Industry News | May 16, 2001

Schlotzsky's Delis Under Construction in Austin

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Schlotzsky's Inc. (Nasdaq:BUNZ) has awarded contracts to build two new restaurants in the Austin market—one at La Frontera in Round Rock and the other on Anderson Lane at Northcross Mall—both slated to open in September 2001.

Both will feature the company's newest enhancements: coffee bar and pastries, iMacs, higher capacity drive-thrus and updated New Orleans grocery-inspired architectural design details.

The company has also purchased three additional sites in the Austin market. Two are planned as partnerships with existing franchisees to replace older stores: on Airport Boulevard across from Highland Mall at the former Buttercrust Bakery site and on Highway 79 next to Walgreen's near Dell Diamond in Round Rock. The third site is on Highway 620 at FM 2222 in front of H-E-B.

This will bring the total of Schlotzsky's® Delis in the Austin market to 24, with 14 being Company-owned or part-owned through partnerships with existing franchisees.

Average weekly sales for company-owned restaurants in the Austin market were $32,334 for the first quarter of 2001, compared to $11,611 for all restaurants in the Schlotzsky's® Deli system for the same period. Total sales in the Austin market have increased from $5,903,710 in 1995 to $21,895,493 in 2000 as the company has grown its presence and ownership.

"Our Austin restaurants are delivering outstanding results,'' said John C. Wooley, president and CEO. "Austin is a wonderful test market for new our ideas because it's ahead of the curve in terms of tastes and lifestyle.''

"Here, we are demonstrating the true strength of our concept and the potential to be realized in other markets,'' he continued. "It's consistent with our growth strategy in key metro markets, and it shows the potential for multi-unit operators.''

At 3,700 square feet, the location at La Frontera is the only restaurant in the Round Rock development to be allowed a drive-thru ``because the developer liked the sophisticated appeal of our concept and the demographics of our customers,'' said Wooley.

"It's a drive-thru, yes, but it's not ordinary because people are driving off with really great upscale sandwiches, pizzas or dessert. Ours is more of a cuisine approach to the drive-thru.''

Wooley said that the company sees significant opportunity for growth in the Austin market, based on additional locations under review, and anticipates continuing to open new restaurants in 2002. Funding for those projects would be provided by the company, local bank financing or through build-to suit leases.

Elsewhere in the U.S., the company will continue to work with new and existing franchisees to open both 3,200 square foot freestanding units as well as lower-cost units located in endcaps of prime retail shopping centers. Each of the two formats will support the quality brand, with the smaller endcap version expected to appeal to existing franchisees due to its lower construction costs and the larger freestanding units expected to attract new, multi-unit restaurant operators.

Schlotzsky's Inc., founded in Austin, Texas, in 1971, is a franchisor of quick-service restaurants featuring made-to-order hot sandwiches served on distinctive sourdough bread, along with sourdough crust pizzas, salads and soups. As of March 31, 2001, there were 711 Schlotzsky's® Deli restaurants open and operating in 38 states, the District of Columbia and 10 foreign countries. Visit www.schlotzskys.com or www.cooldeli.com for more information and e-coupons.

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.