June 1, 2006
By Lynn Petrak
Sandwiches are going upscale and beyond the traditional, as operator competition and consumer trends collide.
Editor’s Note: In this second part of a series of reports on sandwich trends, Snack Food & Wholesale Bakery takes a look at the dynamic rise of the upscale and/or gourmet sandwich chain and the surge in innovative menu items in venues not typically associated with sandwiches.
The recipe for a basic sandwich — bread, bun and assorted fillings — isn’t exactly rocket science.
That said, the humble sandwich has been the stuff of many experiments and research projects lately, as foodservice operators, prepared foods companies and retailers look to capitalize on the best attributes of the sandwich to capture new corners of an ever-competitive marketplace. And, just as with science, the subject of evolution has come up in their studies.
Although protein and vegetables tucked in between a roll or slices of bread is a foodstuff that dates back centuries, the sandwich has gone gourmet in recent years to reestablish it as a hot ticket item on menus both at home and away from home. What once was plain ham or turkey has given way to rosemary-crusted ham or buffalo-glazed turkey, and what once was slapped together on a kitchen counter can be picked up toasted and ready to eat in not only a sandwich chain but a burger place, supermarket, C-store, coffee shop and even a doughnut drive-thru.
The transformation has been subtle, but the remaining basic structure and appeal of the sandwich has not gone unnoticed. In its recently released “2006 Evolving Sandwich Report,” Chicago market research firm Technomic Information Services concluded that consumers still love sandwiches and want higher quality ingredients and meaningful flavor combinations that often reflect regional tastes.
Across the board, notes Technomic’s executive vice president, Bob Goldin, the focus on the quality of the bread and the ingredients inside is stronger than in the past. “I think there is a trend toward upscaling — consumers will pay more for higher quality offerings,” he says, adding that the caveat with so many channels now touting sandwiches is that the growth ultimately is shared. “At the same time, it’s a big market, and everyone can’t move upstream.”
Tied into the notion of quality is the perception that sandwiches with a more contemporary flair can be part of a healthful diet. Additionally, the drumbeat for freshness will likely only continue, given the makeup of the general consumer base.
“The fact is that the population is aging, and the largest segment continues to be the Baby Boomers between the ages of 40 and 60,” says Bob Sandelman, chief executive office of Sandelman and Associates, San Clemente, Calif., which tracks sandwich trends as part of its consulting and marketing services. “These are people who grew up on fast food and still like the convenience and speed of fast food, but now have more money in their pocket and are willing to spend on products they feel are better for them.”
Fast-Casual ChainsGet an Upgrade
Quick-service restaurants (QSRs) that specialize in deli and sub sandwiches — such as Subway, Quiznos, BLIMPIE and Jimmy Johns — are diversifying their menu offerings to better compete with burger and fried chicken chains, which are rolling out deli-style sandwiches of their own. At the same time, there has been remarkable parallel growth developing more premium sandwich fare that differentiates foodservice operators from one another and commands a higher price point, as well.
For instance, there has been an explosion in fast-casual establishments that specialize in premium sandwiches made on ciabatta, focaccia and artisan breads. National chains include Panera Bread, known in some markets as the St. Louis Bread Co., which has been a driver in the premium sandwich boom.
“Places like Panera and Corner Bakery are doing okay,” he says, adding that such establishments cater to consumers’ taste for more sophisticated offerings and their simultaneous lack of time and inclination to do it themselves. “People don’t make these gourmet sandwiches at home, because you have all of these different toppings, vegetables and meats.”
In a broad sense, he adds, Panera and the host of fast-casual sandwich chains have built much of their business by enhancing the quality of their bread.
“They definitely try to differentiate themselves through different varieties of bread, and the other areas are through the use of condiments and sauces,” Goldin notes. “That’s why you are seeing things like ciabatta and chipotle mayo.”
Creating upscale sandwiches using premium components continues to resonate with consumers, points out Bryant Keil, chief executive officer and chairman of Chicago-based Potbelly, which is set to grow its business by 25 new stores this year, after 35 new stores were built last year.
“That’s not a new trend, and I think that’s what is neat about it,” he says. “It’s similar to the way in which people have been drinking coffee for a long time, and Starbucks figured out a way to do it better and more interesting.”
To make over their menus to cater to a new brand of consumer, fast-casual chains are adding new types of breads, condiments and vegetables and coming up with creative combinations of those ingredients.
Richmond Heights, Mo.-based Panera, for its part, recently incorporated a new seasonal item to its menu: the Mediterranean Veggie sandwich with zesty peppers, Feta cheese, cucumbers, lettuce, tomato, onions and cilantro hummus atop its tomato basil bread. Panera also has updated its children’s menu with a new kids’ grilled cheese and a peanut butter and jelly sandwich. It even has a kid-friendly deli sandwich with organic cheese and a choice of turkey, roast beef or ham on whole grain bread. Each meal comes with squeezable organic yogurt and a choice of organic milk, chocolate milk or apple juice.
Stores that started out regionally and are now expanding at a good clip also are keeping their R&D teams busy. Potbelly regularly keeps a pulse on what its customers are looking for in new flavors and formats. For carb-waching customers, for instance, the chain offers a “skinny” option in which a chunk of bread is hollowed out from the inside.
Cosi often livens up its menu with various limited-time-offer sandwiches. According to Paul Seidman, Cosi’s vice president of food and beverage, the Deerfield, Ill-based chain introduces a new hot and cold sandwich every season and for summer. Recently, for example, it launched a cold shrimp salad sandwich and a hot Chicken Mole Rojo Rustica sandwich, made with dark and white meat chicken simmered in a red mole sauce and served on toasted bread with fresh guacamole, pico de gallo, lettuce and crumbled white cheese.
“Latin flavors are really hot, and that [sandwich] is playing very well so far,” Seidman says.
When developing new sandwiches, restaurants have to walk the line between what’s good and familiar and what is interesting.
“I always say that food has to be like a joke — it can’t be too obvious or too obscure because then it’s not funny,” he adds, “It has to be beguiling, but not cryptic.”
Seidman also notes that fast casual chains have developed a reputation as a good place to experiment with new flavors.
“Our consumer is worldly, and they watch the Food Channel, they subscribe to Bon Appetit or Gourmet,” he observes. “We have a lot of trust and permission from the consumer to introduce them to new flavors.”
With a chain of stores in Arizona, Baggin’s Gourmet Sandwiches also works to offer new gourmet flavor combinations to its customers. As a nod to patron interest in bolder flavors, the company offers varieties such as Anasazi Chicken with lemon-seasoned grilled chicken served with Provolone cheese and green chilis on sourdough bread.
The success of chains on a local basis isn’t a fluke, research from Technomic indicates. The firm’s “Evolving Sandwich Report” revealed varying regional sandwich preferences, which explains the continuing popularity of Italian beef in Chicago, deli-style sandwiches in New York City, and clubs with avocado in California.
“Although many chains have a national presence, the responses we received from consumers indicate that many are loyal to the regional favorites,” says Erick Giandelone, the report’s editorial manager. “Operators can benefit from knowing how the consumer decision-making process is influenced by not only the menu, but also the regional influences.”
In addition to providing flavor innovation, fast-casual chains are staking out their portion of the consumer’s sandwich dollar by creating a restaurant environment than has more ambiance than QSRS.
Service, for instance, is often set up differently than QSRs. At Panera, customers place an order, sit down and then wait for their number to be called. Cosi, for its part, currently is updating its service process, through which customers now order, take a number and put the tag on a stand at their table for tableside delivery, according to Seidman.
At Potbelly, Keil says that food is just part of the dining experience.
“I think we have great psychic happiness in our stores,” he says. “You walk in, and the stores are fun to look at. Someone says, ‘Hi, how are you?” and while you are waiting for your sandwich to cook, you are listening to someone playing live music.”
Delivering quality food in a fun atmosphere doesn’t have to come with sticker shock, Keil adds. That’s why patrons are flocking to fast-casual restaurants for sandwiches that typically peak at $7 or $8 and often come with combination value deals such as chips or small salad and a drink
“You get great food, and it doesn’t blow a hole in your wallet,” Keil notes.
The success of fast-casual restaurants actually has spurred traditional QSRs to borrow a page from their success. Mark Mears, chief marketing officer for BLIMPIE, says its new line of premium panini sandwiches on garlic herb focaccia bread was inspired in part by the impact of gourmet sandwich shops.
“We are seeing an influx of a new category of sandwiches in fast-casual, spearheaded by Panera, Einstein and Atlanta Bread,” he explains. “What they’ve done is to elevate the sandwich to more of an experience than just a meal. That’s important, and at Blimpie, we tap into that same mindset to set apart a BLIMPIE sandwich and differentiate our brand positioning of real fresh taste.”
Joining the Club
Sandwich QSRs aren’t the only ones trying to differentiate their food business by adding more premium fare. Those chains that haven’t gotten into sandwiches before are doing so in a big way as of late. One of the most ubiquitous chains in the country, Starbucks recently extended its rollout of a line of upscale warm breakfast sandwiches.
“Starbucks is continuously looking for opportunities to offer innovative food and beverage products that meet the needs of our customers,” says Alan Hilowitz, spokesman for the company. “This will further enhance our ability to connect with our customers while adding to the Starbucks experience.”
For instance, the breakfast sandwich started locally in Seattle in 2003 and was expanded in regional markets such as Washington D.C., Portland, San Francisco and, most recently, Chicago.
“With the introduction of the warm breakfast sandwiches in the three markets this year, Starbucks plans to nearly triple the number of locations that offer warm food options to a total of approximately 600 stores,” Hilowitz explains.
The breakfast sandwiches, which are heated to order, are made with toasted English muffins and bagels, fluffy eggs, premium meats such as peppered bacon and Black Forest ham, and natural aged cheeses.
Dunkin’ Donuts stores also are rolling out the red carpet for sandwich lovers. In January, Canton, Mass.-based Dunkin’ Brands, Inc. launched a new Supreme Omelet sandwich — a combination of bacon, melted American cheese, scrambled eggs, diced red and green peppers, scallions, hash brown potatoes, and Swiss and Monterey Jack cheeses on a freshly baked croissant. According to Susanne Norwitz, global communications manager for Dunkin’ Brands, the Supreme Omelet sandwich scored higher in consumer taste testing than any other Dunkin’ Donuts breakfast sandwich. “It is doing phenomenally well,” she says of sales to date.
Norwitz adds that Dunkin’ Donuts is succeeding with sandwiches because such items are increasingly appealing from a nutrition, convenience and taste perspective.
“Breakfast sandwiches are a wonderful way for people to have something substantial and delicious,” she says. “It’s something that is okay for you and powers you through the day. It’s also a portable, convenient solution for people who are busy and have to get their day started.”
In addition to doughnut and coffee chains, supermarkets and C-stores, are strengthening their foodservice fare by focusing on sandwiches.
Major supermarket chains Safeway, Wegmans and Marsh are among those national and regional supermarkets that have set up counters in or near their deli and prepared foods sections for made-to-order or heat-to-order sandwiches, from premium prime rib sandwiches to upscale panini. There, too, sandwiches are offered in value meals with other menu items such as chips, salads and drinks.
Likewise, 7-Eleven recently introduced a P’EatZZa sandwich that tied into the popular TV show “The Apprentice.” The triangular sandwich, which sells for a suggested retail price of $3.69 and comes in a cardboard base with a perforated cellophane overwrap, is made with two pieces of flatbread filled with deli meats, cheese and spreads in ham and salami and turkey and pepperoni varieties.
According to Kathy Hasty, 7-Eleven category manager for fresh sandwiches, the concept was based on the dual appeal of pizza and the hand-held sandwich.
“While most people order their pizza hot, cold pizza has its own following, particularly among teens and young adults,” Hasty said at the time of the launch. “Some people will order pizza a size up just so they’ll have some left over to eat later. We started talking about how pizza could make the jump from slice to sandwich. We wanted to marry the best from both.”
Chicago- and Boston-area C-store customers, in the meantime, can use an automated touch-screen ordering system in White Hen Pantry stores to purchase sandwiches. The system allows shoppers to select the sandwich they want, including the type of bread and condiments and side orders, and shop the rest of the store while the order is prepared, typically within three minutes. New touch-screen machines coincide with White Hen’s launch of a new line of Hot & Fresh Oven Toasted Sandwiches, available in 12 different varieties.
Even as more foodservice and retail operations delve into sandwiches, the market is set to heat up even more.
“It’s a competitive category, and anything a chain can do to capture at least one more occasion from a consumer, as opposed to them going down the street, will help them build their base,” Sandelman says.