Competition | August 2015 | By Mary Avant

At the Corner

It may not have cracked the QSR 50 this year, but Corner Bakery’s ambitious growth plan should have it there in no time.
QSR brand Corner Bakery one of original fast casual leaders in growing restaurant industry.
One of the original fast-casual players, Corner Bakery has undergone slow and steady growth since it debuted in 1991. corner bakery

Any brand with its sights set on growth has a solid plan for that growth in place—often an aggressive one, at that. Bakery-café brand Corner Bakery is certainly no exception, with a goal of doubling the size of its 190-plus-unit brand by 2017.

Though the Chicago-born and Dallas-based brand has been around since 1991, it spent nearly two decades growing solely through company-owned and operated units. That all changed in 2007, however, when it opened its doors to interested—and experienced—franchisees, who are now the driving force behind the brand’s rapid-but-sustainable expansion.

“When you have 30-plus partners and they are each growing one or two cafés a year, you can easily double the size of the company,” says Corner Bakery CEO Mike Hislop. This year alone, Corner Bakery will open more than 30 franchise units, with the short-term goal of attaining 50 franchise partners who grow at two units a year.

“If we can get 50 very strong franchise partners that all grow at a cadence of two, and then the company grows at 10, then that’s 110 units a year,” says the brand’s president, Gary Price. “We can easily surpass our goal of doubling the size of the company and achieving our longer-term goal of being a $1 billion brand by the end of the decade.”

The management team also feels confident in the type of franchisees it’s recruiting to its ranks—franchisees with proven restaurant experience and equity who want to enter new markets, build brand awareness, and develop relationships within the community.

“Those types of partners understand how to develop a new concept, from the real estate process, the construction and development process, through the opening and operating and how to ramp a business up,” Price says. “There’s not a lot of learning curve.”

But because any good relationship is a two-way street, Corner Bakery has also spent the last several years prepping itself to please franchisees, starting with a revamp of its back-office system to improve the economic model.

Last year, it also launched a new prototype called 5X, a materially smaller unit that shrinks its 4,000-square-foot footprint to one that’s 3,600 square feet. Price says this change alone allowed the

brand to cut nearly 10 percent out of the total cost to build, improving ROI for franchisees. The brand also boasts an AUV north of $2.2 million (as of last year) and 2014 systemwide sales of more than $355 million.

“When you have a brand that has the profile that Corner Bakery has—very high consumer attribute ratings, very good unit economics, and high average unit volumes—what you end up getting are franchisees that aren’t [one-unit or two-unit franchisees],” says Dennis Lombardi, executive vice president of foodservice strategy firm WD Partners. “They’re multiunit franchisees that will take on contracts for five stores, 10 stores, 15 stores.”

With two service models already in hand—a booming catering program that makes up nearly 25 percent of the brand’s business, in addition to its typical counter-service model—Corner Bakery will also begin exploring drive-thru concepts over the next year, which it hopes to roll out to franchisees in early 2016. It also plans to expand its rapid pickup system, where customers order and pay on their mobile devices, then pick up their items at a window or the counter without employee interaction.

But even with all the bells and whistles of new prototypes and back-of-house technology, the real star of the show at Corner Bakery is—and always has been—its menu. “Food is at the forefront of everything we do,” says Ric Scicchitano, who was the brand’s original chef and baker when it first opened as a bread bakery in Chicago and who now acts as senior vice president of food and beverage. “We have a real kitchen. We have ovens for baking, ovens for roasting, burners for sautéing, [and] panini griddles for paninis.

“The ingredients we serve aren’t off-the-shelf ingredients. They’re our recipes, our formulas, and we’re not afraid to make quality statements with them,” he adds.
“We’re not afraid to spend the money to have a higher-quality product.”

Many of those products are the result of the more than 40 fresh vegetables it has delivered to stores every day, as well as its three distinct dayparts featuring a variety of made-from-scratch menu items.

Breakfast, which accounts for around 23 percent of business, is led by its Scramblers menu—made with eggs scrambled to order—as well as steel-cut oatmeal and, naturally, baked goods. Last year, it also debuted a new a.m. item: pancakes. Made fresh in house on flattop griddles, Scicchitano says, Corner Bakery’s buttermilk pancakes have helped drive a significant amount of traffic during the breakfast daypart.

The majority of its business—around 54 percent—comes from the lunch daypart, during which it offers salads, soups, paninis, and a host of other hot and cold sandwiches. Earlier this year, the brand rolled out a new line of flatbread sandwiches, which come in at less than 400 calories a sandwich and which have been a hit with the 60 percent of lunch customers who are female.

Dinner at Corner Bakery includes items like freshly sautéed pasta and grilled sandwiches. The average check comes in under $10.

And though it does have some indulgent items on its menu—like its classic Cinnamon Creme Cake—the brand continually tries to develop items that are relevant to what consumers seek and need today, Scicchitano says, from items with less carbs to dishes that are gluten free.

Perhaps that’s why at least one-fourth of its menu developments address some type of dietary or healthful need. A few recent examples: the aforementioned flatbread sandwiches, as well as a line of salads that feature good-for-you grains like quinoa and black beans.

In the last few years, Corner Bakery has also upgraded many of its protein and produce options, introducing roasted pork shoulder and oven-roasted turkey breast, as well as pickling red onions and jalapeños in house.

“We follow some pretty strong expectations in the kitchen, and we say there are certain ways to get flavor out of food,” Scicchitano says. “And we do our dangdest to get that out.”

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