.”
Aramark operates the majority of Moe’s non-traditional locations, Damico said, while Compass or Sodexo manage other properties. A few campus locations — at the University of Buffalo, Penn State University and the University of Notre Dame — are self-operated, he said.
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Higher-education locations make up most of 420-unit Moe’s on-site restaurants, he added. The brand has 11 campus units open and six more in development, compared with five units in malls, four apiece in airports and train stations, and one location apiece in health care, business and industry, and travel plaza settings.
“The nontraditional venues let us get our brand in front of the masses and introduce us to people who couldn’t see our restaurants where they’re from,” Damico said.
Classing up the joint
Sometimes on-campus locations are the only places where restaurants can open with enough traffic and good locations, said James Walker, chief development officer for Beef ‘O’ Brady’s.
“There are towns out there where a college itself could support a Beef ‘O’ Brady’s, but there’s no real estate available nearby,” Walker said.
The Tampa, Fla.-based family sports pub chain opened its first on-campus restaurant this year at the University of South Florida, also in Tampa, in partnership with Aramark.
“We’ve looked at the results of USF, and we feel that we’ve got enough of a track record there that we’re ready to jump on more campus opportunities in 2012,” Walker said. “That’s where we’re more value-oriented, and college students are looking for value and good sports.”
The sports teams that campus customers want to watch in Beef ‘O’ Brady’s casual-dining atmosphere quite often are the college football and basketball teams from the school, he said, which gives Beef ‘O’ Brady’s a chance to tailor its on-site restaurants to a very passionate fan base.
“Most of our traditional restaurants are about big-name sports teams, like the New York Yankees or the Boston Red Sox, and then a strong local element,” Walker said. “But when this brand moves to campuses, you’re in a bit of a co-branding situation where the team’s brand is center-stage throughout. It’s nothing different from what we do in our traditional locations, but we take this local element and shine a spotlight on it.”
Beef ‘O’ Brady’s has more than 210 restaurants in 22 states.
Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN
Denny’s is promoting its “Taste of the Holidays” limited-time menu with a tie-in to the holiday movie “Arthur Christmas” from Sony Pictures.
Officials from the family-dining chain said the promotional menu would offer the kind of indulgent offerings Denny’s has introduced successfully over the years, such as Red Velvet Pancake Puppies and a Holiday Turkey Melt, as well as movie-themed kids’ items like Arthur’s Christmas Cookie Pancakes and Arthur’s Milk & Cookies Shake.
“It was truly a case of ‘1 + 1 = 3,’” John Dillon, vice president of marketing for Denny’s, said. “We’ve come back with new holiday flavors, but we really had this opportunity with Sony to take it to the next level with a very family-focused holiday movie. We could create some fun new products around that partnership that appeal to kids and kids at heart.”
During the Spartanburg, S.C.-based company’s third-quarter earnings call, chief executive John Miller said the limited-time menu and movie tie-in would reinforce one another, particularly as the Milk & Cookies Shake and Christmas Cookie Pancakes directly target the same kids likely enticed by the movie.
“We believe that crave-able items for all dayparts, with the ‘Arthur Christmas’ holiday movie promotion, will help Denny’s stand out as America’s favorite diner this holiday season,” Miller said.
Watch a commercial for Denny’s “Arthur Christmas” promotion; story continues below
The “Taste of the Holidays” menu also includes seasonal touches to Denny’s Build Your Own Grand Slam, like Bread Pudding French Toast, Brown Sugar Ham Steak and Pumpkin Pie Pancakes. The Holiday Turkey Dinner features turkey breast, stuffing, gravy, cranberry sauce and a choice of two sides, while the Holiday Turkey Melt turns that combination into a portable sandwich. The melt combines sliced turkey breast, stuffing and melted Swiss cheese on grilled potato bread with cranberry-honey mustard spread.
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Over the past several years, Denny’s has tried to stretch its new menu releases by developing and marketing indulgent items that keep promotional menus in the news, such as the Fried Cheese Melt and the Maple Bacon Sundae, Dillon said. There was a similar element intended for the pancakes and milk shake in the “Arthur Christmas” tie-in, he added.
“We start with the consumer need,” Dillon said. “This is all about the holiday flavors and what they do for people, and then the promotional partners and other pieces fall into place from there. The Christmas cookie pancakes and the milk shake get people talking, and it’s all a real jumping-off point for the promotion.”
The movie also will figure prominently in social-media and in-store tie-ins to Denny’s seasonal menu. Denny’s will host a 24-hour toy drive to benefit Toys for Tots; will deploy an in-store game called Letters to Arthur, where kids can win a free kids’ meal; and will run several activities on Facebook, allowing guests to create custom holiday e-cards or stoke a virtual yule log.
“We want guests to feel the holidays from the moment they sit at the table and interact with our products,” Dillon said, “and even afterward we want them to visit our website to keep that going as long as possible. Then they’ll hopefully come back to Denny’s.”
The goal of an integrated marketing campaign for the holidays is to convert seasonal traffic into repeat business throughout the year, Dillon said.
“Holidays in general are important for us, since we’re one of the few chains open 365 days a year, including Thanksgiving and Christmas,” he said. “We are very much trying to create the experience in the restaurant that’s a ‘wow experience’ that keeps people wondering what we’re going to do next.”
RELATED: Three Questions: Denny’s marketing VP John Dillon
Denny’s operates, franchises or licenses 1,677 family-dining restaurants.
Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN
Margaritas Mexican Restaurant has named Bonnie Monahan its new chief financial officer, the Portsmouth, N.H.-based casual-dining chain said.
Monahan previously served as vice president and treasurer of Dunkin’ Brands Inc., leading that company’s recapitalization and initial public offering earlier this year.
Before that, she worked for six years as vice president of strategic planning, business development and investor relations at the Timberland Company. She also has held positions at Staples, Reader’s Digest and PepsiCo.
Monahan earned a master’s degree in business administration in finance and statistics from the University of Chicago.
“I am very excited to join Margaritas, a great brand which is poised for successful growth,” Monahan said in a release. “I am aligned with our priority of excellence in execution, and my focus will be to ensure that the management group delivers excellent support to our colleagues in the field, in our restaurants, and to our franchisees.”
Margaritas started franchising earlier this year with the opening of a unit in Livingston, N.J., in June.
Monahan’s appointment comes two months after Hugo Marin joined Margaritas as its president in September.
Contact Bret Thorn at bret.thorn@penton.com.
Follow him on Twitter: @foodwriterdiary
