Salad Prep
Saladworks prepares for greater franchise growth with a freshened menu, more marketing and advanced training.

By Monica Rogers

First to mature in the growing field of salad-based fast-casual concepts, Saladworks celebrates its 19th anniversary this year with 67 locations, unit volumes in the $850,000 range and a franchise-focused growth strategy that it hopes will add 350-plus units in the next five years.

Quite ambitious for a concept that mall management initially snubbed.

“They insisted a salad-only menu would flop,” says founder John Scardapane, who had to add sandwiches to the initial tossed-to-order salad menu to get his first mall contract.

But Conshohocken, Pa.-based Saladworks finished that first year with $2.1 million in sales—almost all in salads—making it the mall’s top-grossing concept. More recently, 2004 sales of $38 million were 36 percent over 2003, and the company projects 2005 sales will jump 45 percent to $55 million.

Saladworks is again at a crucial proving point. With Scardapane back as CEO after fast-expansion-minded former CEO Thomas A. Romano finished his four-year run in January, Saladworks is renewing its focus “into being better before bigger,” Scardapane says. Preparing for nationwide expansion, he hopes to bolster brand awareness and open 22 stores in existing markets by year-end and increase sales through a multitiered strategy.

New Measures and Marketing
Toward this end, the company re-engineered its menu, trimming hot-food items like pasta sautes and some sandwiches that slowed throughput. “Anything that took longer than 45 seconds to deliver from the time the customer placed the order is gone,” says Scardapane.

Saladworks increased check averages 10 percent in the last year with six top-shelf seasonal salads—such as the $6.99 Blushing Pear with romaine, iceberg, cherry-flavored pears, turkey, cucumber, tomato, sunflower seeds, blue cheese and cranberry-raspberry vinaigrette—priced 10 to 15 percent higher than core-menu salads.

“Customers are trading up,” Scardapane explains. “They’re not as price sensitive as they are quality sensitive. The popularity of the seasonal salads we started two years ago shows this.”

Westward Ho!
Gearing up to sprout these and other salads in new markets, Saladworks is working to support and mature its growing network of franchisees. The chain—which has grown entirely through franchising since 1989—is bolstering programs for both newcomers and existing franchisees.

“All good things, but hard to deliver,” says Tarzana, Calif.-based restaurant franchise consultant Leon Gottlieb. “I say let the buyer beware. There will be a lot of copycats Saladworks will have to contend with. Even with good menus, marketing and franchise support, it’s unlikely they’ll be able to grow as rapidly as they predict.”

Nevertheless, Saladworks executives contend that franchisees will open 350 more units by 2010. “Fifty percent of our growth for the past three years has come through existing franchise owners opening additional stores and 50 percent from new franchisees,” says Sandee Devine, vice president, franchise sales. “We expect to continue at about that ratio.”

Because 95 percent of new franchisees have no previous restaurant experience, and 85 percent of current franchisees operate more than one unit, ongoing franchisee support and training are crucial.

Franchisee Richard Hopkins feels secure in the support he’s getting. “It’s all the right stuff,” says Hopkins, who recently bought the franchise rights for a section of New Jersey where he has opened three units since 2002. “Post 9/11, I decided to leave financial services and started looking at franchises. I had no previous experience in the foodservice industry but really liked the concept and the menu and was blown away by the people running this company. I had plenty of management experience but looked to them to assemble the right team and provide me with the rest.”

For Hopkins “the rest” has included help on site selection, lease negotiation and zoning, as well as ongoing marketing, menu and operational assistance.

Initial franchise investments range from $213,000 to $326,000 for a food-court or airport location and $427,000 to $530,000 for a strip-mall or freestanding unit with 80 seats. Franchise fees are 5 percent annually. Franchisees recently agreed to double marketing expenditures to 3 percent from 1.5 percent of sales to increase brand awareness and spotlight new menu items. Sales at food-court locations average $850,000, while freestanding units come in at about $965,000.

Once signed, franchisees go through a four-week training session including business and computer systems, safety courses and pre-opening inventory-order assistance. They also receive one to four visits from an assigned regional manager.

“The regional managers are pretty much the lifeline for new franchisees,” Devine says. “They’re available night and day to help troubleshoot and assist with any problems.”

Continuing Education
Support continues through Saladworks’ intranet, which posts updates in manuals, local marketing slicks and store rankings. A Franchise Advisory Council made up of 10 franchisees and five executives meets bimonthly to review design, menu and marketing decisions.

Enriching its training options, Saladworks began a sequence of quarterly educational sessions called Operational Exchange Meetings in third quarter 2004. Each focuses on a different topic such as financial management, customer service and employee relations.

The company’s annual convention covers performance, marketing plans and new support services. Attendance isn’t mandatory, but it’s been strong: 98 percent attended this year’s convention.

Experienced franchisees may aspire to greater participation. For example, a team of corporate executives and franchisees shapes design and construction strategies, while another team works on menus.

The company is about to roll out a new 220-square-foot kiosk. Open on all four sides, it can offer the same menu, as long as there’s back-room support.

On the menu side, Saladworks is debuting a new line of house-made soups, replacing third-party-made options, and introducing a line of protein-topped salads to bolster dinner business (65 percent of traffic is at lunch) and raise check averages.

Staying fresh without being too trendy will continue to be key in attracting new customers and franchisees. “There’s nothing faddish about eating healthy,” Scardapane says. “But offering healthy food in a fast-casual, upbeat environment—that’s fresh. Our franchisees believe in it, and our guests want it.”