Baking Up Success

During a time where many retailers have cut back on growth plans, Einstein Bros. Bagels is forging full-speed ahead, fueled largely by its licensing and franchise program.

The quick-casual bakery chain is the major growth brand of Einstein Noah Restaurant Group Inc., which also operates stores under the Noah’s New York Bagels and Manhattan Bagel banners. Einstein Bros. Bagels is on track to open 41 stores this year, giving it 537 locations nationwide by year’s end. (Of the total, 350 are corporate-owned, 180 are licensed, and seven are franchise units.) More locations are in the works for 2010.

“We are at a point in our growth where we want to extend the business opportunity even more to experienced operators who are looking to continue to grow their portfolios with a well-known brand,” said Jeff O’Neill, CEO of Einstein Noah Restaurant Group. “Our strategy is aimed at signing franchise agreements for new Einstein Bros. locations in markets where we already have a significant corporate store presence and established brand awareness.”

O’Neill was named chief executive of Einstein Noah in 2008. The 20-year food and beverage industry veteran joined the company from Priszm Income Fund in Toronto, where he served as CEO. Priszm is the master franchisee for KFC in Canada, and operates 465 quick-service and quick-casual restaurants (KFC, Taco Bell and Pizza Hut).

With its ever-expanding menu options and lighter fare alternatives, Einstein Bros. has carved an enviable niche for itself in the fast-casual restaurant segment. Its stylish decor and comfortable atmosphere resonates with consumers looking for a place to kick back and relax. The chain is especially seeing success on college campuses, and in airports and hospitals, O’Neill said.

Associate editor/Web editor Samantha Murphy spoke with O’Neill about his company.

What was your business approach coming into 2009?

We put a big focus on our growth plans and vision to become the fastest-growing, quick-service chain in North America. With that mission in mind, we implemented two main strategies: growing the company through franchise agreements and refocusing on brand marketing.

The biggest opportunity we’ve seen this year is on the franchising side of the business, and we’ve run with it. While many retailers are cutting back, we’ve had great success through licensing and franchising, and we have used it as a basis of growth for the next three years. We haven’t made major cutbacks, due to that success. Our business model is very appealing to potential franchisees.

What are the plans for 2010?

We plan to expand even more in 2010 by opening 30 to 35 new licensed restaurants, 10 franchise locations and several company-owned stores.

Where are the main areas for store expansion?

We’ve had great success on college campuses and plan to continue targeting that market. We think there is a great opportunity to build a future base of customers there that will dine with us for many years to come. We are also finding growth opportunities in airports and hospitals, especially as we grow our menu with more healthy options. Our fresh-food items and 400-calorie menu has been especially appealing to our customers.

As the business grows, will there be any changes in store design?

We’ve been doing a lot of work to keep the look fresh and consistent across all of our stores, but we aren’t looking for a design overhaul. We have kept our colors warm and inviting over the years to encourage customers to stay and relax. To help even more with that, we recently added wireless to our stores and more communal tables to keep the atmosphere casual and fun.

How has the economy affected your marketing strategy?

Historically, we marketed inside our four walls, but the economy has actually inspired us to go beyond. We are currently testing radio-specific advertising in cities from Albuquerque, N.M., and Richmond, Va., to Las Vegas and Denver. We have also done coupon drops with direct mail and newspapers. Given the tough economic times, we wanted to get awareness up about our brands and products more than ever. We’re really putting ourselves out there, and it’s been very successful so far.

In addition, we also received great feedback regarding our “Free Bagel Fridays” promotion, where we gave customers coupons to come in before a certain time on Fridays to get a free bagel. Consumers love free things, and we’re happy to reintroduce them to the brand. It also gives them a reason to visit us time and time again. It’s critical we build up our follower base and keep those numbers strong.

Are there any plans to use social networking to reach customers?

Absolutely. We have a Facebook and Twitter account, but we are currently evaluating how to better use them next year. Our chief concept officer is also working on various social media strategies to bring more customers to the site and create more customer interaction.

How would you describe your leadership style?

Anyone who knows me would say I’m a high-energy leader with a real passion for the business. I’m a big believer that you can’t communicate enough with your staff. I have lunch with the group’s CEOs each month and hold casual meetings with all employees to update them about the business. This really helps build alignment, which is critical in any business.

And finally, what’s your favorite choice of bagel?

For a while I was into our power bagels, which have lots of fruits and nuts, and then I was into cheese and jalapeño. Now, I just crave a classic plain bagel with peanut butter. It’s a simple approach, but like many things in business, there’s beauty in that. It’s a winning combination that will never let you down.