Once Chris Newcomb, Don Newcomb and Debra Bryson opened the first Newk’s Express Café in 2004, the original team behind the McAlister’s Deli chain wasted no time getting their new concept off the ground.
They also set about to differentiate it from the fast-casual pack.
“After we sold McAlister’s, we knew we wanted to do something different,” Newcomb said. “The model of quick-casual works, but we wanted to upscale the décor and upscale the menu.”
Newcomb and his partners also wanted the “upscale fast-casual” Newk’s—which today has 27 company-owned and franchised units—to appeal to a wide range of customers.
“One of our partners, Debra Bryson, upscaled the décor and ambience and the experience of our dining room,” Newcomb said. “We have an open-style kitchen. We use a lot of stainless steel and tiles and booths.”
The chain features soups, salads and sandwiches, along with pizza, and aims to offer a variety of food for dine-in, to-go, grab-and-go and catering.
Ron Paul, president of Technomic, a foodservice consulting and research firm, said fast casual with upgraded décor and a controllable experience can be an attractive part of the market.
“It has to be better than traditional fast food,” he said. “The way you do that is through quality of the product, service enhancements and the kind of money you put in the store.”
Paul also said that paying up-front gives customers additional control over the experience.
“You can control the experience yourself, which consumers like,” he said. “You can linger. You don’t have to wait for someone to bring you the check.”
Technomic’s Top 500 chain restaurant report said fast-casual chains generated 4.4-percent sales growth and 4 percent unit growth in 2009.
Off-premise sales also reflect a significant part of Newk’s business. Newk’s management categorizes sales into dine-in, catering, to-go and grab-and-go business, which features prepackaged items kept chilled in a refrigerated case adjacent to the register.
Over a one-week period recently, one company store generated catering sales of 14.8 percent, grab-and-go sales of 9.7 percent and 35 percent for to-go and call-in orders, Newcomb said.
“Our off-premises sales total about 60 percent in that one location,” he said. However, he added, off-premise business generally averages between 30 percent and 40 percent.
Technomic’s Paul said fast-casual chains covet off-premise sales.
“You can get more dollars through the system without either having to have more space or more rent,” he said.
Another feature that helps differentiate Newk’s is a large condiment roundtable with ketchup, mustard and mayonnaise, as well as pickles and homemade salad dressings.
“We mixed a lot of elements of casual into fast casual,” Newcomb said. “You place the order at the register, and we give you the ticket. [Then] you get your drink and visit the roundtable and get some toppings or something to munch on. By the time you get to your table, we should be bringing out your food.”
Newcomb describes the concept as having low labor costs, with a prep team coming in early in the day to cook, chop and stock the line. There are five employees in the kitchen, one person working the register, two or three food runners and a dining room attendant during service time. The back-of-the-house staff includes two sandwich makers, a salad maker, pizza maker and an expediter.
“We do make everything from scratch, and we have a small prep crew that comes in five or six days a week,” Newcomb said. When service time rolls around, the staff is lean and efficient.
“We have five key positions that can handle as much business as we can throw at them,” he said. “We have [served] 300 people an hour.”
Newk’s generates an average per-person check of between $10 and $12.50.
“We also serve alcohol,” Newcomb said. “We serve a limited menu of beer and wine, which helps get our check average up on occasion, too.”
Same-store sales in 2009 rose 2.9 percent over the year-earlier period, and, for the first quarter of 2010, same-store sales increased 8 percent versus the same period in 2009.
The owners plan to expand Newk’s to 36 total units this year through franchising. The most recent store opened in Austin, Texas, on May 3. Newcomb said he is concerned about the state of lending for prospective franchisees, but remains optimistic that current franchisees can still grow.
“The lending requirements are a concern, especially for those who are entering the franchise market,” he said. “[But] a lot of our franchisees that are growing right now either have investors and are using cash or are experienced franchisees that have operators and banking relationships in place.”—[email protected]
Newk’s Express Café HEADQUARTERS: Jackson, Miss.MARKET SEGMENT: fast casualMENU: salads, sandwiches, pizzas, soups and cakesNO. OF UNITS: 27SYSTEMWIDE SALES: N/ALEADERSHIP: Chris Newcomb, founder and CEO; Don Newcomb, founder and chairman; Debra Bryson, founder and vice presidentYEAR FOUNDED: 2004AVERAGE PER-PERSON CHECK: $10 to $12.50TARGET MARKETS: Houston; Oklahoma City; Tulsa, Okla.; Chicago; Louisville, Ky.; Orlando, Fla.; Cincinnati; and Richmond, Va.METHOD OF GROWTH: franchisingTARGET DEMOGRAPHIC: 25-to-65-year-olds with discretionary incomeNOTABLE COMPETITORS: Chipotle, Panera, Pei Wei Asian Diner
