Schlotzsky's New Image Means New Opportunity

Now more than ever, Schlotzsky’s is a great opportunity for experienced investors looking to open multiunit franchises in 2013. “We reimaged the brand about four years ago and are now more of a bakery/cafe than deli. We’ve upgraded the brand to fast-casual, offering table service, a wide variety of sandwiches, salads, pizza and soups. We started co-branding with Cinnabon and Carvel Ice Cream, both also owned by FOCUS brands. It’s attractive from the development side to get three brands under one roof,” says David Wheeler, vice president, franchise sales.

“The new Schlotzsky’s is fun, unique and quirky. We attracted a new demographic in females and a younger generation without alienating long-time customers. The strength of the brand, along with the food we’ve been making for 42 years, brings people back.”

Becoming more relevant and competitive has made investors take note. “Improved unit level economics is really helping our growth,” says Wheeler.

Schlotzsky’s looks for sophisticated, multiunit developers in a couple dozen markets around the country for that growth. The minimum agreement is for three units, and typical deals are for six to 10 restaurants. In the last year, Schlotzsky’s signed deals for 25 and 30 units. The investors on bigger deals really understand the development process and are savvy about the capital investment and marketing needed. The company hopes to open 50 new stores in 2013.

“We believe franchisees are our partners, and we work with them on a daily basis to help them be successful.”

“We believe franchisees are our partners,” says Wheeler, “and we work with them on a daily basis to help them be successful. We want to ensure our franchisees are fully engaged in their business. From a personality profile, all types of people make up our franchisees, but they all are fully engaged, understand the development process and understand this is not a passive investment.”

Franchisees have local connections to their communities, and that is where they focus marketing dollars. “Every franchisee has a corporate local marketing manager to work with on local programs,” says Wheeler. “They are strongly engaged with the local level advertising, marketing, PR and catering programs. We develop programs tailored to local markets, which are the best way to drive customers into the local restaurants.”

While franchisees often have direct interaction and communication with the corporate office, they can also rely on the Schlotzsky’s Franchise Advisory Council for information and updates. The council is a group of 13 franchisees elected by fellow franchisees. “There are quarterly meetings in Austin,” says Wheeler, “weekly support groups with the advisory council franchisee team, and franchisees on committees that deal with everything from purchasing to marketing to training to operations. It’s a great partnership between corporate and the franchise system, interactive and comprehensive.”

Schlotzsky’s remains about 15 percent corporate-owned, and even as the company grows, Wheeler says that percentage will stay roughly the same. “We are a franchise company, but we also believe we have to have skin in the game to understand what franchisees go through,” he says.

Social media emerged as a driving trend around the same time the company redesigned its stores. “It has really moved to the forefront for us when it comes to creating new customers and engaging with them,” says Wheeler. “Our primary social presence is through Facebook, but we are also active on Twitter and Foursquare and the other day we were even discussing a presence on Instagram. In addition to that, we are working on online ordering and mobile apps for smart phones so customers can find the nearest Schlotzsky’s and more.”

The company has focused on the “Lotz” in the middle of its name and created the “Lotz Better” brand mantra. “It is our internal filter moving forward,” says Wheeler. “We ask ourselves if ideas are ‘lotz better’ to make sure we are the best we can be. ‘Lotz better’ sums up just about everything at Schlotzsky’s right now.”

For more information about franchising opportunities with Schlotzsky’s, visit