David Karam, CEO of Sbarro, knows how to capture an impulsive opportunity. It starts by awakening the senses and creating a craving, then satisfying it with a slice of New York-style pizza. This is how the chain became the food court operator par excellence, synonymous with commercial culture, in the early 2000s.
“The best way to think about it is that we are equal parts retailer and restaurant company,” he says. “We have large, abundant displays that stimulate customers’ pizza cravings as they walk past.”
The company’s almost exclusive reliance on malls was a vulnerability when Karam joined the company a decade ago. The growth potential was limited and Sbarro had to think beyond those limits. It has begun to expand into new, non-traditional channels without completely severing its ties to malls.
Expansion has only accelerated since then, with unit count growth rising from the mid-30s in 2018 and 2019 to 103 new units last year, the highest figure in the history of Sbarro so far. He is expected to reach 120 debuts this year. Convenience stores and travel centers are among the biggest growth drivers, but the brand also sees immense potential to expand its presence in universities, hospitals, casinos, theme parks, military bases, and more.
“I would challenge any other brand to describe the expansion of their locations like the one we have seen in four years,” says Karam. “We can get into sites as small as 400 square feet or as large as 3,000 square feet. »
This level of flexibility extends to the menu as well. Sbarro relies on being in high-traffic locations as its primary marketing tool, so it doesn’t feel obligated to have the same menu at every location. It encourages operators to develop a customized product line that meets the specific needs of their unit.
With an expanded total accessible market and dedicated franchise sales teams for each of its target location categories, site selection was not much of a challenge for the quick-service pizza chain. The real wild card when it comes to expanding into new categories is operational execution.
“We are constantly working to develop more efficient procedures, but at the same time we want to make sure the brand is represented correctly,” Karam explains. “This is the biggest challenge we face compared to the traditional standalone fast food industry.”
Sbarro is meeting this challenge by investing heavily in field visits and training, as well as focusing on tracking operational performance, food quality and those all-important displays designed to trigger an impulse opportunity. The company has also resisted the general industry trend toward an asset-light model. About 20% of its 700 units are company-owned, which Karam says is crucial to providing effective support.
Some chains attract more interest than others from traditional fast food brands. Karam cites tourist stations as an example of the former and shopping malls as an example of the latter. Overall, he believes competition among non-traditional sites is intensifying.
“Everyone is looking for a return on invested capital,” he says. “As land and building costs increase, they are looking for more practical ways to adjust their concept and offer new distribution points to the consumer.”
With 1,200 units located primarily in convenience stores and truck stops, Chester’s Chicken has seen an increasing number of brands enter its core business over the years. The growing pressure sparked a 2021 brand refresh that included upgraded menu items and new prototypes designed to emphasize the freshness of its namesake product. From flour-dusted aprons and the sound of sizzling oil to improved menu boards and a modernized visual identity, the redesign relied on the fact that the chicken is hand-breaded and fried fresh every day, which which the brand considers to be a key differentiator.
“The brand refresh was about the consumer side with the demand for quality products and the evolution of convenience store food service,” says Vice President of Marketing William Culpepper. “One thing we continue to look at is evolving the kitchen and making things easier for the operator.”
Chester’s works directly with convenience store and truck stop owners to customize its footprint in each location. It can be as small as a 6-foot counter with a 4-foot stove or as large as a full dining room model for an immersive customer experience.
“Being in nontraditional spaces means you have to be very adaptable, because no two stores are equal,” Culpepper says. “We have requirements in the kitchen in terms of refrigeration and freezer space to make sure you can support the product and manage the volume, but there is a lot of flexibility in terms of the store layout.”
Chester’s aims to recruit 100 or more partners each year. The company is on track to add 125 units in 2023. Director of Business Development Levi Heimer attributes this growth to low start-up costs, minimal labor requirements and a return on investment “that measured in months rather than years. In addition to internal sales, gallons pumped monthly and the number of roofs within a given radius, the level of commitment and engagement of operators is a key part of the site selection equation.
“We’re really focused on finding locations that have strong operator and manager buy-in,” Heimer says. “Operating through a convenience store model, you may not have as direct a point of contact between Chester’s as an organization and the consumer, so we have to rely on our operators to ensure that those relationships and the brand representation are strong. »
With a refreshed approach that puts its core strengths front and center – and a positive response from consumers and operators – new venues such as airports, college campuses and stadiums could be on the horizon. But for now, Chester’s is focused on expanding its reach in existing channels.
“We’re starting to see this as a growth channel for many large quick-service restaurants. So it was imperative for us to refresh our brand,” says Culpepper. “We have stepped up our game because we are competing against competitors on a different level. You have to stay sharp and keep evolving to keep winning.