While branded and proprietary foodservice programs get a lot of attention at retail, prepared sandwiches have quietly—and profitably—filled a valuable niche for retailers.
By Marilyn Odesser-Torpey, Associate Editor.
Sandwiches and wraps are a $2.7 billion category and sales are expected to remain strong through 2014, according to a 2011 report from foodservice research and marketing firm, Technomic. Hot and cold deli sandwiches fuel the category, accounting for 62% of sales (41% for hot, 21% for cold).
Hot sandwiches have taken a big bite out of the burger segment, which represents only 5% of sales. With 20% of sales, hot dogs are experiencing a revival thanks to new varieties, better hold times and resurgence of the roller grill, the report said. Wraps are responsible for 3% of sales. Plus, ethnic foods are spicing up the category to attract a new crop of customers focused on variety and quality.
Technomic attributes the growth in sandwich and wrap sales to the increased availability and use of third-party commissaries. For example, at its nearly one dozen locations, Appleton, Wis.-based Express Convenience Stores promotes the name of its sandwich supplier, a well-known, upscale catering company in the area. The sandwiches are sold under Express c-store’s proprietary “Dashboard Dining” brand name.
But other retailers prefer the control and flexibility of preparing their grab-and-go offerings in their own commissaries. Rockland, Mass.-based Tedeschi Food Shops is one very successful example.
Tedeschi operates full-service delis with made-to-order (MTO) service in only 22 of its 200 units. But while the MTO business is a little higher in volume than grab-and-go in these full-deli stores, the prepackaged sandwiches have a legion of loyal fans that continues to grow, said Joe Hamza, Tedeschi’s vice president of sales and marketing. Deliveries are made to all stores from the company’s proprietary central commissary, Tedeschi Fresh Foods, three or four times a week.
“People would naturally rather have fresh than premade, but when they don’t have time to wait in a deli line or wait for a sandwich to be made on the spot, they grab from the fresh case,” Hamza said. “Grab-and-go is also popular during late night hours.”
Meeting a Variety of Needs
While delis are usually destinations, grab-and-go sandwiches from the fresh case are more of an impulse purchase, he said. Often, it is the value pricing as well as the appetizing appearance and selection of the sandwiches that catches the shoppers’ eye.
Instead of the $6 or $7 they would spend for a sub at a fast-food restaurant, Tedeschi’s average a little less than $5. Lunch is always busy, but, sometimes breakfast is even busier, Hamza said.
Tedeschi began offering breakfast about seven or eight years ago. Coupled with a significantly upgraded coffee program and appealing combo deals, the morning daypart took off. The breakfast daypart also provides a multitude of opportunities for incremental sales, such as on coffee, smoothies, parfaits, juice or fruit.
For lunch and later, the stores offer combos every day, bundling such complementary items as water, chips, fruit and coffee. Again, impulse add-on sales are strong because the fresh case is also filled with favorite sides, such as cole slaw, potato and other salads.
The stores also attract some evening and late night sandwich seekers. Some of the locations are open until midnight, some 24 hours.
“A big reason for the success of our program is that we don’t focus on only one daypart,” Hamza said. “Our cases are full whenever customers come in.”
Spicing Up the Menu
The key advantage to doing sandwiches yourself is the ability to develop your own distinct menu. Khalid Sirhandi, a Shell dealer in Kansas City, Mo., who turned down national brands to launch Papu’s Café in his stores two years ago, has never looked back.
Specializing in Middle Eastern fare, Papu’s Café’s best-selling sandwich is its chicken shawarma, which is shaved chicken wrapped in pita bread. Sirhandi opened his first café as the economy went south because he was looking for another big draw to attract customers. Papu’s Café prepares most products from scratch in its store, including hummus, falafel and its signatures sauces.
“After looking at the market we saw an opportunity with this type of food offering,” said Shuja Sirhandi, general manager for Papu’s Café. “We’ve introduced this type of food to the Kansas City area. People come in, smell the food and ask all kinds of questions. I can’t believe some people have never had a gyro before.”
Kwik Trip Inc., based in La Crosse, Wis., has no MTO facilities in its stores. But they do have more than 20 varieties of sandwiches and accessories, including hash browns and mozzarella bread sticks, in their hot and cold cases.
Hot sandwiches are prepared in the stores, cold ones come from the chain’s proprietary central commissary. Delivery is on a daily basis to all 385 Kwik Trip stores, said Paul Servais, the company’s foodservice zone leader.
He noted that breakfast and lunch are both very strong dayparts. In the morning $2.99 bundles featuring a breakfast sandwich, coffee or juice are the best sellers.
In the northern Midwest, where Kwik Trip operates, the tried-and-true standards—beef, turkey or ham and cheese—are still the top sellers, Servais said. An extensive condiment bar, which includes pickles, onions, tomatoes, sauerkraut, dressing pumpers and the traditional salt, pepper and mayo packets, allows shoppers to customize their creations. Last year, bottles of honey mustard, chipotle and horseradish sauces were added to the fixings for the more adventurous customers.
On the other hand, over the past 10 years, Hamza has seen a “seismic shift” in the flavor combinations that please the increasingly sophisticated palates of Tedeschi’s Northeast customers. He explained that people in the chain’s downtown Boston locations are usually the first ones to catch on to new flavor trends. After tracking sales in those stores, the company carefully rolls the more successful varieties out to its other units, he said.
In many of the stores, the traditional ham or turkey and cheese do not even crack the top 10 sandwiches in sales. They have been replaced with fillings that have more complex flavors, such as chicken topped with pesto and chicken salad spiked with cranberries and a hint of curry.
“After all, salsa is America’s number one favorite condiment,” Hamza said. “We view our sandwiches like pasta; just by adding different sauces, you can create an endless number of different dishes. We make our own sauces for our sandwiches so we can constantly come up with new combinations.”
Quality Ingredients Crucial
Hamza emphasized that the type of bread is critical for sandwich success, even though the options are somewhat limited by those that would tend to dry out or get soggy after a couple of hours in the case. However, varieties such as oatmeal, whole grain and wheat add variety without jeopardizing the quality of the sandwiches.
To maintain customer excitement about the sandwich selections, Tedeschi changes its menu around every month to six weeks. This also gives the stores a chance to discontinue any slow-moving items, while maintaining a full assortment.
A growing number of Tedeschi shoppers are also looking for more healthful choices, Hamza said. The company prominently features full nutritional information, including a breakdown of ingredients and calorie counts on the front of each package, and people are reading these labels. He said customers are often surprised at how delicious a healthful sandwich can be.