A Step Ahead
Top 400 sales-growth leaders achieve goals with forward-looking approach
By Allison Perlik, Senior Editor -- Restaurants & Institutions, 7/1/2004
Customers want to see a brand continue to evolve to meet their needs, says Aaron Kennedy, founder and CEO of Boulder, Colo.-based Noodles & Company. “If you stand still, you’re going to be left behind.”
Like other Top 400 sales-growth leaders, Kennedy works hard to make sure his brand stays relevant. His latest creation is four new “noodle-less” dishes, a response to carb-conscious diners, scheduled to roll out in September.
“We’ve always looked at the ways people want to eat and developed alternatives for major diet movements,” Kennedy says. The payoff: Growth in systemwide sales from $28.4 million in 2001 to $68 million last year, while the number of units increased from 37 to 81.
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At other chains, demographic evolution takes other forms—from adjustments in site-selection techniques and marketing targets to shifts in community-involvement programs—but all with a common goal: solid, sustained sales growth through addition of new locations and improvements in existing-unit volumes.
Sites Unseen
BJ’s Restaurant & Brewery, a casual-dining concept
based in Huntington Beach, Calif., in the past has struggled
to meet goals for new store openings. Last July, the chain hired
Greg Lynds to the new position of chief development officer.
“We weren’t being exposed to enough viable sites,” says co-CEO Paul Motenko. “Greg has been effective in identifying a sufficient number of great sites.” The company also learned that it could successfully move into more lower-income areas than it had previously targeted. Four restaurants opened in 2003; six or seven are expected this year and eight to 10 in 2005.
BJ’s chooses to stay with company stores but other chains opt for a mix of company and franchised. Both Noodles & Company and Ridgeland, Miss.-based McAlister’s Deli count franchisee size and experience as keys to success.
Franchisees who already have been successful developing other brands can “come in and really hit the ground running,” says Patrick Walls, McAlister’s chief development officer. The chain expanded from 101 to 122 units last year; system sales jumped 27% to $126.7 million.
A desire to attract seasoned franchisees was one reason Kennedy waited eight years to franchise Noodles & Company. He now seeks only multiunit deals.
The Marketing Mix
A media-saturated culture provides many ways to put brand names
before the public, and chain concepts maximize the options.
Size, geographic presence and target audiences all help determine
how to connect with consumers.
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With more than 150 units in 26 states, Dallas-based Wingstop needed to consolidate marketing efforts. It encouraged franchisees to form marketing cooperatives and pool resources for programs within each market. Corporately, a national spokesman was signed: former Dallas Cowboys quarterback Troy Aikman.
“We have a lot of markets with one or two stores, so people ask, ‘What’s Wingstop?’ When they see Troy Aikman on TV, it brings us credibility,” says Executive Vice President of Marketing Andy Howard. Wingstop ended 2003 with 60 more than one year earlier—and a 57.1% increase in system sales to $55 million.
Marble Slab Creamery, based in Houston, uses small and large screens to tout its products. Earlier this year, the chain produced its first 30-second TV spots; 7-second tags at the end allowed local operators to tailor messages.
Marble Slab also increased use of movie-theater onscreen ads. “Many of our stores are in shopping centers with movie theaters. [Onscreen advertising] allows us to concentrate efforts on people who are already coming to that center,” says Marble Slab President Ronald Hankamer.
Rather than channeling ad dollars to TV, Dallas-based Brazilian-style steakhouse Fogo de Chão concentrates on public relations efforts. The eight-unit chain contacts media detailing how the concept fits with holidays or local events, says Operations manager Selma Oliveda. It also is involved in community activities.
Where the Heart Is
Community involvement is part of the culture at Pasadena, Calif.-based
Panda Express, where employees are encouraged to donate time
and food to the community. The chain also gives a 10% discount
to military, police and fire personnel. “Whatever way we
can expose our brand to the community” is used, says President
and CEO Peggy Cherng.
An in-store initiative, themed “Making Moments Magic,” focuses on details that make dining experiences exceed expectations, Cherng says. These range from opening doors for customers or carrying trays from counters to tables to talking with diners to ensure needs are met.
Tampa, Fla.-based Beef’O’Brady’s Family Sports Pub units sponsor local Little League teams in addition to aiding school and church fundraisers. Photos of sponsored teams, along with area high school teams, are on display, sharing wall space with professional sports memorabilia. The chain has grown from 89 to 121 units in 2003. System sales reached $78.3 million, a 40.3% increase.
A League of Their Own
In what he calls a competitive advantage, COO Nick Vojnovic positions
Beef’O’Brady’s as family-casual. “The
bad news is you’re in a niche no one knows about,” he
says. “The good news is that there is a demand out there
for a restaurant where folks can take children and have an environment
that is community-focused with a price point slightly below Chili’s
and Applebee’s.”
Biaggi’s Ristorante Italiano, a 15-unit chain based in Bloomington, Ill., also has carved a spot between categories: upscale-casual Italian. Units (which average nearly $3.7 million in annual sales) have a managing partner and executive chef with equity investment. CEO Todd Hovendon says that while atmosphere and menu place Biaggi’s a notch above some of its casual-dining colleagues, its $18.43 average check (including beverages) keeps the concept affordable. The chain added four units last year; system sales rose nearly 26% to $41.4 million.
Biaggi’s “wine cellar” rooms—so called because of the hundreds of bottles that line the walls—are popular for meetings and private parties. “As people get to know us better, they realize all the different ways they can use Biaggi’s,” Hovendon says.
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