Article

McAlister’s Deli founders find second-time success

Nine years after the sale of McAlister's Deli, the Newcomb family gains ground with Newk's Express Café.

November 21, 2010 by Valerie Killifer — senior editor, NetWorld Alliance

Chris Newcomb was looking for simplicity. In 2001, he and two others sold their interest in McAlister's Deli, the restaurant chain founded by his father in 1989. While Newcomb didn't have a solid plan at the time, he and his partners knew they wanted to develop a simple restaurant concept that focused on high-quality menu items.

So for three years the group, consisting of Newcomb, his father Don Newcomb, and partner Debra Bryson, worked on developing and refining Newk's Express Café. They opened the first location in 2004 in Oxford, Miss., and today have more than 28 locations in operation across seven states.

The limited menu is focused on menu items made from scratch daily in full view of the customer. Menu items include soups, sandwiches and pizza served in restaurants that reflect a relaxed Tuscan interior design.

Chicken salad and pizza are the chain's biggest sellers although sandwich sales are on the rise, Newcomb said. The group uses water from New York to make pizza dough and recently changed its bread recipe to reflect use of the same liquid.

Market growth

While expansion has stalled over the past two years, Newcomb said it appears to be on the rebound.

Same store sales in 2009 increased 2.9 percent and for the first 12 weeks of 2010, comps increased almost 10 percent when compared to the previous years' quarter.

"McAlister's is where we learned," Newcomb said. "We were trying to grow corporate and franchise restaurants and we were always spread too thin. We haven't opened a company store in two years so we could support our franchisees and team."

Six of its locations are owned by franchisees, one of the newest being Wirt Yerger, manager of Kudzu Food Services LLC. Kudzu signed an agreement that was announced in September to bring 10 Newk's locations to the North Carolina markets of Winston/Salem and Raleigh/Durham markets over the next few years.

Yerger, who has a background in the cellular industry, said he liked the concept and had invested in a Charlotte, S.C., location two years prior to the North Carolina deal.

"That was a passive investment, but the manager did what he said he was going to do and it's performed well," Yerger said. "The other reason why I like this investment is because I think if you can get involved with a good trend, namely fast casual, that helps a lot. That's just like the trend of wireless phones. We were in a great sector and that was good for our family and investors."

He plans to open the first location in June and is negotiating the lease for his first site. One of Yerger's four sons also recently went through Newk's management training program and is in the process of relocating from Birmingham, Ala., to Raleigh/Durham. In the meantime, he is working at two Newk's locations in Alabama.

"He liked the Newk's experience because they offer a way to grow within the organization and there is opportunity for promotion from within," Yerger said.

Newcomb said the company made a decision two years ago to implement a comprehensive training program to support employees and franchisees with a comprehensive training program. They hired a training director from Ruth's Chris to lead the initiative.

"The level of teaching is almost like a university. It's really stepped up the organization. We're building up people and not just enforcing systems that are in place," he said.

In addition to Raleigh/Durham and Winston/Salem, Newk's founders are looking at markets that include Kentucky, Illinois and Oklahoma.

"We're starting to see ... rent and construction prices becoming more reasonable," Chris Newcomb said. We're seeing a few banks out there opening up new resources. We don't want to grow too fast that we can't support it, then again, we still need to grow."

Newk's has been around for less than seven years and has already opened more locations than McAlister's Deli did in its first eight.

"We've learned a lot and we're trying not to make the same mistakes twice," Newcomb said. "The biggest challenge is making sure we're staffed up to handle the growth we've got coming and to be able to keep up with the support staff and not lose our focus."