As competition has heated up amid a cooling of the economy, fast-casual chains are promoting both value and hospitality to woo fickle customers who want bargains and a bit of pampering during the same dining occasion.
The fast-casual niche’s sales grew 13.3 percent overall in 2007 as the entire quick-service restaurant sector could notch only a 5.3-percent increase, according to foodservice consulting firm Technomic Inc. Regardless, the more adult-oriented fast-casual concepts are trying to boost their service amenities and offer price flexibility to avert guest defections to lower-priced quick-service rivals touting upgraded fare and bargain promotions.
At the same time, the fast-casual players want to retain their more upscale positioning, so several chains are tweaking their menus to heighten their appeal to cost-conscious customers.
Most brands whose food styles and adult appeal would put them in the fast-casual category and apart from largely price-driven mass-market chains generate average tabs that run upward of $5, often closer to the $9 range. But their representatives point out that they nonetheless offer a range of choices with varying prices, without resorting to couponing or deep discounting.
Einstein Noah Restaurant Group, for example, is testing a value menu it calls Incredible Deals, which offers some 10 items priced between $2.49 and $5.49. The company’s Einstein Bros. Bagels specialty bakery-cafe chains are not using the term “value menu,” explains spokesman James Hood.
“We are not in QSR or going to compete with a dollar menu or anything of that sort,” he says. “But there was a sense that that some people might have a perception that we are a little higher-priced than we are.”
In test markets, 464-unit Einstein Bros. Bagels is promoting Incredible Deals with billboards and in-store signage.
Rival bagel chain Bruegger’s, with 279 bakery-cafe units, also is promoting everyday value items, such as its $2.99 egg sandwich and its $4.99 deli sandwich, in print media and point-of-purchase displays. New items are introduced often, and most fit a value image, says Paula Doyle, marketing vice president.
Bruegger’s recently rolled out its first frozen, blended coffee drink, a treat item aimed at beefing up the midafternoon snack time and tempting customers to add the drink to meal orders at any time of day. While Bruegger’s has offered iced coffees for several years, the new beverage goes a step further to become a treat and has a higher price point, Doyle says. Its prices in most markets are $3.59 for a 16-ounce portion and $3.99 for the 24-ounce size.
Atlanta Bread Company Bakery Café is offering its version of everyday value by focusing on core menu items rather than constantly bringing in new ones, explains Jennifer Madison, a spokeswoman for the 116-unit chain. Its long-standing Half & Half program of choices of half a sandwich with a half-order of salad or soup has grown more popular and typically is priced between $4.99 and $5.29, she says.
Baker Bros. American Deli, a 15-unit chain based in Dallas, recently added a half-sandwich-half-salad option and revamped its entire menu, both decreasing and increasing portion sizes of various items, says Tom Dahl, its president.
“This gives people more options,” and has led many customers to add on more side items, he says.
“We want to stay out of the couponing game,” Dahl says, explaining that Baker Bros. runs just one weekly special, usually of a newer item. The chain’s $7.75 check average has stayed about the same since it made the half-and-half menu revision.
Several chains are employing tactics long used by quick-service restaurants: bundling or combining several items for a price lower than that of buying each item individually. Moe’s Southwest Grill has launched Moe’s Passport to Adventure, a choice of five combo meals, the first time Moe’s has featured a combo package, says Lauren McGowen, a spokeswoman for franchisor Focus Brands.
Aimed at Moe’s 18-to-24-year-old target market, the Passport special is being promoted through online sweepstakes and prizes ranging from T-shirts and music downloads to theme park vacation trips to Orlando, Fla. Moe’s has nearly 400 burrito outlets.
Jason’s Deli is one of the few fast-casual chains to offer a salad bar, which is one way the 183-unit “healthy” deli concept promotes value with its signature price of $6.79 for unlimited servings.
A newer feature is Jason’s Manager’s Special of a half-sandwich with a side of fruit or soup for $6.49. “A ton of people have been ordering the manager’s special,” says spokesman David Helfman.
Meanwhile, fast-casual chains that serve breakfast continue to try to drive more traffic to that daypart. Another Focus Brands chain, Schlotzsky’s, is doing a co-branding test with sister chain Cinnabon at 15 locations, says Kelly Roddy, president of the 375-unit deli sandwich chain. He says the test is going well and is being expanded.
The Very Veggie and Cheddar omelet sandwich is Bruegger’s newest breakfast bagel sandwich. Meat lovers may add bacon, ham or sausage.
Apart from its cinnamon roll test, Schlotzky’s is looking to core dayparts for other co-branding opportunities. Next in the testing pipeline will be a Schlotzsky’s co-branding experiment with Carvel, another sister chain. Test markets are expected to be chosen soon, Roddy says.
In the meantime, Schlotzsky’s is testing some lower-price and smaller-portion items. The chain’s current check average is about $9, Roddy says.
Au Bon Pain is boosting its between-meal time slots with its new French vanilla iced coffee, which, uncharacteristically, it gave away for free one recent afternoon at participating U.S. locations as an introductory promotion. The 220-unit bakery-cafe chain also recently rolled out 14 reduced-portion items containing 200 calories or less at lower price points.
“We aren’t changing anything dramatically,” says Au Bon Pain spokesman Ed Frechette. “We have no combo meals or special discounting.”
The iced-coffee introduction is expected to bring in more customers between meals, when many may also buy a pastry or other snack, he says.
Zaxby’s, a 435-unit chain specializing in chicken fingers, Buffalo wings, salads and sandwiches, is debuting snack-sized “Nibblerz,” a deep-fried chicken finger with Zaxby’s signature sauce in a toasted bun for $1.39 in most markets. It’s being offered through September either à la carte or as part of a combo meal of three of the sandwiches with fries and a drink.
The chain also is continuing to promote its “Meal Dealz,” launched last year with the expectation that the economy was “going south,” says Zach McLeroy, Zaxby’s chief executive. The $4.99-to-$5.29 price range of five combo meal choices “helps to increase your traffic, and we began getting a different type of traffic in our stores,” he says.
That introduction was part of a plan to broaden the base of customers who may have perceived Zaxby’s as a casual-dining restaurant because of its decor, McLeroy explains.
Noodles & Company, another fast-casual player, recently resized all of its menu items to offer more variety in pricing and to avoid having to pass increased commodity costs on to customers, says spokeswoman Jill Preston. The 181-unit multicultural noodle chain has seen an uptick in orders for its TRIO option, which allows guests to combine any small noodle bowl with a side salad or soup.
“It has really increased our value proposition,” Preston says.
Noodles & Company, which has used the same service system of table delivery of orders since the chain’s inception, is adding a new service element by having a crew member serve as a Noodle Ambassador, greeting guests and answering questions about the menu, including nutrition and allergy concerns.
“We encourage them to walk around and interact with guests standing in line,” Preston says.
Other fast-casual chains also seek ways to increase guest interaction, in face-to-face encounters as well as on the phone and online. Einstein Bros.’ Hood notes that the goal of improved hospitality is a “huge push” right now for the company.
“In tough times, people have more to worry about,” Hood says, adding that small touches of courtesy from managers and staff can go a long way. “We encourage our general managers to walk around with coffee for refills and be a little more engaging.”
During busy times, an Einstein Bros. crew member often comes to the line and takes orders before customers reach the counter. The chain also is working on other ways to improve flow of filling orders at peak times.
Later this year, Atlanta Bread will introduce a new customer service program, says spokeswoman Madison.
“Customer service is so important, especially in these trying economic times,” she says.
The bakery-cafe chain’s franchisees are given a choice of running food to the tables, and about half of them do that in their restaurant. Madison expects the percentage to continually increase.
Camille’s Sidewalk Cafe is another chain that is refocusing on the customer experience, says David Rutkauskas, its president. The 84-unit sandwich chain is testing running food to the tables and assigning floor managers to talk to customers and refill their drinks.
Improving customer service is “in the top three or four things we are working on” at Così, says Chris Carroll, the eclectic sandwich chain’s chief marketing officer. He says Così’s management has been retraining employees to increase their efforts to create a fun, friendly atmosphere.
Before each shift, managers talk to crew members to remind them to smile and be friendly, Carroll says. Building guest loyalty is especially crucial for the 148-unit chain, he notes, and also is being newly promoted through an online customer loyalty program.
Au Bon Pain also is spending more time emphasizing customer interaction, which has proven especially beneficial in responding to mistakes and preventing guests from defecting to competitors, Frechette notes.
Zaxby’s, one of the few fast-casual chains to have drive-thrus attached to all of its restaurants, has increased speed of service from six minutes to closer to four minutes, says chief executive McElroy. While that time cannot compete with quick-service chains such as McDonald’s, having drive-thrus nonetheless gives Zaxby’s an edge in its category, he says.
Several fast-casual chains also are finding opportunities to increase their corporate and social catering business. Among those reporting successes in that area are Camille’s, Moe’s and Jason’s Deli.
