Schlotzsky’s cracks top five in app store restaurant category

By Brenda Rick Smith

Schlotzsky’s new “Lotz 4 Me” loyalty app – the first system-wide loyalty program in the brand’s history – had a strong launch in June, with 60,000 downloads in the first three and a half weeks.

More than 11,000 people downloaded the app on the first day alone, driving “Lotz 4 Me” as high as fourth on the restaurant charts in the Apple Store.

“We are a relatively small brand, and to be number four in the app store in the restaurant category is pretty amazing,” said Schlotzsky’s President Kelly Roddy. Especially considering many of the other high-ranking brands have thousands of units, compared to Schlotzsky’s 350 locations, he added. “We were expecting a slow build. We figured we’d get several thousand downloads, and maybe add some more through the sharing features.”

The goal of the app, which was developed on the Punchh management platform, was to drive occasional customers to visit stores more frequently and encourage them to advocate for the brand on social media, said Roddy. While data is not available yet, he reports that he has observed an increase in social media traffic.

The app offers customers who make seven visits $7 off their next purchase. Customers can earn rewards for sharing the app with their friends via social media and getting them to download the app, too. Customers who download the app before July 31 will also get a free Original sandwich.

Customers can also find Schlotzsky’s locations and menu information in the app, keep up with company news and claim special offers.

Some customers are already redeeming rewards, according to Roddy, and those customers are spending an average of 20 percent more than they typically do because they are getting something for free.

The increased check size has been welcomed by franchisees, who have wanted to see a loyalty program.

While the focus of the first iteration of the app is on loyalty, future versions may also include mobile ordering, said Roddy.

Reaching out to Millennials

The app is central to Schlotzsky’s goal of attracting Millenials and their $1.3 trillion spending power. The app, coupled with a revamp of Schlotzsky’s restaurants and expanded menu options, is part of the brand’s bid to reconnect with its core audience: young people.

“We’ve always had a young audience. Most of our early stores were close to universities,” said Roddy. That proximity, paired with the brand’s fun, quirky appeal and fresh, made-from-scratch menu offerings, helped reach young customers, he said.

“But we see a change in Millennials, in what they want and what they expect,” said Roddy. “They are more tech dependent, more social, more culinary-savvy than in the past. We wanted to be able to communicate with that audience in the way they want to communicate: through their mobile device. We want to keep and grow that audience and serve them the way they want to be served.”

Along with the app, Schlotzsky’s updated its restaurants with vibrant colors, new seating and the brand’s “Lotz” messaging in an effort to appeal to Millennials. Many restaurants are also co-branded with Cinnabon bakeries. Schlotzsky’s has also added new items to the menu, including Artisan Flatbreads, Gourmet Pizzas and seasonal salads, including the Very Berry Salad.

Schlotzsky’s plans to add 20 new locations this year.

“We’re excited to be where we are,” said Roddy. “We’re staying on the bleeding edge of where our customers want us to be.”

Source: Fast Casual

Schlotzsky’s ranks high in Consumer Reports latest survey

Taste champs for burgers, chicken, and more

We asked subscribers this direct question: On a scale of  1 to 10, from least delicious to most delicious you’ve ever eaten, how would you rate the taste? We heard about 53,745 burger chains’ burgers, chicken chains’ fried or roasted chicken, Mexican chains’ burritos, and sandwich chains’ sub—or heroes, hoagies, grinders, or wedges, depending on where you call home. (Click on the image above to see an expanded view of the the taste tables.)

The tables reveal that some signature dishes came close to our readers’ benchmarks for excellence. But many of the biggest names earned significantly lower scores for the foods that made them famous, notably McDonald’s. The chain, which serves flash-frozen patties made with 100 percent USDA-inspected beef, touts them as free from  “preservatives, fillers, extenders, and so-called pink slime.” Such a pledge might be comforting, but it’s hardly a rousing endorsement. McDonald’s own customers ranked its burgers significantly worse than those of 20 competitors, including Hardee’s, White Castle, and Carl’s Jr. No other house specialty scored as low.

Taco Bell’s burritos were also voted least luscious. And the subs from Subway, the world’s largest restaurant chain with more than 40,000 units in 106 countries, are near the bottom of the list.

CRM_Consumer_Reports_Taste_Champs_08-14

Fast-food alternatives: Readers’ choices for fast-casual restaurants

Fast-casual restaurants are a step up from fast food (Chipotle describes its fare as “farm to face”). They usually serve higher-quality fare, charge higher menu prices, and focus more on a dine-in rather than drive-through experience. And they’re big on breakfast. The ones listed were among the most praiseworthy. McAlister’s Deli gets the award for most improved. The chain’s score increased significantly since our 2011 report.

Here are the restaurants at the top of the list.

• Chipotle Mexican Grill

• Firehouse Subs

• Five Guys Burgers and Fries

• Jason’s Deli

• Jersey Mike’s Subs

• Jimmy John’s Gourmet Sandwiches

• McAlister’s Deli

• Panera Bread

• Schlotzsky’s

Source: Consumer Reports

Cobranding Part 1: Will it work for fast casuals?

Cobranding in the restaurant industry may have started in the ’90s with “KenTacoHut” — Pizza Hut, Taco Bell and KFC — but fast casuals are starting to embrace the idea. Bruegger’s Bagels and Caribou Coffee, for example,  expanded their cobranded concept last year to North Carolina, marking the third cobranded unit for the two brands, and Bruegger’s recently announced a deal to pair up with Jamba Juice in South Florida. Another smoothie concept, Smoothie Factory, is now testing cobranded units with Red Mango, and Fatburger has combined with Buffalo’s Café to offer chicken with its burgers in California.

While developing the right partnership and operations formula can be tricky, cobranding is a great way to add an additional revenue stream for franchisees, said Kelly Roddy, CEO of Schlotzsky’s, which has been cobranding since 2007 with Carvel Ice Cream and Cinnabon. He said the key to a solid cobranding partnership is ensuring that both brands benefit. The Schlotzsky’s/Cinnabon cobrand, for example, gave Cinnabon the opportunity to expand beyond malls and travel centers but also allowed Schlotzsky’s to offer menu variety to guests.

“It’s a great partnership for us and contributes to dayparts beyond lunchtime, including breakfast for those restaurants that open early as well as snack/evening options,” Roddy said. “Cinnabon also offers an additional catering option for our guests.”

The benefits

Those are just a couple benefits that cobranding can provide, said Steve Beagelman, president and CEO of SMB Franchise Advisors. Cost savings and risk aversion are two others.

“When you want to keep costs down, cobranding makes a lot of sense. When you’re going through the real estate process, you can save a lot of money up front since you’re utilizing two business to pay the rent for one location,” he said. “So, a lot of brands look at cobranding because it saves the front-end costs. The best benefit is utilizing and cross-training the labor. So you’re saving on your rent, your build out, your employees. There are a lot of economic reasons why cross-branding makes sense.”

Risk aversion is another benefit of cobranding, said Catherine Kearns, general manager of CHD Expert North America.

“Cobranding affords restaurants an opportunity to introduce their products to new markets, while mitigating cost and risk,” she said. “A significant capital investment is required to open a restaurant, especially costs associated with making a brick and mortar location service ready, and cobranding allows for brands to test new territories, while requiring less money for initial overhead costs.”

The challenges

While the benefits of cobranding are numerous, there are also challenges, including the possibility of complicating operating procedures and brand dilution, especially when one brand’s word-of-mouth, marketing and history are stronger than the other, said No Limit Agency’s Chief Brand Strategist Nick Powills.

“You are dealing with two brands and, in many scenarios, two different customers. Even if you sell cookies and ice cream, the cookie customer may not have the same taste as the ice cream customer at that exact moment,” he said.

Beagelman agreed but also said some franchisors will risk brand dilution to score faster distribution, so it’s often a trade off they are willing to make.

The possibility of complicating operating procedures stems from the fact that franchises abide by corporate-mandated guidelines, so combining operations from two entities can create challenges, Kearns said. For example, if two brands come together and they both have exclusive contracts with their own paper goods supplier, someone may have to break a contract.

“In addition to contracts and sourcing of products, melding two different restaurant cultures can also be a challenge,” she said. “Many chain restaurants have a pre-established operations manual and different standard to which they hold their team accountable. This includes processes for food preparation, customer service, and employee culture. Introducing two company cultures with different standards is not a seamless process. Camaraderie and synergy will take time to develop.”

These reasons, Kearns said, are why it is more common for cobranding to occur among companies who share a parent company — Yum! Brands, for example. Even then, however, it’s not a sure thing.

“You are mixing two brands with two different missions — even when run by the same franchisor,” Powills said. “Cobranding certainly can make sense when you are not experiencing a strong ROI from every square foot of your restaurant, however, it is a tricky balancing act, no matter how you look at it — so, being an effective operator will be critical.”

Should you cobrand?

Before hopping on the cobranding wagon, operators should ask themselves a few questions. They include:

  • Am I comfortable with employees being cross-trained?
  • Am I comfortable with potentially sharing revenue streams?
  • Do I really need two concepts under the same roof?
  • How will my brand benefit?
  • What negative effects will it have on my brand?
  • How is my brand perceived in comparison with the brand I am cobranding with?
  • How will my core consumer base react to this cobranding?
  • What is the cost benefit analysis on customer acquisition?
  • How will marketing efforts be affected?
  • How are joint decisions going to be made between the two separate corporate entities?
  • How will vendor relationships be affected?
  • And how will my internal employee culture be affected?

“The best time to co-brand is when it will help both perspective franchises and customers,” Powills said. “Many brands have mastered the art of this concept, hoping that franchise operators will be happier with a mixed portfolio and that customers will frequent the business more with more options.”

A mutual benefit is what inspired the partnership between Bruegger’s and Jamba Juice, said Arturo Zindel, the developer of the five cobranded Bruegger’s and Jamba Juice units in South Florida.

“We believe there are synergies with the brands plus additional operational efficiencies and economies of scale when you build stores that offer the two brands together,” he said. “Additionally, in the case of Bruegger’s Bagels and Jamba Juice, the dayparts are different plus both brands stand for high quality products and a top end customer experience in the stores, so we believe they will be a great fit offered under one roof.”

The same can be said for Schlotzsky’s, which has been so happy with its partnerships with Carvel and Cinnabon, that it’s launching a five-restaurant test with TCBY this April in the Austin area. Through the express format, the chains will offer six yogurt flavors and more than 15 types of toppings, Roddy said.

“We are excited about this opportunity and the potential daypart expansion,” he said.

Editor’s note: This is part 1 in a two-part series about cobranding. The next installment will feature Q and A interviews with three restaurant operators who have found success in cobranding.

Source: Fast Casual

Schlotzsky’s comeback story: The days of bankruptcy are long gone

Fast Casual

 

February 4, 2013 - Cherryh Butler

Everybody loves a good comeback story, and if Hollywood were to feature one about a restaurant as opposed to an underdog sports team, Schlotzsky’s would be the star. After all, what’s more inspiring than a brand reclaiming a top spot in the industry less than a decade after filing bankruptcy? That story belongs to Schlotzsky’s President Kelly Roddy, the man who took over in 2007, and helped the nearly extinct chain to accomplish seven years in a row of positive comps. It’s also enjoying a huge growth spurt, opening 30 units in the past two years with plans to open at least 50 more this year.

“All round, Lotz better”

While most brands struggling to regain relevancy tend to overhaul their entire menu, Schlotzsky’s left it alone for the most part except for changing the salads — they’re fresh now — and a few other menu additions. Instead of changing the food, Roddy decided to concentrate on updating the look and feel of the brand. What sets Schlotzsky’s apart from competitors, he said, is serving sandwiches on made-from-scratch, round buns, as opposed to the subs served in most restaurants. Those round buns inspired the chain’s design element and new tagline, “All round, Lotz better.” (Click here to see photos of the new design.)

“It’s our brand filter, our promise to do everything better,” Roddy said.

The first unit to get the redesign was in Waco, Texas, in 2009, because if it worked there, “We knew it would work anywhere. Circles are just a cool design and you see them everywhere from on the walls to the lamp shades to our cups and bags,” Roddy said. “When you see a circle, we want you to think Schlotzsky’s.”

The design also incorporated fresh, modern colors, including apple green, sky blue and bright red mixed with some earth tones.

“It’s just a cool, hip look,” he said.

When sales increased at the Waco unit by 45 percent, Roddy and his team knew they were onto something and began building all the new units with the new look. They still had 350 “old” stores, however, that needed updated. They went to work planning how to use their marketing dollars to retrofit the other stores. It took a few years, but now nearly every unit has new paint inside and out, new signage, packaging and road signs.

Better service

Although customers still order at the counter, Schlotzsky’s staff bring their food to their tables. In the past, guests waited for their numbers to be called and had to fetch their orders.

“It’s now more of a sit down and relax atmosphere, and we’ve removed the clutter with the numbers,” Roddy said. “We also added more soft seating instead of mainly just hard chairs. There’s more booths and nice lighting. It feels more like a casual dining experience.”

The food comes on china as opposed to paper products, which also upgrades the experience.

Branding together

The chain also found another way to increase sales; it added a Cinnabon Express to about 200 of its locations, and 30 units now house Carvel Ice Cream units.

“When we add these brands, we are more of a complete package,” Roddy said. “We may be selling ice cream to one out of 10 customers during the day, but it’s more about creating family events at night. It helps bring in more families. We’ve seen a nice little bump in the Carvel stores at dinner.”

Cinnabon, which sees half its sales as take out, also encourages guests to spend more money.

“They’ll stop in for lunch and then grab Cinnabon to go,” Roddy said. “It’s a very inexpensive way to put in another national brand and bring in customers.”

Looking ahead

Schlotzsky’s is in full growth mode, said Roddy, who predicts the spurt won’t stall anytime soon. The chain, which has a presence throughout the States, has sold more agreements in Texas and Oklahoma and has also targeted Phoenix and California. Franchises will also soon open in Philadelphia, North and South Carolina, New Jersey, Kentucky, Tennessee and Florida. An announcement about an international deal is also just weeks away, Roddy said.

“We’re not only financially strong; we are growing and will be for years to come,” he said. “It’s just been a great ride.”

Source: Fast Casual

Schlotzsky’s® Unveils First-Ever Chipotle Honey Sandwiches

The new mouth-watering sandwich trio will be layered with the hot and sweet honey chipotle sauce

Schlotzsky’s® falls into autumn with the announcement of a completely new line of limited-time-only Chipotle Honey Sandwiches. From now until November 25, the home of The Original® round-toasted sandwich will feature three new, signature Chipotle Honey Sandwiches – the Turkey and Bacon Chipotle Honey, the Roast Beef and Bacon Chipotle Honey, and the Chicken and Bacon Chipotle Honey.

“We have been looking to bring something hot and sweet to our customers and this trio of delicious sandwiches is the perfect menu option,” said Kelly Roddy, president of Schlotzsky’s. “When the chipotle honey tops our high-quality meats and cheese, it creates an irresistible taste. We look forward to hearing our customers’ feedback.”

The three new, signature sandwiches include:

Turkey & Bacon Chipotle Honey 

Smoked turkey breast and crispy bacon with smoked cheddar cheese, lettuce and tomato with chipotle mayonnaise and hot and sweet honey chipotle sauce on a toasted Sourdough bun;

Roast Beef & Bacon Chipotle Honey

Tender slices of Angus roast beef and crispy bacon with smoked cheddar cheese, lettuce and tomato with chipotle mayonnaise and hot and sweet honey chipotle sauce on a toasted Sourdough bun; and

Chicken & Bacon Chipotle Honey

Tender, shaved chicken and crispy bacon with smoked cheddar cheese, lettuce and tomato with chipotle mayonnaise and hot and sweet honey chipotle sauce on a toasted Sourdough bun.

Schlotzsky’s restaurants offer guests more than 15 different sandwiches on its famous, unique and round freshly-baked buns, as well as gourmet pizzas made with Fresh-from-Scratch® crusts, freshly made-to-order tossed salads, and a variety of soups and delectable desserts.

For more information or to find the nearest location, visit www.Schlotzskys.com.

Under the Toque: Jim Villemaire

Chef turns supplier experience into innovation

September 2010 – Jim Villemaire says he got a lucky break. The former Bennigan’s cook was making copies at the parent company’s corporate headquarters when S&A’s head of research and development invited him to come work for him. At the time, Villemaire was a training at Bennigan’s and had no R&D experience. While working at Bennigan’s, he also met his future wife – which he ranks as one of his career highlights.

He then took a job at a giant supplier Cargill, where he continued to learn about R&D in the restaurant business.

Now, as director of R&D for the 39-year-old, 350-unit Schlotzsky’s, Villemaire incorporate lessons learned while working at restaurants and Cargill – a job that allowed him to gain insight into many large restaurant companies.

In addition so sharing some of his best practices, Villemaire reveals news on yet-to-be-released menu items.

What was your first foodservice job? I was a cook at Cheddar’s in Arlington, Texas.

How did you transition from cooking into research and development? I worked my way through the cooking ranks at Bennigan’s and got into kitchen management and was tapped to be a trainer. One day I was standing by the copier and them man who took over for director of R&D at S&A restaurants [Bennigan's parent company] at the time, David Groll, said he had a team of chefs, but didn’t have anyone who had any experience working [in the kitchen] at Bennigan’s. He asked, “Do you have any interest in doing research and development?” I jumped at the chance.  He gave me the opportunity of a lifetime.

After S&A, you took a job with supplier Cargill. Did your experience there give you insights into how other chains operate their R&D departments? I got to see the best practices of some amazing chains. I took the best pieces of how they do things. One of the most important things I’ve integrated is that I want anyone who does anything for me to feel appreciated. People who sit on my side of the desk can get aggressive and feel so important. But we’re all just people.

Was it difficult to make the switch from supplier back to a chain? For a while I feared that I’d never be able to get back [into a restaurant company.] Once I left, [some people] didn’t consider me a real restaurant chef. You learn about how people like to categorize. Some of the sales folks who used to be your best buddies didn’t have any time for you when you didn’t anything to give them. And that in itself was eye opening.

Describe Schlotzsky’s for anyone who’s never been to one. What are they most known for? They are all sit down. Probably 65-percent have drive-thru. It’s a fast-casual type set up. Really the entire heartbeat of our brand is the bread. It is that homemade quality. We had a lot of people come through and say we could grow faster if we use a pre-made bread. But we haven’t found anything that meets our benchmark.

Are you planning to add more healthful dishes? We’re exploring all of our options there. But it’s not the over-arching focus. I was told to work on healthy items, and I was working with a lot of panels of females, and one of the items they all loved best was the chicken sandwich with a fat-free spicy ranch dressing, jalapeno cheese sourdough bun, alfalfa sprouts, shaved chicken breast, lettuce, tomato, a little bit of onion and guacamole. But at the end of each session, they said you should add bacon and cheese to it. It is now served with the bacon and cheese as the California Chick promotion. I understand. At home, I eat  healthfully. When I go to a restaurant, I am going to get something that really floats my boat. I’m trying to drive sales, and something that is indulgent and decadent is what moves people. We have become increasingly aware of people’s allergies and diets. To reduce sodium content is a major goal for us. We’re always looking for ways to try to address things like gluten. But so much of the [health talk] is buzzwords that are usually wielded by people who have very little connection to the foodservice world. They’re usually politicians.

So if healthful food isn’t Schlotzsky’s major focus right now, what is the company’s priority? We’re trying to grow with strategic partners in some of the areas where we’re already present, to flush out these markets and take them from open markets to closed markets.

What are the big food trends that you’re watching right now? We’re seeing fresh and local. Organic. We’re seeing people expect more ethnic authenticity – Thai, Mediterranean, Greek, Korean and Southwestern.

How does your guest define value? The guest doesn’t always define value in how much something costs. They define value in terms of what they get. They are willing to spend money if they feel they’re getting good value. An example I can give you is for years we have been testing steak sandwiches and salads. I’d try to engineer both of them based on what our current prices are, but I wasn’t hitting the mark. Finally, we decided that we were going to sell the best steak. We went out and found a slice Angus rib-eye steak. And we put it out there for $6.99 and $7.99 a piece, and [those items] came back with better value ratings than when we were testing it at $4.99.

When might we see that promotion? The steak sandwiches are going to be a holiday focus this year.

How do you cook the steak? The product comes in already seasoned, sliced and cooked, and we heat it in a conveyor oven.

What do you add to it? We have several varieties. We’re still working on which ones will be the finalists. But one [that might be available] is the Steak and Bacon Smokecheezy with smoked cheddar. It has roasted red bell peppers, crisp bacon and a touch of lightly spicy chipotle mayo. One of the others is served on a jalapeno cheese bun. It has pepper jack cheese, lettuce, tomato, onion, guacamole and chipotle pesto. We’ll be doing there. The other one we’re still toying with.

Source: Nation’s Restaurant News

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