Schlotzsky’s®, a beloved fast-casual restaurant franchise known for its made-to-order sandwiches, plans to expand its footprint across the U.S. In its 320-plus locations around the country, Schlotzsky’s has long delighted customers with fresh sourdough bread, baked in-house every day.
The enthusiasm for the brand has translated into great success, both with guests and franchisees, receiving recognition in top industry awards including Entrepreneur’s Franchise 500. “We are proud to be recognized as a preferred brand by consumers and franchisees,” said William Armstrong, Schlotzsky’s chief brand officer. “Schlotzsky’s offers something unique with our fresh-baked bread and craveable sandwiches, and receiving a stamp of approval from our guests is something we take great pride in.”
With growth top of mind, the franchise just launched new incentives to drive unit growth. “Knowing that cash is king, especially in the current economic environment, we are offering a heavily discounted up-front franchise fee for new locations,” Armstrong says. These incentives include not only a discounted franchise fee of $10,000, but also includes 1 percent royalties and 0 percent advertising fees for the first year of operation, followed by 2 percent royalties and 1 percent advertising fees in year two.
This aggressive incentive represents the brand’s commitment to fueling growth. For multi-unit development, the same royalty and advertising rates apply, and the initial franchisee of $10,000 for stores numbers two and beyond are paid in installments, with 25 percent due at time of signing, and 25 percent due on an annual basis until balance paid in full, or prior to opening, whichever comes first. This incentive is being offered to qualified franchisees through December 20.
Schlotzsky’s has always fit well in suburban, rural, and semi-rural markets. Alongside stand-alone and retail-strip spaces, the brand sees opportunities in non-traditional venues like airports, colleges, and universities. Schlotzsky’s has also introduced three new prototypes with smaller footprints, allowing franchisees the flexibility to develop with competitive real estate in urban areas as well as prioritize the shift in consumer demand from in-restaurant dining to off premise businesses.
The first two prototypes are named the Design 1,800 and the Design 1,000—the former comes with an 1,800 square foot location with about 35 indoor seats, while the latter fits in 0.69 of an acre without indoor seating. “Design 1,000 prototype has two drive thrus side-by-side, one side is for conventional drive-through ordering, while the other side is specifically for digital app order pickup,” says Armstrong. Franchisees also can build restaurants in end cap and in-line locations, with and without drive thrus, something that allows Schlotzsky’s to enter retail strip centers and special venues. All these options offer franchisees a reduced initial investment in construction, lower rent, and ensure guest convenience as well as restaurant efficiencies.
With the customer-service experience top of mind, perhaps it’s no surprise that Schlotzsky’s has invested in digitization in both the front- and back-of-house. The investment has improved the throughput and guest satisfaction scores.
“We are utilizing metrics from our drive-thru timers which allows us to identify any pain points in the operation and adjust accordingly to increase efficiency and overall speed of service,” Armstrong says. The franchise is testing kiosks to improve speed of services and making sure that their app and online ordering platforms provide a smooth experience to customers. “We have also invested in our kitchen display systems which have shown tremendous improvements.”
All of these improvements led to one of the brand’s best years ever. In 2022, Schlotzsky’s traditional drive-thru locations had average net sales of $1.1 million. Armstrong says he and his team only deserve some of the credit—he gives a nod to the dynamic group of franchisees currently helping grow the brand into new and established markets.
For more, visit the Schlotzsky’s franchising page.
By Dikshant Uprety