Schlotzsky’s Growth Momentum Skyrockets with 75 Franchise Agreements


Newly Rebranded Image Captures Interest of Multi-Unit Investors in New Jersey and Central Texas

Schlotzsky’s®, the home of The Original® round toasted sandwich,  announced today it has signed 75 franchise agreements for a total of 25 restaurants that will each house the Schlotzsky’s, Cinnabon and Carvel concepts under one roof.

Company executives said the restaurants will begin to open throughout New Jersey and Texas during the next six to 12 months. The first development agreement was signed with New Jersey-based Better Bunz, LLC for 17 tri-brand locations (a total of 51 agreements between the three concepts), to open in areas throughout New Jersey. Meanwhile, Texas-based Sac-N-Pac inked the second deal, with eight tri-brand locations, for a total of 24 agreements, to open throughout Houston, San Antonio and Central Texas.

“Together, these agreements represent the largest in Schlotzsky’s history,” said Kelly Roddy, President. “We are thrilled to expand the brand throughout Texas and New Jersey with a talented group of business savvy entrepreneurs,” added Roddy, who further noted that the new locations will feature the brand’s ‘Lotz Better’ look, a bright, contemporary feel with a circle theme and a new service model where crew members hand-deliver food to the tables.

While Anthony and Lama Dalleggio of Better Bunz, LLC will own the new Schlotzsky’s restaurants, their daughter, Lea, will oversee operations. In addition, the Dalleggios will work with experienced restaurateurs as part of their team to help with site selection, marketing and operations.

“Our family’s strong affinity for the Schlotzsky’s brand started many years ago while living in Houston,” Lea Dalleggio said. “When we moved to New Jersey, our family missed our favorite Schlotzsky’s sandwich and looked into bringing the brand to the region. After our due diligence, we couldn’t pass up the opportunity to replicate the Schlotzsky’s culture in New Jersey. We look forward to serving our customers with the best in gourmet sandwiches and beyond.”

Family-owned and operated fuel and grocery retailer, Sac-N-Pac, will open non-traditional interstate/convenience connected locations primarily operated along major highways and travel plazas. Each Schlotzsky’s restaurant will share a building with the fuel/convenience retail and have its own entrance, a separate drive-thru and a connected pass-through in the building.

With more than 350 locations worldwide, Schlotzsky’s continues its growth momentum by aggressively targeting markets in Texas and in untapped markets around the country including  Atlanta, Charlotte, Denver, Orlando, Tampa, Kansas City, Nashville, Phoenix, Raleigh and St. Louis for multi-unit developers. Roddy added that, ideally, Schlotzsky’s plans to have upwards of 700 locations by 2015.


FOCUS Brands grows tri-branded locations

April 5, 2011 | By Ron Ruggless

While co-branded restaurants have become commonplace over the past decade or so, Focus Brands is going a step further and expanding its Schlotzsky’s/Cinnabon/Carvel tri-branded units.

The triple branding model is not entirely new. Dunkin’ Donuts tri-branded with Baskin Robbins and then-sibling chain Togo, and Kahala Corp. has nestled its Cold Stone Creamery and Great Steak brands with Tim Horton’s. In addition, Tricon Global, which later was renamed as Yum! Brands, in 1998 tested a tri-brand Pizza Hut, Taco Bell and KFC unit in Carrollton, Texas.

Focus Brands, however, has beyond the test phase, with 17 tri-branded units operating and more are on the way.

“The first from-the-ground-up tri-brand was in Midland, Texas,” said Kelly Roddy, president of Austin, Texas-based Schlotzsky’s. The tri-brand units cover the same 2,800-square-foot building that a stand-alone Schlotzsky’s would, he added.

“The real estate costs are the same,” Roddy said. “The obvious reasons are you can get three brands into the same square footage with one manager’s salary, one rent, one utilities. The unit-level economics is great when you are only talking about the additional costs of pieces of equipment.”

The advantage for the operator is getting incremental business in non-peak hours. “You have a dining room that fills up at lunch, gets a little busy at dinner,” Roddy explained. “But you have these snack dayparts where traditional restaurants find themselves pretty empty, in that 2 to 4 [p.m.] range. We find a lot more people coming in to have a cup of coffee or a Cinnabon, or grab an ice cream after lunch or dinner. It fills in the gaps really nice for us.”

Dan Quintana, who created LotzFresher Delis of El Paso, Texas, and plans to open his first of seven stores in the El Paso and New Mexico area in summer, said, “It’s a great opportunity to have three concepts under the same roof.

“It gives me the opportunity to serve my customer better. And a happy customer will keep coming back,” he added.

Quintana plans to position his stores in shopping center end caps, allowing for drive-thrus.

“Because of the Cinnabon inclusion, we probably will open at least the drive-thru early for coffee and Cinnabon,” he said. “Schlotzsky’s doesn’t have an extensive breakfast menu. Some franchisees do serve the limited menu.” Stores generally open at 11 a.m. for lunch, and Quintana foresees the possibility of opening at 7 a.m. or 8 a.m.

Roddy said Schlotzsky’s plans to continue its co-branding with Cinnabon as well. “We have slightly more than 100 Schlotzsky’s-Cinnabon co-brand units,” he said. “By the end of this year, I’m expecting we’ll have, on the low end, 160 co-brands to 190 or 200.” Schlotzsky’s currently has 370 units.

Prospective tri-brand franchisee do have to negotiate three different franchise agreements, Roddy said. “That’s the only real complexity. Otherwise, it’s still one operational unit.

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.

Source: Nation’s Restaurant News