Make Room for Schlotzsky's

Sandwich franchise expanding into c-store channel with Cinnabon, Carvel cobranding

Published in CSP Daily News

By  Samantha Oller, Senior Editor/Special Projects Coordinator

AUSTIN, Texas -- Convenience retailers have a new franchise option as sandwich chain Schlotzsky's expands into the channel.

Schlotzsky's--established in Austin, Texas, more than 40 years ago--is looking to regain ground after it was bought by franchisor Focus Brands in 2006. In this time, the brand updated its menu to feature everything from its famous oven-toasted sandwiches to salads, soups and pizza, and added table service to create a "quick-casual" feel.

"We are fast-casual in a sense, bringing the food to you but at the same time we have a drive-thru capability with a three-minute wait time," David Wheeler, vice president of franchise development for Schlotzksy's, told CSP Daily News. "Everything is made fresh to order, with nothing in heaters." And Schlotzsky's has chosen the c-store channel as one area it would like to stretch its legs.

There are currently with five c-store Schlotzsky's sites in Florida, Texas, California and Oklahoma--this is out of approximately 365 Schlotzsky's across the country. The sandwich franchise first established it industry roots with Sac N Pac Stores Inc., a 45-store chain based in San Marcos, Texas, that has two sites open and more in development. Schlotzsky's is targeting multi-site operators for its franchise expansion, with a three-site minimum for new franchisees.

"We are looking for c-store operators that have 10 or more locations because we know they're experienced and in the market," said Wheeler. "They'll have some locations they are already looking to convert to a more elevated brand."

In terms of where a Schlotzsky's franchise would fit best, Wheeler said that c-stores have much more leeway than a freestanding restaurant. "We would put a c-store location where we wouldn't put a freestanding site," he said. "Smaller towns that wouldn't justify the expense of a drive-thru, we are cobranding with a c-store."

Indeed, new franchisees must make room for a drive-thru, which Schlotzsky's considers a key competitive advantage to fast-casual chains such as Panera and Corner Bakery. This could either be as part of a standalone site, or as an end-cap drive-thru connected to an existing store.

The restaurant area can be built to a footprint ranging from 1,200 to 3,000 square feet, and would be staffed by between 25 and 30 employees, with seven per shift typical. Schlotzsky's also has a breakfast program that includes breakfast burritos, tacos and sandwiches. And each franchise would include Cinnabon cinnamon rolls and coffee, and Carvel soft-serve ice cream.

While Wheeler declined to name other retailers with whom Schlotzsky's is partnering, he noted that there are several contracts being finalized across the country, from California to North Carolina, including one chain with several hundred c-stores and a half-dozen QSR brands. Start-up costs vary widely, depending on whether an existing site is being converted or built from the ground up.

Franchise fees start at $38,500 per location, with discounts based on multiple locations. Schlotzsky's provides a four-week training program for new franchisees, as well as ongoing operational, training and marketing support.

For more information, e-mail David Wheeler at dwheeler@focusbrands.com, visit www.schlotzskys.com, or visit booth 5849 at the 2013 NACS Show in Atlanta.

Keywords: 
hot & cold food
By Samantha Oller, Senior Editor/Special Projects Coordinator
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