Pandemic pushes sandwich concepts to refocus
A Cheba Hut employee focuses on a popular sub sandwich, prepared to go, instead of grocery orders or new family packs.
Sandwich brands, like all restaurants, have seen a dramatic shift in business as the fallout from COVID-19 changes how consumers interact with food brands. Those in the fast-casual segment, though, haven’t been hit quite as hard as full-service dining.
According to research firm Black Box Intelligence, the fast-casual category lost about 50 percent of sales in the first weeks of the crisis, and stayed relatively flat as the pandemic ushered in a swift change in business. That’s a deep hit, but compared to the 80-90 percent drop-off in casual dining, it’s somewhat manageable. And those on the quick-service end of the spectrum saw sales dip even less. In all, QSR brands saw sales decline about 30 percent right away, and just slightly more in the following weeks, according to Black Box.
One silver lining has been check averages, which have ticked up as people shift away from quick bites and rely on limited-service and fast-casual restaurants to provide dinner, too. Above all, retrenching on smaller menus of star items and core operations kept the sales drop from reaching disaster mode and helped concepts pivot to meet quickly changing consumer demands.
Cheba Hut embraces curbside service
When the COVID-19 pandemic first hit, everything was on the table for Seth Larsen, chief relationship officer at Cheba Hut Toasted Subs. He looked at family pack menu items, but they proved too complex in a time of crisis and were just more for the staff to keep track of. He also looked into grocery sales, but opted for tight focus not fads.
“We decided to focus on what’s in front of us and our current revenue streams, instead of pushing new revenue streams. We wanted to get back to basics and make sure you had customer service and answered the phone at every location. That’s low-hanging fruit compared to a grocer program” that won’t last, “so why waste time there,” said Larsen.
Manageable shifts were curbside service, tapping into the move to evening sales and making it easier for customers to get sandwiches for dinner.
“I’m a firm believe that sandwiches can be dinner, we’ve been screaming that from a mountain top for 22 years,” said Larsen.
Execution of the changes relied on operations and service, which ultimately meant having someone keep an eye on the parking lot and, when someone arrived, greeting them and getting the order. Larsen said one challenge was inconsistent parking at Cheba Hut’s 30-plus locations.
“Curbside is a new beast for us, a lot of our locations are not set up for that, so to get that implemented in the last six weeks has been pretty incredible,” said Larsen. “It’s all about having options there for customers to feel safe and frictionless. If it’s hard to order or the app is not working, people are going to bounce.”
Now that the new service mode is running smoothly, Larsen expects it will be part of the new normal even after the full menu returns and the bar reopens.
“It’s going to change the way everyone does business, so it was about breaking it down to what’s necessary and now, and what’s permanent and what’s the most benefit for the long term,” said Larsen. “Reduced-contact curbside, I think, is here to stay. I think a portion of the population is comfortable grabbing a beer and doing those things they typically used to do, but there will be a portion of people that will be a little more wary of it.”
From left: Togo’s build-your-sub pack. Schlotzsky’s guerrilla sandwich marketing. Seth Larsen, CRO at Cheba Hut.
Togo’s tweaks catering targets
For 180-location Togo’s, changes have included posting signs that outline the cleaning and disinfection strategy for guests to see, curbside operations and detailed checklists for franchisees to keep things working with reduced sales. A quick pivot on catering also helped the company capitalize on changing consumer habits.
As offices across the country closed and workers went home, catering sales cratered. But Togo’s, which has always had a strong catering program, shifted its target from the typical office lunch to providing for all those essential workers.
“The support group has put a list together to reach out to hospitals and Amazon warehouses to get catering sales, that has helped drastically. There are a lot of employees that are still in business,” said Togo’s VP of Operations Farid Biglari. Those workers still need a lunch option, “especially now when most people don’t have time to go anywhere and eat.”
The standard Togo’s lunch box proved desirable because it’s sealed by employees in the restaurant.
“This is more of a safety point of view, that this is a sealed box, nobody has opened it. So, it’s about customer safety,” said Biglari. “Everyone can pick their individual box that hasn’t been exposed to the outside or other employees.”
That’s an exceptional bit of peace of mind in this crisis. The end customer knows nobody, not the delivery driver, a passerby or Kimmy in accounting, has messed with their sandwich.
An entirely new target for the company catering program was families. Leveraging the demand for more dinner options and family orders, Togo’s created a make-your-own sandwich kit.
“Customers can come in and get this package with produce, bread and cold meat, which you can take home and have a family dinner with a make your own sandwich. We got a lot of good feedback,” said Biglari.
Schlotzsky’s leans on drive-thru
As one of the few sandwich chains with a drive-thru, Schlotzsky’s was able to push a core operational trait even further, leaning into efficient drive-thru service to keep things going. Chief Operating Officer Tony Bartlett said some stores even saw increased sales as they pushed value offerings and many competitors shut down.
“Our biggest shift to keep sales going has been increased speed of service at our drive-thru. People feel confident and comfortable ordering and picking up food from their car,” said Bartlett. “We have also been leaning into meal deals, BOGO pizza on Wednesdays, for example, or our family meal deal promo which offers families four entrees, four chips.”
A streamlined menu keeps the drive-thru going even faster and the value messaging seemed to work on uncertain consumers. And something as simple as a sticker to close each box gives customers an additional peace of mind for drive-thru, delivery and curbside orders.
“It shows we have limited the number of contact points between the kitchen and the customer,” said Bartlett. “Customer confidence is everything. We must continue to maintain their trust and over deliver.”
McAlister’s keyword: ‘scrappy’
McAlister’s Deli, which like Schlotzsky’s is under the Focus Brands umbrella, rolled out deli and meal kits that also come with a gallon of the company’s signature sweet tea. It’s also realizing the benefits of a recent investment in its core operations app.
“The McAlister’s app allowed us to scale curbside pickup as a convenient option for our guests from 50 to more than 350 locations in just a week,” said Shelley Harris, VP of operations. “Curbside has been one of the largest impacts—thank goodness we had invested in that app and loyalty technology before COVID hit.”
She said plugging deeper value into those operations has been beneficial, too. The company offered 99-cent child meals with an adult entrée through mid-May to give worried or unemployed consumers a reason to come and also push them to the app for contactless payment now and marketing down the road.
Above all, Harris said, the biggest lesson has been how a concept with more than 450 locations can still operate like a small, nimble business when it has to.
“We’ve taught our guests and ourselves that we can be nimble, responsive and accommodating to what guests need and want right now. And we’ve partnered with our franchisees on major speed-to-market initiatives,” said Harris. “Things that would normally have taken us months of consumer testing, building a marketing campaign and discussing with our franchisees have been accomplished in a matter of days. There is no going back from that. That expectation will become the new normal. And we think our teams are poised for that reality and excited about solving faster and with less fear of the unknown. ‘Scrappy’ is a new word we use a lot right now.”
The COVID-19 crisis forced the entire restaurant industry to re-think how it does business. While the grocery programs and toilet paper sales may have kept a few dollars coming in, more often than not these franchises were pushed to remember their original customer appeal—and hope it endures.