Competition | May 2017 | By Jessie Szalay

Collaboration Fuels a Brighter Future in Fast Casual

Cutthroat competition gives way to collaborative success that uplifts not only individual brands, but also the industry overall.
Michelle Gauthier of Mulberry & Vine is among a group of fast casual 2.0 operators who are finding greater success through collaboration. Mulberry & Vine
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When Untamed Sandwiches was still just a glimmer in cofounder Andy Jacobi’s eye, he had a long conversation with Ben Conniff, president of New York–based Luke’s Lobster. The fast casual had inspired Jacobi, and he was eager to hear Conniff’s insights.

“In a very nonjudgmental, open-minded, and collaborative way, [Conniff] set me straight on some things and encouraged me on others,” Jacobi says. “He didn’t know me from Adam. He didn’t have to do that, but it meant so much to me.”

Three years later, Jacobi pays Conniff’s help forward. He talks with new restaurateurs and makes collaboration a key part of his business.

“We help each other out. … We informally ask our peers for advice or feedback on experiences they’ve had,” he says. “I think our peers know that when they say something to me, I’m going to treat it with confidence. And I do the same thing for them.”

The rising tide

Jacobi isn’t alone in this approach. For years, multi-brand companies like Yum! and Focus have grown revenues by placing sister stores adjacent to each other and sharing consumer data. Now a growing legion of concepts—many of which are independents—is finding a similar strategy can benefit all. Collaboration can encourage customers to eat out at limited-service restaurants more often, bring traffic to different areas, and ensure high standards across the board. Plus, Jacobi says, it feels like the right thing to do and can create a fulfilling community.

At its core, the philosophy behind collaborative success is that a rising tide lifts all boats. “We all want people to eat out more,” says Gary Stibel, founder and CEO of the marketing and strategy firm New England Consulting Group (NECG). “It’s good for everyone.”

Location can be a major factor bringing in the tide. Pennsylvania-based fast casual Saladworks’ first location was in a food court. Therefore, says president and CEO Patrick Sugrue, “Our genesis is community.” Though these days Saladworks is in fewer food courts and more lifestyle centers, being in a high-volume area is still a priority. Areas with several restaurants usually generate enough traffic for everyone, he says. And when a new concept comes in, it creates buzz, boosting traffic overall.

Areas with several concepts in close proximity can also increase convenience because customers have more of a choice. “Convenience trumps everything else,” says John Richards, former president of Starbucks and current managing partner of the NECG. “You get more eyeballs and activity in the immediate trade area, and more people seeing your place, regardless of what you do from a marketing standpoint.”

For many consumers, an area with multiple places to eat is simply more convenient. People don’t want to eat the same thing every day, so the variety allows them to go to the same area but try new places. Clustered restaurants also eliminate the veto vote, Sugrue says. That’s especially important as consumers become more interested in distinctive offerings and embracing dietary limits.

But guests appreciate offerings beyond the healthy-versus-unhealthy paradigm. Sugrue says he would be happy to place a Saladworks near a Pita Pit, another healthy brand, because they each have distinctive offerings, which helps customers distinguish the two. But Saladworks typically gets soup and salad exclusivity within a shopping center.

Jacobi echoes that sentiment. “Would I want to be next to another high-end sandwich shop? Maybe not,” he says. “But I’d love to be next to a Luke’s Lobster.”

Block party

Finding the right neighbors requires a precise balance of similarity and differentiation. Though it’s important to stay away from too-similar concepts, avoiding too-different ones is also key. Intermingling quick-service and full-service establishments can work, NECG’s Richards says. It’s more important to avoid discrepancies in quality and values. Being near a traditional fast-food restaurant like Subway would be a negative for Untamed Sandwiches, Jacobi says. The fundamental philosophies are dissimilar.

“The more that I can get people to think of us as a similar quality of food as a Luke’s Lobster or a really amazing fine-dining restaurant with a different style of service, the more luck we will have of convincing customers of our value proposition,” he says.

This approach requires thorough knowledge of the brand’s ideal customer, which Stibel says is of upmost importance. Once operators intimately know who their customers are, they can focus on cultivating differentiators.

Michelle Gauthier is the founder and CEO of Mulberry & Vine, another New York City fast casual. She says her customers are generally looking for high-quality food with whole ingredients at a more economical price than full service. The fast casual 2.0 category is filling that void, so having several close together creates energy.

“It adds legitimacy. It normalizes the market, and people become comfortable with the concept,” she says. “The more people who demand better ingredients, the better it is for everyone.”

But she emphasizes that Mulberry & Vine’s area of Manhattan is home to many fast casual 2.0 concepts, which have carefully crafted unique characteristics based on customer awareness. Those differentiators maintain the energy without cannibalizing business.

Clearly differentiated restaurants of similar caliber in close proximity can create a dynamic environment for consumers and operators alike. It can also encourage community and collaboration within the competitive business environment.

Gauthier has embraced working together wholeheartedly. She doesn’t just target locations with other fast casual 2.0s; she also makes an effort to know other operators. Gauthier, Jacobi, and a handful of other operators recently developed a social networking group in order to further collaboration. They meet about once a month and invite other experts in foodservice to speak.

Stibel and Richards suggest their clients do something similar—whether it’s taking advantage of franchisee associations or going to lunch with other quick-service and fast-casual operators.

An interesting breed

Gauthier views this social aspect as especially important in the fast casual 2.0 space because it is less established than other limited-service sectors. It also tends to draw people who are new to foodservice and need advice, much like Jacobi did before opening Untamed Sandwiches.

“People in fast casual are an interesting breed,” she says. “It seems like the majority are new to the industry, very passionate about what they’re doing, and yet have no real skillset to be doing it. … I can’t imagine doing this without the community. Everyone’s super quick to respond, transparent, and willing to share the good, the bad, and the ugly.”

When they meet, the group talks about everything from health insurance to dishwasher referrals to best uniform suppliers. Because busy schedules make it difficult to find time for collaboration, Gauthier and Jacobi hope their structured meet-ups will foster more conversation and help within the greater community.

Sugrue, who works with other limited-service brands through heavy involvement in the National Restaurant Association, views knowledge sharing as a fundamental part of success. He encourages operators to discuss their experiences, whether it’s how they made their restaurants comfortable or how they create a value proposition. The more that restaurants offer good value and inviting atmospheres across the board, the more likely consumers will view the industry as a whole as one worth patronizing.

Sugrue also strongly encourages operators to share insights on food safety and supply-chain quality assurance. “Safety best practices are too important not to share,” he says. “If there are reports of food-related illnesses in the papers and certainly in a given chain, that hurts everybody.”

But the benefits of collaboration go deeper than guest volume. The knowledge that they are not alone in an often-stressful industry can be invaluable. “We’ve all fallen down plenty of times, but we’re there to pick each other up,” Gauthier says.

This story originally appeared in QSR's May 2017 issue with the title "Better Together."