Restaurant Segment Performance: Fast-Casual Sandwich Chains

Fast-casual sandwich chains within the Top 150 Fast Casual Restaurant Chains achieved a year-over-year sales increase of 7.5 percent from 2010 to 2011. They also grew their units at a slightly more modest rate of 5.8 percent. Sandwich chains within the Top 150 fared much better than their limited-service counterparts across the industry, which reported nominal sales growth of just 4.0 percent and nearly flat unit growth of 0.1 percent.

The top two chains within the sandwich cluster, Jason’s Deli and McAlister’s Deli, both saw their sales and unit counts rise in 2011. Jason’s Deli reported a 3.9 percent sales increase to $525 million and 4.5 percent unit change to 232 units in 2011. McAlister’s Deli has a particularly strong 2011. Its 6.6 percent jump in sales to $381 million easily trumped its 1.6 percent sales increase in 2010. Its store count, increased at a more modest rate of 1.7 percent, to 308 U.S. units. Seven chains within the fast-casual sandwich cluster—Firehouse Subs, Halsted Street Deli, Newk’s Express Café, PepperJax Grill, Pret A Manger, Which Wich Superior Sandwiches and Zoës Kitchen—achieved double-digit sales growth, boosting the cluster’s overall moderate growth.

In 2011, many of the leading fast-casual sandwich chains got in on a key menu trend: premium ingredients and toppings and upscale artisan breads and buns for sandwiches and other menu items. D’Angelo Grilled Sandwiches rolled out new Café Sandwiches featuring new hearty country-white and multigrain bread. Schlotzsky’s unveiled three limited-edition sandwiches featuring Angus roast beef on toasted sourdough buns. In addition, premium ingredients were also added to non-sandwich offerings. McAlister’s Deli introduced premium salads, including one with Black Forest ham, salami, olives, roasted red peppers, provolone cheese, red onions, cucumbers, tomatoes and an olive oil and balsamic vinaigrette dressing.

Fast-casual sandwich chains revved up expansion efforts in 2011. Many chains expanded or announced plans to expand into new U.S. markets. Portillo’s Hot Dogs, for example, revealed plans to expand beyond its Chicago-area base into Arizona. Newk’s Express Café, which reported a 50 percent increase in U.S. units from 2010 to 2011, entered the Arkansas market in 2011 and signed franchise deals to build a number of new locations in the Southeast in the first quarter. Firehouse Subs signed a development deal to open its first restaurants in Puerto Rico.

*Technomic estimate
Source: Technomic, Inc.; 2012 Top 150 Fast Casual Restaurant Chains

Concept to Watch: Zoës Kitchen

Zoës Kitchen is a chain of fast-casual restaurants that offer Mediterranean-inspired sandwiches, entrées, salads and sides in a quick and casual format. The chain differentiates itself with its focus on the fresh ingredients and healthy preparation methods associated with the Mediterranean diet. The chain is a popular option for lunchtime diners and those looking for a scratch-made home-meal replacement. Zoës also runs a brisk catering business. Zoës Kitchen USA LLC operates and franchises the chain.

The Birmingham, AL-based chain grew sales by 40 percent in 2011 to reach $49 million. At year end, it had 57 units, a number that is up 33 percent from 2010.

Most units are located in close proximity to offices, health clubs, entertainment centers, hospitals or high-end grocers. Décor includes a color palette of earth tones, multicolor awnings, striped walls, lime-green tables and art-deco plastic chairs. A grab-and-go case with packaged foods is located near the ordering counter. The chain also sells fully prepared takeout meals large enough for a family of four.

Zoe and Marcus Cassimus opened the first Zoës Kitchen in 1995 in Birmingham. John Cassimus acquired the rights to his mother’s restaurant in 1999. Private equity firm Brentwood Associates acquired a majority interest in the chain in 2007. In 2011, the chain received $20 million from GE Capital, Franchise Finance to fund expansion plans.

Click here for a one-page profile of Zoës Kitchen including sales and unit data, competitive set, growth plans and more.

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Technomic provides clients with the facts, insights and consulting support they need to enhance their business strategies, decisions and results. Its services include numerous publications and digital products, as well as proprietary studies and ongoing research on all aspects of the food industry.

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