Why Le Duff's 3 fast casual brands are poised for growth

Feb. 26, 2013

Editor's note: This is just one story in a recurring series that features interviews with top-level execs in the fast casual industry. If you would like us to feature a specific exec, please make your request in an email to Cherryh Butler at cherryhb@fastcasual.com.

Fast casual concepts, Bruegger's Bagels, la Madeleine and Brioche Dorée, have more in common than the same parent company — Le Duff America. Each brand is also on a mission to grow and expand and is testing new design elements or prototypes.

la Madeleine has launched a franchise strategy for the first time in its 30-year history, and Bruegger's has opened several new markets and plans a 6-percent increase in bakeries this year. Finally, Brioche Dorée, which already has more than 600 units, is focused on growth in medical centers, hotels and other non-traditional venues.

Paul Carolan, chief development officer with Le Duff America, chatted with FasCastual.com about his plans for each brand and the strategies the chains must carry out in order to grow.

Q: All three of your fast casual brands are growing; what has been key to this success?
: First and foremost, our success is grounded in the menu items we serve. We're far ahead of the curve when it comes to menu innovation, quality of ingredients, freshness and flavor. Remember, everyone is a foodie today — consumers want fresh, authentic dishes — and we provide distinctive dishes with an unmistakable touch that differentiates us from our competitors.

Second, it's the atmosphere. Our guests see their meals prepared right in front of them. They love seeing this — it reminds them of how fresh it is, the quality of our ingredients, and that it is made to order. Blend that with dish preparation at a pace that our guests prefer, service that is second to none, as well as design, décor and a seamless flow throughout the experience, and we have a recipe for success. We have consistently increased our revenues year over year several times over, and transaction counts are driving the growth. This means people love coming to our restaurants and enjoy what our brands stand for in today's competitive landscape.

Lastly, the economics behind our brands complete the picture. Restaurants with each of the concepts are generating impressive returns on investment. Fact is, each of the concepts is proving to be a good investment.

We're in great real estate in highly trafficked shopping, professional and residential districts. It makes connecting with our brands very easy. Now, we're leveraging the connections we've made between the brands and consumers to bring our restaurants even closer to where they are day in and day out. Our growth in non-traditional venues is taking off. We're focused on opening each of the concepts in airports, medical centers and college campuses.

We have highly desired brands that combine food, atmosphere, service and economics that have us poised for growth.

Q:The three brands (Bruegger's Bagels, la Madeleine and Brioche Dorée) are similar in some respects; how do you ensure that they don't compete with one another?
: Each of the brands fulfills different consumer needs.

Bruegger's Bagels is your authentic New York-style bagel bakery. More than 50 percent of our bakeries' business is breakfast. The brand offers its signature made-in-Vermont cream cheese, as well as handcrafted breakfast and lunch sandwiches and salads. Consumers love the convenience the brand offers if they're out for a quick breakfast or lunch, and they also appreciate kicking back if they have more time or want to get work done.

La Madeleine is much more robust — the menu is broader and the mix of business at different dayparts is very different as compared to our other brands. The mix is 43 percent lunch, 43 percent dinner and snack, 14 percent breakfast.

The atmosphere says come and stay. We have a signature fireplace that helps cast a warm, inviting feel to our restaurants. It's fast casual dining where we bring food to you that is ordered at a counter. Breakfast dishes are plated and include quiche, eggs Benedict, omelettes, fruit, oatmeal and more. Lunch includes cold and hot artisan sandwiches, salads, and dinner includes pastas.

Brioche was designed in Paris for Parisians on the go. We're keeping that spirit alive as we evolve the brand here. Our guests come in to get coffee, a bakery item and then head out. For lunch it's quick as well. Regardless, everything is made fresh and our pastries are baked right in front of you. It's a Parisian street store that is all about speed.

Q: Why has the company decided to franchise le Madeline after all these years?
Carolan: The reason why we want to franchise is consumer demand. We've conducted several focus groups recently and what we hear time and time again from those surveyed is that we're not close enough to them. They want to immerse themselves in more of la Madeleine's world.

When you consider the demand and the performance of our bakeries, it is clear that we have a very franchisable model. Our average unit volume is $2.1 million. Build-out costs are $1.1 to $1.2 million. So, our high sales-to-investment ratio is extraordinarily good. Plus la Madeleine's EBITDA is close to 18 percent.

Our focus is to franchise with well-capitalized restaurant investors/operators who have a deep appreciation for the niche we fill in the fast casual category.

Q:What will la Madeleine have to do in order to be successful with franchising?
: We have to manage our growth. And, we have to guard and protect the brand as if it is our only child. The key to success with la Madeleine's franchising initiative will be to open restaurants that are completely consistent with the experience our fans have grown to love. That will happen with great support from us to our franchisees in the form of marketing, operations and real estate. If we get caught up in the numbers game, accepting the wrong franchisees, with no operational skill set, we'll have problems. But, there's no chance of that happening with our strategy in place.

Q:Why is there a focus on airports and other non-traditional venues?
:When you have high demand for your brand and people are excited about it, you want to meet that desire. For us, it makes a lot of sense to bring it to their colleges, airports, hospitals and other venues where we have a natural fit.

Airports are going through a renaissance. They seek something fresher. Colleges are getting bored of the same old same old thing. They are looking for more authentic, food-centric brands, and our brands fit that mold nicely. We have authentic in everything we do — from our food to our atmosphere. So it's really a demand issue and meeting that closer to where are consumers are.

Q:Are you targeting specific markets for growth with each brand?
: With la Madeleine, we are building out concentric circles from our core hubs where there is brand awareness. We are focused on Texas, since we have a great presence in Dallas, Austin, San Antonio and Houston. Target markets include Oklahoma, Arkansas, New Mexico, New Orleans, Atlanta, Washington D.C., Maryland, Richmond, Baltimore and Delaware.

Our expansion of Bruegger's Bagels through franchising is centered on regions where we have a presence. Franchise bakeries will launch in Atlanta, Austin, Phoenix and Virginia Beach this year. The company's franchise growth efforts are squarely focused on top tier markets where operations are ongoing in states such as Colorado, Illinois, Kansas, Michigan and Tennessee, among others.

Brioche Dorée's expansion is widespread and includes top tier markets throughout the Mid-Atlantic as well as the Toronto, Ontario, market.

Q:How do each of the brands keep the experience fresh and current in competitive sectors?
:We focus on menu innovation, making sure to stay within the categories that we are in already. You won't find us serving Mexican or Italian dishes — we are true to who we are.

We train, re-train and train again. The staff at our restaurants creates environments that keep our guests coming back.

We just finished a Bruegger's prototype that we are testing and feel confident that it will be rolled out systemwide. This includes an enhanced service model that is being tested.

la Madeleine is also testing new services enhancements and design elements. The same can be said for Brioche Dorée.

Focus groups and customer feedback are always taken into consideration as we evolve as brands.

Read more about operations management.

Topics: Franchising & Growth , Operations Management

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