Taking a Bite Out of the Sandwich Segment

Due to their versatility, portability, perceived freshness and value, sandwiches are one of the most popular menu items in all types of U.S. restaurants. The top 500 sandwich chains accounted for almost $20 billion in sales in 2009, a .8 percent increase from a year prior, according to a 2010 report by Chicago-based research firm Technomic.

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fes1101SpotlightElevation2Among consumers polled for Technomic's Sandwich Consumer Trend Report, 93 percent reported that they eat at least one sandwich each week. It is not surprising that industry wide sandwiches are menued in full- and limited-service restaurants more than any other type of entrée. Additionally, the Hamburger and Other Sandwich menu categories alone account for nearly half of the total limited-service restaurant industry revenue.

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Despite its popularity, revenues in the sandwich segment have taken a hit in recent years, like most other restaurant categories. "We've not had traffic declines of this magnitude for this long a period of time," says Bonnie Riggs, restaurant industry analyst for New York City-based NPD Group's Foodservice division.

"Where there is growth, it is being led by fast food categories, with the hamburger category as the top one."

NPD reports that there were 40 million more visits to hamburger restaurants last June, July and August compared with the same period in 2009. "Sandwiches are where the action is," Riggs says. "Along with burgers, they are versatile comfort food that offers new concepts and lots of varieties."

Riggs recently authored a Future of Foodservice report that forecasted 13 percent growth in the Healthy Light Sandwich category compared with 8 percent growth in the restaurant industry overall. "Sandwiches also have done well in this economy because the segment has benefitted from consumers who are trading down to keep check averages affordable," Riggs says.

NPD reports that the fast casual bakery sandwich category has been the strongest performer throughout the recession. "We did a study asking consumers to define value," Riggs says. "They told us it meant fresh ingredients, fresh looking food and fresh tasting food at reasonable and affordable prices. Fast casual sandwiches met the criteria."

On average, consumers say that 64 percent of all sandwiches they purchase are taken to go, while the remaining 36 percent are ordered for dine-in, Technomic reports. This shows the importance of both speed of service and portability in the sandwich category.

Although chicken sandwiches are the leading variety offered on menus today, there are a number of trends in this category. For example, breakfast sandwiches are on the rise in limited-service, quick-service and full-service restaurants, Technomic reports. Other trends in this category include value-oriented, grilled and oven-baked, ethnic, artisan and portion-controlled sandwiches.

"Sandwiches are a growth market and will continue to be in the future," Riggs says.

Case Study: Elevation Burger, Arlington, Va.
How does a burger joint set itself apart in one of the most competitive foodservice categories? For Elevation Burger, it's all about focusing on fresh and operating an environmentally friendly business.

When CEO and founder Hans Hess opened the restaurant chain's first location in Falls Church, Va., in September 2005, he sought to fill a void in the fresh burger landscape that he knew was evident. Working for a Washington, D.C., real estate consulting firm, Hess was exposed to foodservice and food courts in college and university student unions. This furthered his determination to develop a different concept that would push the envelope in this segment.

But it wasn't until the chain began franchising early in 2008 that Hess realized the potential of his operation. It was at this time that Michael Berger came on board as managing partner. In its first year franchising, and during one of the country's worst recessions on record, Elevation Burger sold 20 franchised units. The following year, 20 more were sold. Today, there are 79 franchises sold.

"We currently have 10 operational units, and another eight locations will open by the end of the first quarter of 2011," Berger says. "By the end of next year, our goal is to have 25 units open. By the end of 2013, we're pushing for 100 units on the ground."

Elevation Burger's biggest differentiation is that its grass-fed, organic and free range beef is ground at each of its locations. Yet, the menu has been kept simple, so menu innovation does not get in the way of quality. "Our innovation is in our production methods rather than on our menu," Berger says. "We have equipment that not many other restaurants of this type have."

It helps that Hess, also a physicist, is in tune with how equipment works. His passion for engineering and mechanics led Hess to design a modified griddle that has cut down cooking time.

"Our 36-inch griddle is modified with clamshells and extra walls on the back and middle of the unit, and we have a patent pending on it," Berger says. "This design, which keeps the burger patty completely on the griddle surface, has reduced cook times from four minutes and 50 seconds to two minutes and 30 seconds. Not only are we able to cook more evenly on both sides, but the patty is more uniform in appearance."

The new Germantown, Md., Elevation Burger opening in March will include the new griddle system designed by Hess. It is expected to almost triple the throughput of product on an hourly basis. "All true fresh burger operators tend to have trouble with the consistency of wait times," Berger says. "When we're busy, it can take 12 minutes for food to be ready, and when we're slow, it can take four minutes. It's unpredictable." The new griddle design is expected to solve this problem.

"We're working with a private engineer in California to get the first model made. We're also talking to existing equipment vendors to see who can help us put these units into production," Berger says.

Along with focusing on production and wait times, Elevation Burger's success can be attributed to its focus on demographics and location. "One of the biggest things we've done is pay close attention to the real estate we're going after," Berger says.

By focusing on the right demographics, the appropriate density and a population that can handle an economic downturn, Elevation Burger's sites have been able to weather the current recession. "If a restaurant is located in the right place with the target customers, its success is more dependent on the marketing," Berger says.

As a result, Elevation Burger has stepped up its grassroots marketing, getting its literature, including coupons and menus, into people's hands at a variety of locations, including train stations and bus stops. "The location has to be conducive to marketing drives, because relying solely on the menu or equipment will not help an operator weather an economic downturn," Berger says. "It's about getting guests into the restaurants."

With the average meal priced between $8 and $9 for a cheeseburger, fries and a drink, the chain is fortunate to be in a foodservice category that is less affected by the recession than others.

Elevation Burger also has implemented a number of sustainable initiatives in terms of its equipment, design and construction. For example, Energy Star equipment is used whenever possible, and a new location in Potomac, Md., is expected to receive silver LEED certification.

"We have noticed that the restaurant industry is far behind the curve in terms of sustainable practices overall, but particularly in the area of equipment," Berger says. "There is equipment capable of being Energy Star rated, but companies have not opted to go after this certification."

Berger attributes this to one of the underlying drivers with restaurant operators, which is to reduce capital costs to maximize return on investment. "The industry has not pushed hard going the environmental route with design, construction and equipment because there is the misnomer that the additional cost would not make it worthwhile," says Berger, adding that the small upfront cost would not make or break an operation's annual return on investment.

The majority of the chain's green initiatives are uniform in its prototype sites, but not all stores go after LEED certification. Elevation Burger's locations use water-reducing fixtures, purchase energy offset credits to neutralize its carbon footprint and recycle the olive oil used for its fries to create biodiesel fuel. Lighting systems by windows are on sensors, so lights automatically shut off to reduce energy consumption during daylight hours.

"There is not a significant additional cost to implementing these projects," Berger says. "We are seeing an operational payback in less than three to four years, which is less than half the term of a typical restaurant lease. In the meantime, these initiatives pay us back in energy, water and gas savings."

Elevation Burger pays as much attention to operating a green business as it does in creating its menu items. Its signature item, the Elevation Burger, includes two grass-fed 3.2-oz. patties topped with six-month aged cheddar cheese on a potato roll. Even its veggie burgers are unique, with a regular and a vegan version available. "Our most unique item is our Half the Guilt burger, which includes a veggie and beef patty on the same sandwich," Berger says.

Fresh meat for the burgers is delivered in a trim pack containing fore and hind cuts. In the morning and between the lunch and dinner rushes, staff mix and grind the beef in a 250-lb.-capacity hopper with a 4-inch diameter grinding plate.

The open kitchen comprises about 40 percent of the 2,280-sq. ft. restaurant. Main pieces of equipment include two griddles out front and two sandwich units set up on back-to-back walls that flow into an expedite table and end at the point of sale line. The L-shape configuration has the griddle, bun prep area and expedite table on a long wall, with the fryers at a 90-degree angle adjoining this section.

All sites now use gas rather than electric fryers. "This is because the heat is more immediate," Berger says. "We were having issues with time lags and temperature float ranges when using electric fryers in a couple of locations. We've been able to reduce the oil temperature window from 10 to 15 degrees to 5 to 10 degrees with gas units."

Because Elevation Burger's fries are fresh, not frozen, timing and consistency are key with its fryers. "With our production process, the food ends up at the same place, with the fries coming up as the burger is being wrapped," Berger says.

A second griddle is used when stores are ramping up, during peak volumes and in training. "It can be difficult to scale up the amount of food from a griddle as opposed to a fryer. The fryer can handle food off of the two griddles," Berger says.

All food is made fresh, so there are no holding areas, steam tables or microwaves. "Our three most critical pieces of equipment are the grinder, griddle and fryer," Berger says.

The chain will increase its fryers from three to five vats once its new griddle systems are implemented. "Our new equipment will be very revolutionary in terms of how people perceive our brand," Berger says. "Our burger concept will be more about cooking fresh product with consistent wait times, even in peak production periods."

The revolutionary equipment is expected to help further differentiate Elevation Burger from its many competitors. "With our open kitchens, we will create a visual cooking experience where people can watch their burger cooked in front of them," Berger says. "With our green initiatives, we also want to encourage other foodservice operators and equipment companies to pay attention to restaurants like ours that are taking the plunge and staying ahead of the curve."

By differentiating a popular and common concept like burgers, Elevation Burger has been able to propel itself to the forefront and set its operation apart.
Key Equipment:
  • Grill
  • Oven
  • Food Processor
  • Slicer
  • Walk-in refrigerator and freezer
  • Sandwich prep tables
  • Ice maker
  • Dishwasher
E&S Considerations:
Consistency: Because sandwich shop menus are typically limited, it becomes even more important to utilize equipment that provides reliable, consistent results for heating, grilling and cheese melting.

Energy Efficiency: Energy Star rated and other efficient equipment may cost more up front, but will save on utility costs in the long run.

Easy cleaning: Open sandwiches and the many meats used to create them can produce messes that are difficult to clean. Units that are self-cleaning and/or provide easily accessible surfaces will be simpler to maintain.
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