Veteran franchisee JJ Ramsey, who owns 20 Schlotzsky’s restaurants, opened the first Design 1800 unit in Derby, Kansas, on August 12, and debuted a second modified version this summer in Mountain Home, Arkansas. From a sales standpoint, Bartlett says the stores are accomplishing exactly what the brand projected—earning the same volume, if not more, compared to a larger legacy building.
“What we've seen immediately—and these locations have only been open for a short time—but we have seen that the way we designed to open it and operate it with less employees has proven out,” Bartlett says. “Once again, I think the bigger thing for me is that we've proven that the volume could still run through these smaller locations. The franchisee is extremely happy with not just the buildout costs of it, but how efficient the building is to operate.”
In terms of upcoming store debuts, Schlotzsky’s was forced to push some openings for a short period due to disruption with commodities and labor. The brand worked with franchisee partners to make sure they’re ordering equipment 12–16 weeks out instead of the typical four weeks.
Bartlett views staffing as the bigger question. Normally when the chain plans to open a restaurant, there’s an overwhelming number of applications, but now the brand is having to put more effort into drawing in candidates. One major fix is the prototypes, which require lower labor costs.
“We had some goals to reduce labor in these buildings and I think it's been two-for-one by reducing the menu offering, and secondly, redesigning the building and focusing on profitable channels,” Bartlett says. “One of our most profitable channels is the drive-thru versus dine-in business. When you have a dining room, you have to staff it, you have to heat it, you got to clean it, whatever. Our 3,300-square-foot prototype had 90 seats. Now we have 30–35 seats, so it's a lot smaller.”
“We are leaning heavy into speed through the drive-thru and accuracy so that guests know they can come to our drive-thru and be there fast and get the same quality food that they would on a dine-in experience,” he continues. “Those channels—just through digital and drive-thru—are extremely more profitable and easier on the labor model. By focusing on those channels, we've been able to deleverage that dine-in piece of the business, which is very labor intensive.”
As Schlotzsky’s heads toward the end of 2021, Bartlett expects comps to remain positive in addition to more gains in traffic.
He knows that headwinds with supply chain and staffing likely won’t dramatically change in that timeframe, but the brand is ready for that reality.
“I think what we do have to do is be prepared as we look forward to menu development and things that we want to do in ’22,” Bartlett says. “I think you've got to be very mindful that there potentially could be additional disruption in the supply chain network.”