Pretzel players put twist on menu items; segment leader ‘Anne’s’ sold
Chains that entice travel-terminal commuters and shopping-mall visitors with the aroma of fresh-baked soft pretzels are twisting their product lines to satisfy more customers while increasing snack choices and launching dozens of new locations.
In a look at five chains that have more than 1,500 branches and rank among the category’s largest, three have divulged plans to add at least 80 new outlets. That does not include the unspecified plans of the segment leader, Auntie Anne’s Hand-Rolled Soft Pretzels of Gap, Pa.
Auntie Anne’s, with 850 mostly franchised units in 43 states and 12 foreign countries, will be looking at expansion under the ownership of its veteran president and chief operating officer, Sam Beiler, who is buying the company from founders Jonas and Anne Beiler, a distant cousin.
The sale of Auntie Anne’s, for an unspecified price, is expected to close by March 31. Sam Beiler would become the lone principal in the privately held company, which he joined in 1991 after being a franchisee. Since then he has focused on opening 137 foreign stores and overseeing 37 company-owned units.
Auntie Anne’s, which said its systemwide sales last year were $247 million, up from $234 million in 2003, most recently augmented its menu of exhibition-made specialties by adding a Pretzeldog, which takes the concept to the border of the sandwich category.
Beiler said the Pretzeldog has been the chain’s most successful product introduction in the last seven years. The item, essentially a hot dog wrapped in baked pretzel dough, fits the concept’s snack category, which means that it is a hand-held snack to eat on the go, he said.
“It’s a little more than a pretzel, but not a full meal. It’s still focused on consumers who don’t have a lot of time,” he explained.
Auntie Anne’s is not trying to provide a full meal because most of its units don’t have seating. The majority of the chain’s restaurants are in enclosed shopping malls, but Beiler plans to expand the number of nontraditional locations, which include transportation centers, such as commuter rail stations and airports, and college foodservice venues.
Another newer growth vehicle for Auntie Anne’s is a portable concession trailer, now being tested in the Southeast and used at fairs, festivals and other events.
Beiler, who said Auntie Anne’s retiring founders plan to devote themselves to their charity work on a full-time basis, said the chain they created last year notched a same-store sales increase of 2.1 percent and a check average of $3.45.
A handful of other pretzel chain leaders are vying to be the clear No. 2 brand in the pretzel category. The three largest of those chains are Pretzel Time and Pretzelmaker, both owned by Mrs. Field’s Famous Brands of Salt Lake City, and Wetzel’s Pretzels of Pasadena, Calif. In addition, various regional brands are staking out ever-expanding fresh-pretzel territories.
Wetzel’s could add between 40 and 50 units this year to its existing 210 locations, according to chief executive Rick Wetzel. His chain’s same-store sales rose 7.5 percent in 2004, reaching $372,000, compared with $346,000 in 2003, he said. Systemwide sales totaled $44.9 million in 2004, Wetzel indicated.
“Our average food and paper [costs] combined run 21 percent, with our best stores running 17 percent,” Wetzel added. “Our average labor runs 31 percent [of sales], with our best stores running 27 percent.”
The mostly mall-based Wetzel’s Pretzels chain, which so far has concentrated on West Coast development, has expanded to the East Coast and claims to have the two highest-grossing units in the segment, because of its locations at Disneyland in Anaheim, Calif., and Walt Disney World in Lake Buena Vista, Fla.
One of Wetzel’s key growth strategies is to deepen his chain’s product line, which includes such recent additions as a pizza pretzel, which is topped with cheese and pepperoni, and a hot-dog-and-cheese pretzel wrap.
Because Wetzel’s pretzels weigh 6 ounces, compared with competitors’ more-common 4-ounce versions, the chain is positioned to be a slightly more premium brand than most of its rivals, Wetzel said.
Fred Kraut, brand manager of pretzel concepts for Mrs. Field’s, said some of its chains’ newer products have been among the most successful, particularly the pretzel dog and cheese stuffers, which are cheese cubes wrapped in pretzel dough, and pretzel bites–small squares of pretzel dough with various toppings.
Product lines are similar for both Mrs. Field’s pretzel chains, but Pretzel Time, with 223 units, is concentrated east of the Mississippi River, while Pretzelmaker, a 204-unit chain founded in Utah, is concentrated west of the Mississippi. The check average for each is about $3.90. Kraut would not reveal any other sales numbers.
Mrs. Field’s also continues to operate about 10 Hot Sam’s units but plans to convert them to Pretzel Time units, Kraut said.
Kevin Krabill, president of the 46-unit We’re Rolling Pretzel Co. of Alliance, Ohio, projects it will add about 20 new units this year. Per-location sales average $200,000 a year, and the chain should gross $10 million in 2005, he indicated.
“It costs more to be in the bigger malls; it’s all relative to what you pay,” Krabill said.
Wetzel also noted that mall costs are crucial to the pretzel business, since annual sales per store are relatively low compared with other foodservice concepts that have higher check averages. “It’s a real-estate business,” he observed.
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