Schlotzky's New Recipe for Expansion: Would You Like a Cinnabon With That?
The fast-food deli Schlotzky's has long been an also-ran in the quick-sandwich wars, having been through bankruptcy court, delisting, a forced sale and continued shrinkage over the past decade. Even teaming up with sister companies Cinnabon and Carvel ice cream a few years back didn't help the the 40-year-old Austin, Texas-based chain arrest its downward slide.
Now the company thinks it has a winning new variation on an older failed idea -- adding Cinnabon mini-stores to a perky new Schlotzky's design -- and figures this formula will help it double in size over the next five years. That sounds overly ambitious, but just starting to see steady growth again would be major progress.
The closely held chain hasn't revealed sales figures for the new setup versus traditional Schlotzky's, but company managers are encouraged enough by what a company spokeswoman described in an email as "the jolt in sales" to launch the company's first major expansion push in years. CEO Kelly Roddy recently told Nation's Restaurant News the new stores are luring more young diners and women. The new design celebrates Schlotzky's ironic round sandwich bread, with polka-dotted decor that plays up the company's emphasis on fun, in keeping with its slogans such as "Lotz Better" and "Funny Name. Serious Sandwich." The company's previous format was more generic, and in a world of sandwich-store sameness, the switch to something eye-catching with kid appeal is a big step forward. Schlotzky's offers a departure from the Subway-Quiznos toasted-sub sandwich routine, and gives it an edge in appealing to diners looking for some variety.
As for the Cinnabon move -- well, breakfast in fast food is considered found money, in that staff has to be in-house early preparing ingredients for lunch anyway. So it doesn't increase labor costs much to add some tasty cinnamon rolls to the menu and attract morning commuters. Everybody in fast food is either in breakfast big-time already or looking to get in -- Subway announced this week it's joining the breakfast crowd. Competition is stiff for this meal and morning quick-serve sales have been down a bit in the downturn, but Schlotzky's has the name-brand Cinnabon treats to help it stand out in a world of egg-and-sausage sandwiches.
The company is already active in social media on Twitter and has a popular Facebook page, so Schlotky's has a ready platform for promotions there. But to break out of the pack -- it's currently ranked around 250th by Entrepreneur magazine's Franchise 500 -- Schlotzky's managers will probably also need a big, splashy national ad campaign in all media.
Given the apparent success the chain has seen with the new decor, look for Schlotzky's to find ways to get some of the new design into all of the older stores. Even if they can't all instantly add Cinnabon or have expensive, complete makeovers, a few polka-dot lampshades and new signage would make them part of the new brand identity and help older stores capitalize on new marketing efforts.
Photo via Flickr user Andrew Currie