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The Heat Is On

Whether grilled, toasted, or thrown on a conveyor belt for a ride through an oven, sandwiches are taking the heat in the latest battle among fast-food purveyors.Toasted sandwich seller The Quizno's Master LLC is spreading faster than a slice of mozzarella under a broiler. Forty-one-year-old Blimpie International Inc. is repositioning around its higher-retail, panini-grilled menu. (See "The Rebirth of Blimpie," Page 70.) Meanwhile, Subway Restaurants heralded its new toasted sub option with a Super Bowl Sunday ad campaign.

"The sandwich category has been hot for a long time," said David Henkes, principal, Technomic Inc., a foodservice consulting firm based in Chicago. "Toasting is the newest wrinkle to take sandwiches to the next level, to continue the consumer interest and encourage trial."

That interest is supporting Quizno's rapid rise, according to Stacie Lange, a spokesperson for the Denver-based company, which has grown from 1,000 restaurants in 2000 to nearly 4,000 today, making it the fastest-growing sandwich chain three years running.

"The appeal [of hot sandwiches] is they are perceived as more upscale," Lange said. "There is a perception you are getting more for your money when you get something that is oven-toasted, especially if people are standing in line and watching their sandwiches made from fresh ingredients, going through the toaster oven and seeing the cheese melted. It's definitely a quality thing."

Quizno's, whose entire menu is toasted, introduces new sandwiches each quarter. Untoasted sandwiches will be made if requested.

"Hot sandwiches are coming to mainstream fast food," Lange said, "But we consider ourselves the adult, more upscale version of fast food."

The company's belief in the power of toasted has led to Craveable Salads, which feature a bed of greens and tomatoes topped by toasted meats and vegetables. "The concept of toasted is organic to our brand and can transfer to other items," Lange explained.

Although the chain no longer has a lock on toasted sandwiches, the competition has not moved Quizno's retails. A meal typically runs $1 or $2 more than a traditional fast-food burger, fries and soda combo. Rather than reduce prices, Quizno's is hoping its customers will respond to its heavier promotional activity, which focuses on the quality of its food.

Going head-to-head with other QSRs, the chain aims for a customer wait time of two minutes from the time an order is placed until the sandwich is wrapped. "But we have noticed that customers are willing to give up time at Quizno's, more than at other fast-food restaurants, because the sandwich is made before them. They are a little more lenient with us than with McDonalds."

Still, c-store operators looking to duplicate Quizno's success need to proceed with caution. Sandwich consumers surveyed by Technomic said they'd be willing to wait longer for a hot sandwich, but limited that queue time to two to four minutes, tops.

"Four minutes is a long time when you are standing in line after putting an order in," Henkes said. "Throughput is one thing Subway [took time] to figure out."

Indeed, Subway had been studying the best way to offer hot sandwiches for more than a decade, according to Les Winograd, a spokesperson for the Milford, Conn.-based chain, which tested panini grills, conveyor ovens and other methods, before settling on a TurboChef convection oven specifically programmed for the chain.

"We chose this oven because of the taste of the sandwich, the ease of use, the space requirements and safety," he said, declining to say how much the ovens cost franchisees.

With its toasted program — any sub may be toasted free of charge — the chain is looking to give loyal customers more choices and expand its reach to those who want a more upscale bite. "Americans are strongly interested in hot sandwiches and the appeal is pretty widespread," Winograd said. "They harken back to something your mom or grandmother made. They're a comfort food."

With 18,000 U.S. locations, Subway began installing the ovens on the West Coast last summer and finished up at the end of 2004, giving franchisees time to familiarize themselves with the equipment before the February national ad launch. Now, many franchisees are reporting sales upticks, Winograd said, with some restaurants reporting their February sales were the highest they've ever had.

Still, he acknowledged, competition for this customer is intense. "A lot of the competition hasn't sold sandwiches before, but looked at how successful we have been and the positive publicity we are getting with the toasted sandwiches, and are benefiting from our success. They feel the market is large enough for many. But we feel, 'You've tried the rest, now try the best — that's us.'"

In the future, Subway will introduce sandwiches made expressly for toasting, most likely using combinations of ingredients already in the stores. "Many of our stores are pretty small, so we have to be careful not to bring in too many new items," Winograd said. "But the franchisees have this big piece of equipment on the counter and they want to use it."

One of those operators is Buster Walker, director of restaurant services, Love's Travel Stops & Country Stores Inc., based in Oklahoma City. The chain offers Subway sandwiches in 73 of its 170 locations. Every Subway customer is asked if they'd like their sandwich toasted.

"Truck drivers, in particular, find it convenient to get a hot sandwich with us, so our percentage of toasted sandwiches might be a bit higher than at a traditional convenience store," Walker said. "The hot sandwiches, like the meatball subs, in particular are great toasted."

The option is keeping Love's competitive in the sandwich market, said Walker, who is looking forward to new menu items that will better leverage the "significant" investment in the oven. "There is an opportunity to expand breakfast and lunch items," he said. "There already is a pizza program we can offer.

"I don't see any downside in investing in the oven. The timing of this couldn't be better. In my opinion, the sandwich business is the fastest-growing part of the fast-food industry."

Operationally, Walker characterized the Subway's toasted program rollout as "near perfect." Employees have noticed little change in operations. "A sandwich is toasted through in 20 to 30 seconds — faster than heating a sandwich in the microwave," he said.

$7 Sandwiches

A hot sandwich and soda purchased at a Cosi shop can cost nearly $10, but executives at the 90-unit fast-casual chain, which recently announced plans to add nearly 500 more stores by the end of 2009, are confident in their ability to differentiate themselves from aggressive QSRs and c-store operators, while maintaining their pricing structure.

"Hot sandwiches are going to be the price of entry into the category — if you can execute them properly," said Paul Seidman, vice president of food and beverage for Cosi Inc., where sandwiches are made on a crackly-crust flatbread, baked fresh every 20 minutes in a hearth oven. "I don't think a microwaved, pre-made sandwich — which some c-stores are doing — is the answer to a hot sandwich. Guests won't see that as value-added."

The folks at Cosi, however, are feeling the heat to get their sandwiches into customers' hands as quickly as possible. "That is a compeller for our guests. Plus, we have a limited window of trade and we have to make sure we maximize sales in that window," he noted.

With this in mind, the chain is approaching hot sandwiches two ways. Given its existing store design and capabilities, Cosi offers Warm N Cosi melts outside of peak times, after 3 p.m. During this time, employees will heat sandwiches in a conventional oven. "We don't do it at lunch because of the time it takes and the slowdown that occurs," Seidman said.

More successful has been Cosi's Rustica line, introduced late last year. Sandwiches such as the Turkey Alfredo Rustica are made with heated meat held in various sauces. "They're portable, hot, made fresh, and delivered faster than a sandwich heated in a conveyor oven," the Cosi executive said.

"It may not be in the next six months," said Technomic's Henkes, "but sandwich retailers not offering toasted [or other heated sandwich options] will see an erosion in sales, because they won't be offering what the competition is."

"They may have a loyal customer base now, but longer term they will be at a disadvantage."

nThe Rebirth of Blimpie
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