This category totaled $22 billion in 2012 with strong growth of 5.9 percent, says Darren Tristano, Technomic’s executive vice president. “Within that group, Subway set the stage for the sandwich segment, the way McDonald’s sets the stage for the burger segment, with sales of $12.1 billion and growth of 6.1 percent,” he adds. “More importantly, Fast Casual ‘better sandwich’ concepts like Jimmy Johns and Firehouse Subs grew at 24.6 and 33.5 percent, respectively, with combined sales of over $1.6 billion.”
Sales have been above industry average with some share trading, Tristano continues. Fast Casual operators have gained the benefit of new unit expansion sales at the expense of some more quick-service, lower-priced brands.
“It’s the Fast Casual operators who seem to be winning over customers and expanding locations through franchising,” he says.
Consumer trends driving this segment are customization “with plenty of bread, cheese, flavor and topping options, and preparation interaction with operator staff who are preparing the sandwiches custom to order,” Tristano says. “This allows consumers to control the experience and step into the kitchen and the portability of the product, which maintains integrity for travel times and easily allows a consumer to keep one hand on the sandwich and one hand on the wheel or smartphone.”
Unique new offerings of sandwiches containing meat or poultry are also helping to boost sales. Such items include Deerfield, Ill.-based Cosi’s Chicken Mole Sandwich; Menominee Falls, Wis.-based Cousins Sub’s Cubano Sandwich; Denver-based Quiznos’ Honey Bourbon Chicken Sandwich; Boston-based Au Bon Pain’s Black Angus Steak and Cheese and Sedona Chicken. All of these items are either limited-time offers or new items launched in 2013.
This fast-track segment attracts major meat and poultry processors. Cargill’s primary foodservice customer-focus areas for deli meats involves national and regional restaurant chains and the K-12 channel including the National School Lunch Program, explains Deborah Schulte, marketing manager, Cargill Value Added Meats – Retail in Wichita, Kan. It also services other channels in the foodservice sector, including C-stores, colleges and universities, healthcare and foodservice distributors.
Products provided to deli sandwich chains by Cargill include sliced and bulk deli meats. “We offer beef, ham/pork, turkey and chicken,” she says. “For beef, we offer corned beef, pastrami and roast beef. For turkey, we offer smoked [hickory, mesquite, peppered] oven-roasted, oil-browned, turkey ham and turkey pastrami.”
Turkey continues to be the No. 1 protein for sandwiches, she says. “We also innovate in the area of reduced-sodium products,” Schulte adds. “To a large degree, our deli-meat business relies on the success of our customers and their ability to market their products. We collaborate with them to develop new products that help invigorate the category and help them grow their businesses.”
Springdale, Ark.-based Tyson Foods supplies leading deli-chain restaurants and others with its meat and poultry products.
“Recent research says consumers want the ability to customize their sandwiches, they’re interested in nutritional options and they want value for the money they spend,” says company spokesman Worth Sparkman. “As we look at product offerings and new development, we’re mindful of those things and work with our customers to deliver what consumers will ultimately eat.”
The Subway difference
Subway has earned the reputation for offering healthier meal alternatives to traditionally fatty fast-food offerings, says Les Winograd, Subway spokesman. While a large percentage of Subway’s menu items are low in fat and high in nutrients, customers have plenty of sandwich choices to get exactly what they want. “Customization is a key factor in the Subway experience and we offer something for just about any dietary requirement, whether it be low-fat, lower-sodium or full-flavor and indulgent.”
Subway’s 2012 year-end sales totaled $18.1 billion worldwide and $12.1 billion in the US. It operates 40,000 locations globally, including about 26,000 in the US, all of which are owned and operated by independent franchisees. “Sales have steadily increased every year for at least the past 15 years,” Winograd boasts.
Subway’s meat and poultry suppliers are among the largest and most respected in the industry. It serves approximately 7.5 million lbs. of meat per week in North America.
While Subway’s sandwich offerings have remained relatively the same over the years, it occasionally introduces limited-time offer (LTO) menu items plus it constantly tests new products. Subway is always in a continuous improvement mode. For example, its sodium-reduction efforts began in 2008. It has reduced sodium across its line of low-fat sandwiches by 28 percent and by an average of 25 percent across its entire menu.
Subway calculates there are more than 37 million possible varieties of sandwiches available by using items that are typically found in one of its restaurants. One of its most-recent promotions includes the Turkey & Spinach with Avocado sandwich (turkey breast, spinach, avocado served with the customers’ choice of fresh vegetables, condiments, sauces and bread.) All sandwiches are available on six-inch and foot-long breads. One six-inch serving would typically be 263 grams while a foot-long would be double that amount. Recommended prices are $4.75 and $7.50, respectively. This particular sandwich has received the American Heart Association’s Heart Check certification.
Subway’s menu is primarily the same globally, but it makes adaptations for cultural and religious preferences. In India, beef and pork are not served, so lamb, turkey and chicken are often substituted. It also offers an expanded range of vegetarian items there.
One offering served at Subway restaurants in India considered unusual by American standards is its Chicken Ham sandwich, made with smoked chicken that looks and tastes like ham. Another unusual international item is Smoked Chicken with Cream Cheese from Brazil. “It’s similar in texture and appearance of chicken salad, however, the Brazilian version is made with cream cheese instead of mayonnaise,” Winograd says.
Roast beef and beyond
Atlanta-based Arby’s Restaurant Group Inc. is the second-largest quick-service sandwich chain in the US operating more than 3,400 restaurants system wide. Parent company Roark Capital Group is an Atlanta-based private-equity firm.
Arby’s has achieved 11 consecutive quarters of positive, same-store sales, says Len Van Popering, senior vice president of product development and innovation. “We attribute this growth to focusing on what we’re known for and what our customers have told us that they love about us – craveable, oven-roasted, freshly sliced sandwiches,” he adds. “We closely follow consumer trends in the marketplace, but most important, we listen to what our customers are telling us they want from us. And that is our oven-roasted, freshly sliced sandwiches with unique cheeses, sauces and breads.”
Arby’s utilizes six different beef suppliers and four chicken suppliers. It uses 392,000 lbs. of meat and poultry per day in its sandwiches and operates more than 3,300 restaurants in the US and more than 3,400 globally.
Trends have changed over the years and Arby’s has adapted its products to meet consumer cravings. “But our philosophy has remained the same – which is to stay true to who we are,” Van Popering says. “When Arby’s was born in 1964, our founders focused on a niche market that wasn’t available – hot, freshly sliced sandwiches. And today, we continue this tradition.”
Arby’s product development team focuses on a disciplined approach to the new product process. “They have been working hard at developing platforms of products – vs. one sandwich – that center around oven-roasted, thinly sliced meats and specialty breads and sauces that consumers can’t find anywhere else,” Van Popering says.
Recent new product successes include King’s Hawaiian Roast Beef, which includes King’s Hawaiian bread and oven-roasted, thinly sliced roast beef at a recommended price of $3.99 sandwich/$5.99 combo. King’s Hawaiian Roast Beef & Swiss includes King’s Hawaiian bread; oven-roasted, thinly sliced roast beef; mild and creamy Dijon spread; pickles; and Swiss cheese at recommended pricing of $4.59 sandwich/$6.59 combo.
Under its Hot Turkey Roasters banner is the new Grand Turkey Club, which includes toasted Harvest wheat bread; oven-roasted, thinly sliced roast turkey; melted Swiss cheese; pepper bacon; leaf lettuce; tomato and mayonnaise at a recommended price of $4.39 sandwich/$6.49 combo.
“Our big point of difference is we thinly slice our roast beef and turkey daily in all of our restaurants and prepare our sandwiches fresh when ordered,” Van Popering says.
The Quiznos factor
Denver-based The Quiznos Master LLC (Quiznos) strives to offer its customers a unique sub experience by translating gourmet food trends into premium sandwiches with quality ingredients that can’t be found at other fast-food restaurants.
“Finding products that are on-trend gives us the competitive edge we need in the QSR space,” says Elizabeth Sapp, senior vice president of communications for Quiznos. “We have a lengthy testing process that ranges from concept panels, focus groups and in-store tests to ensure we’re delivering products our customers are happy with. We take a look around at what’s popular in other spaces, and how we can adapt that to our environment – the recently launched BBQ Southern & Spicy Pulled Pork subs are a great example of that. Pork’s popularity is skyrocketing, and we were able to find a great fit on our menu.”
According to a study recently published by Chicago-based researcher Mintel, regional Mexican and Latin American flavors are among the top flavor trends among consumers in 2013. Knowing its customers are eager to explore cuisines that embrace up-and-coming flavor trends, Sapp says Quiznos recently debuted the Chicken Fajita Sub, which took the traditional fajita and translated it into an inspired Quiznos sub.
One 2011 consumer trend report released by Technomic found hot or spicy foods appealed to 48 percent of American consumers. Quiznos capitalized on that trend by introducing two BBQ Pulled Pork sandwiches for its most-recent LTO. “Instead of offering one new item, we introduced two – one for consumers wanting something spicy and one for consumers who prefer something more traditional,” Sapp says.
These subs debuted in May and are great examples of the kind of innovative products the company is hoping to continue adding to its menu going forward. They paired the classic combination of Applewood smoked pulled pork with two unique coleslaw recipes, cilantro-jalapeño and apple cider. “Our development of these new flavors and textures continue Quiznos’ history of elevating the classics,” Sapp says.
Quiznos also recently launched a Surf N’ Turf Salad LTO that includes the newly introduced Black & Blue Salad and the Lobster & Seafood Salad. The Black & Blue Salad features Black Angus steak, blue cheese crumbles, onions and diced tomatoes served on a seasonal lettuce bed and paired with fat-free balsamic vinaigrette.
Quiznos provides support in developing unique products. As its franchisees see growth, they can continue developing their own products.
While Quiznos’ menu is primarily consistent throughout the system, the company tries to incorporate regional items where possible. “In India, we will have two separate menus available in the same restaurant – one for vegetarians and one that includes meat,” Sapp says.
Looking ahead
Delivery, online ordering and catering have been driving off-premise sales and will continue to provide convenience to the consumer, Technomic’s Tristano says. “More gourmet sandwich players will drive innovation and new flavor integration and vegetarian options will provide more healthy alternatives, with an add-meat upgrade option, of course,” he adds.
Subway sees international development as its greatest challenge and opportunity. Its major goal is to have 50,000 locations by 2017.
According to Van Popering, Arby’s opportunities lie in being able to offer unique, high-quality products that aren’t available at other fast-food restaurants. “These same opportunities have challenges in that during the innovation process, we have to walk a fine line to ensure we’re staying true to the brand and what we represent,” he explains.
Quiznos intends to continue offering signature menu items with exciting flavor profiles. “Quiznos wants a menu that represents the quality, premium products we’re known for, that our operators can deliver on, and that guests will love,” Sapp says. “It’s a challenge to make sure we can offer quality and affordable menu selections for our customers, while at the same time making sure our products will continue to be profitable for our franchisees.”
