Positive results convince Schlotzsky's to extend TV campaign

Nation's Restaurant News, July 19, 1999 by Gregg Cebrzynski

AUSTIN, TEXAS -- Schlotzsky's Deli, which earlier this month broke a second, four-week flight of national TV spots, saw "positive" results from the first round of ads and is "absolutely committed" to continuing the campaign next year, director of marketing Lee Applbaum said.

The 755-unit sandwich operator and franchisor has its media buys for 2000 in place and will pursue the same brand-building strategy as this year, but with new ads that Applbaum said would be "pretty dynamite."

The ads are expected to run during prime-time programming, late-night shows and morning news programs on CBS, NBC, ABC and cable networks.

During the current campaign Schlotzsky's is spending $14 million on the national TV spots and $6 million on local and regional advertising. Ad spending is likely to be higher next year as revenue increases. Franchisees pay 1 percent of sales into a fund for national ads and 3 percent for local advertising, public-relations director Laura Bernstein said. As revenue rises, the amount of money available for advertising also goes up.

According to a company financial report, Schlotzsky's generated $348.5 million in systemwide sales in 1998, a 29-percent increase from 1997 volume.

The best sales results from the initial TV spots, which ran for four weeks in April, occurred in regional markets where Schlotzsky's never had advertised on TV, Applbaum said. The ads had less of an impact nationally and in such markets as Austin and Dallas, which have aired the chain's TV ads for several years.

It was difficult to determine exactly what impact the first ads had on sales because "the truth is, there were so many other factors involved, the largest being bundled meals -- the Deli Deal," he said.

Schlotzsky's launched its Deli Deal program, which bundles a sandwich, chips and beverage, as the TV spots broke. Regional 30-second ads in the current flight promote the Deli Deal during the last 10 seconds and feature more food photography than does the first flight, Applbaum said.

"Sales during the period in which we ran [on] network TV were positive vs. the prior year," he said. "In regional or local markets where there was no [previous] TV, we saw double-digit growth. It's very difficult to say [the ads] led to an impact on a national level."

Same-store sales in April were up 5.3 percent, with even better results in less-established markets. Sales at stores in Oregon rose almost 17 percent, while sales in Fresno, Calif., were up 20 percent, the company reported. Same-store sales in Virginia rose 13 percent.

The national campaign, Schlotzsky's first, consists of four 15-second spots. It was created by McGarrah/Jessee Advertising of Austin. The ads show different characters oblivious of their surroundings as they daydream about Schlotzsky's. "When you've got Schlotzsky's on the brain," the voice-over says, "there's not much room for anything else."

In one spot an orchestra conductor stands with his arms frozen in position as the musicians struggle to hold the note. Another shows a woman in an office, staring at a phone in her hands and ignoring the caller. In the other two a man driving a lawnmower rolls over everything in sight, and a dad gets bopped on the chin repeatedly while he stands behind his kid on a swing.

Although those are exaggerated situations, Schlotzsky's customers do have a strong devotion to the product, according to agency principal Mark McGarrah, who talked with customers and franchisees before the campaign was developed.

One franchisee told McGarrah that a customer traded him a van for the right to eat free every day for one year.

"We really started to see that this is food that people genuinely crave," McGarrah said when the campaign broke. "It became impossible for us to ignore that as a great way to introduce this brand. We felt like the best way to get out there was with humor. If you look at the concept and the company, they are very serious about the product. But the personality is very much [about] fun."

Franchisees reported that the TV spots drew both good and bad comments from customers, Applbaum said.

"Some say they love them; some say they dislike them. But they're saying that when they're standing in the restaurant and about to make a purchase," Applbaum added.

Customers who told franchisees that they didn't like the spots "described the commercials to a 'T.' They can recall the commercials right down to the tag line," Applbaum said. "We obviously managed to cut through the clutter."

He also said Schlotzsky's corporate headquarters received "a significant number of phone calls" from consumers who saw the ads and wanted to know where the nearest deli was.

As part of an overall effort to build brand equity, Schlotzsky's recently opened two restaurants at Austin-Bergstrom International Airport. One is a traditional unit, and the other offers a limited menu. Both are located in areas that are highly visible to arriving and departing passengers.

"Their first exposure and their last is Schlotzsky's," Applbaum said. "From a brand standpoint that's immeasurable."