Tuesday, October 07, 2014


We're going far, far off the grid today.

Schlotzsky's is a sandwich restaurant in the fast casual category. It's one tier above Subway/Jimmy John's/etc., and because the company started in Austin in 1971, I've been eating their sandwiches for most of my life (and they're really, really good).

The menu has always been simple. Toasted sandwiches (with fresh-baked bread) and salads. For decades. In the last few years, they added Cinnabon and pizza. Still, though, it's a small menu. Here, have a look (thanks, Urban Spoon):

Sandwiches take up over half of the menu board. Pizzas, salads, and soups have about 40% combined.

Like I said, it's been like this as long as I can remember. A small, focused menu.

Last night, I walked into a Schlotzsky's and saw this:

Overnight, they've added 40+ menu items. It's incredible. They've added a series of pasta dishes, flatbreads, "specialty" sandwiches (that use a different kind of bread than the signature bread Schlotzsky's is known for), "Knife 'N Fork" sandwiches (not a clue), and an entirely new dessert menu.

I've never seen a restaurant's menu expand like this. And I think I understand what they're doing.

The category directly above "fast casual" is "bakery/bistro", and it includes restaurants like Panera Bread and Corner Bakery. This tier can charge more for food because the restaurants usually have slightly more upscale menus and nicer seating plans. It looks like Schlotzsky's is trying to move up a tier in order to justify higher prices/profit margins, and they had to dramatically modify their menu to do so.

I don't remember a restaurant ever doing this successfully. Usually a restaurant in one tier will create an entirely separate brand (often with an entirely different genre of food) to enter a higher tier (McDonald's/Chipotle, for example). So what Schlotzsky's is trying to do--change tiers with the same brand--seems relatively unprecedented.

Well, it's unprecedented in terms of someone succeeding.

Schlotzsky's is betting the future of the company on this new menu, because I don't think they can go back. They have one substantial problem, though, in terms of customers accepting this "new" bistro concept: the seating plan is still fast casual.

Bakery/Bistros have seating areas that emphasize "nooks". There are little places for privacy almost everywhere, and every seating location feels somewhat private. Schotzsky's, though, has a mass seating area with absolutely zero nooks. So there's a big mismatch in terms of the food they're serving and the seating.

I can't imagine that they can pull this off successfully, but what nerve it took to even try.

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