The new prototype and growth strategy provide Togo’s with an energized and optimistic future, much unlike what it saw at the onset of COVID.
At the beginning of April 2020, sales sank 45 percent. But the uphill path toward recovery wasn’t as steep for multiple reasons. For one, the chain is built on sandwiches, a product that fits perfectly with off-premises programs. Secondly, Togo’s recognized prior to the pandemic that it needed to strengthen its digital strategy, so it already started work on integrating online orders and third-party delivery into its POS system. Because of that foresight, the sandwich brand finished 2020 only 2 percent down in sales.
So far in 2021, the brand is lifting 19 percent. In the same period last year, Togo's was down 17 percent, so it's made up for its losses. Off-premises mixed 24 percent in 2020, which breaks down to a 12 percent split between native web/app and third-party delivery service providers. Year-to-date, sales outside the four walls account for 33 percent of sales, or 19 percent from third-party delivery and 14 percent from the native web/app. Pre-COVID, off-premises mixed just 12 percent—7 percent native web/app and 5 percent third party.
More sales opportunities are on the way since California is scheduled to return to full capacity and remove mask mandates on June 15. Lunde acknowledges that Togo’s really isn’t an “ambience energy” type of place like a local brewery, but he adds that it will be nice for customers to have the option to eat inside as opposed to eating in their car. But even with the dining room fully open, Lunde thinks there’s a group of consumers that really likes delivery and doesn’t mind paying for it.
“Certainly everyone has adjusted their payment for that,” Lunde says. “So I think DSPs [delivery service providers] are sort of here to stay as is online ordering. I don't know that online ordering will continue to rise as quickly as DSPs. We're hoping that dine-in is going to be more incremental and that the people ordering online and DSPs are going to keep doing that and it's the dine-in people that don't like online or want to sit down and all that have been staying home and making sandwiches.”
Labor remains a challenge for Togo’s, just like everyone else. To assist franchisees with the recruiting process at the store level, the chain added an application portal to its website. In two weeks, the brand received more than 100 applications though the portal. For Lunde, running restaurants is about competing for people first, then customers—whoever gets the best people tends to get the most guests. It’s another reason why the brand refresh and simpler operating model has been so valuable to Togo’s.
But looking at the bigger picture, vaccinations are rising, jurisdictions are reopening, and consumer confidence is increasing. And Lunde knows Togo’s is in a better position than most to take advantage of the new environment.
“We are geared up for the summer,” Lunde says. “We’ve got our 50th anniversary, our new products, our new advertising. So our dine-in will be opened at 100 percent, and then depending on the county will dictate what percent of the tables can be used, but we're setting it up like it's 100 percent.”