When Nord Brue and Mike Dressell started their bagel retail concept, Bruegger's, in 1983, less than one-third of Americans had ever tasted a bagel. But once they discovered the doughnut replacement, imitators quickly clogged up the bagel landscape.
The bagel wars followed, and while they weren't exactly bloody, there were some tears shed, and some wallets emptied, no doubt.
Bruegger's, with its boiled, then baked, New-York-style bagels emerged the winner.
The chain, which was started in Vermont, was purchased by its largest
franchisee, Quality Dining, in 1996. A year later, the founders repurchased the company. Sun Capital Equity Partners became the third owners of what has evolved into a bakery cafe. Today there are 279 bakery cafes in 22 states and the District of Columbia. About 183 are company owned.
James Greco became CEO in 2003, bringing with him a law degree and a background in operations reengineering, strategic direction and brand positioning.
When he came onboard, Greco says, the chain was stagnant. "It was a company with a good name, good position, but we needed to define who and what we were," he says. They hired a branding company to help them do the research and interpret the results.
They discovered the concept had high brand awareness with consumers – 93 percent – and 30 percent of its customers visit more than once a week, Greco says. Bulk bagels and cream cheese account for 20 percent of the sales and the day parts are fairly evenly divided with breakfast accounting for 39 percent of sales and lunch for 41 percent.
And even though they serve organic and fair-trade coffee, Bruegger's tends to share locations with Starbucks and Caribou coffee shops, Greco says.Innovative marketing has helped create a buzz. For instance, sales from green bagels on St. Patrick's Day and red-white-and-blue ones for July 4 support local charities. A bottomless mug program – refillable mugs which sell for around $119 a year, depending on the market – encourage frequent visits, plus allow the company to track its customers. Around 13,000 mugs have been sold systemwide, he says.
Systemwide sales have increased significantly, Greco says, and they are on track to do $200 million this year. Average unit volume is up and the company is experiencing its 16th consecutive quarter of same-store sales increases.
The company has signed 10 development agreements since January 2007. "We should end the year with 300 units," he says.
One of the keys to success is to provide franchisee support early on. In
addition to the initial training, Bruegger's has a 90-day plan that looks at the metrics to ensure the franchisee is on target. Prospective franchisees also are required to have previous restaurant experience.
But the effort hasn't been all growth, one of the things the branding team looked at was the stores' appearance. All the units have been redone, and the prevailing look is a New England farmhouse theme – a nod to the chain's Vermont heritage. More drive-thrus are being added, because research shows stores with drive-thrus do 20 percent more business than units without them.
When asked how much input his equity partners provided, Greco quipped, "When things go well, you don't hear from your partners." So in essence, Sun Capital is involved "to the extent they need to be and no more."