“We think it’s the great strength of our concept and great execution,” says Panera President Neal Yanofsky.
Yanofsky says he gets asked every year what Panera is doing differently and the answer is always the same: “We’re working harder at being more of who we are.”
By way of example, Panera introduced a new line of muffins in May 2007. It’s not anything huge, Yanofsky says, they’re just better than before.
“In general, we don’t see that we’re in some kind of dog fight,” Yanofsky says. He’s right. Panera is so far ahead of its competitors, it’s hard to identify anyone that could feasibly present a challenge any time soon and with high double-digit growth the company isn’t giving anyone time to catch up.
That doesn’t mean that other sandwich makers aren’t looking for a slice or two of the bread. After breaking into the QSR 50 for the first time last year, Jason’s Deli continues to move up the chart, jumping two more spots this year. Jason’s grew sales by 9 percent on top of around 20 percent last year. Jason’s big claim to fame is the highest annual unit volume on the QSR 50 at almost $2.4 million. That bests Panera by around $300,000.
McAlister’s Deli is another fast-casual sandwich chain making its mark on the industry. With systemwide sales growth of more than 23 percent in 2006 on top of over 29 percent in 2005, McAlister’s appeared as a contender for the first time this year. Unit growth of over 20 percent, concentration the Southeast, and newly partnered with equity group Roark Capital, McAlister’s is set for further movement toward the 50 in 2007.
The overall growth of the fast-casual market is being highly influenced by the incredible growth in the Mexican segment. With high double-digit growth in sales and units, the top three performing Mexican chains are setting the pace in fast-casual.
“Americans have accepted Mexican food like they’ve accepted burgers,” says Qdoba CEO Gary Beisler.
Leading the fast-casual Mexican pack by some $500 million in sales and nearly 300 units is Chipotle. With a simple, fixed menu and exclusively company-owned units, Chipotle posted a 31 percent increase in sales, almost 12 percent growth in annual unit volumes, and 19 percent growth in units in 2006. Last year was the chain’s ninth consecutive year of double-digit comp growth.
Chipotle spokesperson Chris Arnold says the key to Chipotle’s success is its concentration on Food with Integrity. By keeping the menu simple, the chain can focus on providing better ingredients. Around two-thirds of its chicken and half of its beef are naturally raised, and hormone-free sour cream was introduced last year.
“We believe that if we do those things really well then we’ll keep growing,” Arnold says. As always, there are no plans for adding menu items or dayparts to increase sales.
The company plans to open 110–120 units or 15–20 percent more units than it did in 2006. Expect Chipotle to gain a couple more spots in the 2007 QSR 50.