Focusing on dining experience lets more fast-casual chains specialize

Nation's Restaurant News, Sept 24, 2007 by Liza Berger

Like many pop-music stars, most quick-service restaurants made their name with one hit single.

McDonald's, Kentucky Fried Chicken and Pizza Hut, for example, all started out with a narrow focus on hamburgers, chicken and pizza, respectively.

Now fast-casual restaurants are getting into the customization game, with more and more taking their chances on one primary product. Those operators include concepts such as Cereality Cereal Bar & Cafe; Peanut Butter & Co., a New York-based operator specializing in peanut butter-based sandwiches; and one of the newest players on the block, Miami-based Franktitude, which aims to ensure that hot dogs never will be thought of the same way again.

While the art of specialization is not new to the quick-service segment, fast-casual players are peddling a slightly different formula: They're selling the experience as well as the product itself.

Seattle-based Starbucks provides a good example of this formula at work.

"I think Starbucks is selling an attitude or an environment or a place where people can sit and no one bothers [them]," said Tim Zagat, founding chairman of Zagat Survey, a worldwide provider of consumer survey based dining, travel and leisure information. "I think you're paying for a lot more than a cup of coffee."

While other companies have specialized in specific foods, like Baskin-Robbins with ice cream, for example, Zagat said, "I think the uniqueness of Starbucks is that it is selling something bigger than the sum of its parts."

Some of the new fast-casual chains agree that ambience is a key component of their concepts, and they're not afraid to admit that Starbucks was a big influence.

Stan Synkoski, chief operating officer for Cereality, a fast-casual chain that specializes in hot and cold cereal, stresses the significance of the Cereality experience. Colorful cereal boxes line the shelves at the stores; cartoons are playing on the two TVs; and pajama-clad servers, also known as "cereologists," interact with patrons. The company currently has 10 units.

[ILLUSTRATION OMITTED]

"What we offer is an environment that is much like [Jerry] Seinfeld's kitchen," Synkoski said. "Our founders used to say, 'We don't sell cereal. We sell Saturday morning.'"

The restaurant offers cereal with a twist. Patrons can order cereal with toppings, such as malted milk balls and fruit, and all the cereals come in Chinese takeout boxes. Smoothie--and parfait-type items also are on the menu.

"When people come visit us for the first time, they are wrapped up in the experience," Synkoski said.

He added that the Cereality experience raises the value of a regular item such as coffee or cereal. To explain the phenomenon, he points to "The Experience Economy," a 1999 book written by James H. Gilmore and B. Joseph Pine II. The book preaches that the experience at an operation exponentially increases the value of a good or service. Coffee itself is cheap, but add an environment with ambience and some comfy couches, and it seems reasonable to charge a few dollars more for it.

Meanwhile, the affluence of the younger generation has helped such chains as Starbucks flourish, Zagat said. Whereas paying $5 for a cup of coffee a few years ago may have seemed outrageous, it is the norm among working professionals today.

Food actually plays a supporting role in these new fast-casual concepts, noted Dino Lambridis, a founder of Tampa, Fla.-based Evos, a healthful fast-casual concept with three corporate stores and one franchised store.

"I don't think it's just the offerings causing this, but it has to do with the unique experience when it comes to the brand," Lambridis said. "The marketplace is reacting to the demand of the consumer to want to experience something new and significant in their lives. There are day-to-day stories of companies offering unique products in a unique atmosphere and brought to them in a different way."

[ILLUSTRATION OMITTED]

Franktitude, which currently has five units, could be one such company. Ari Wurmann, chief executive and a founder of Franktitude, said he is striving to give hot dogs a new reputation.

When people think of hot dogs, they usually associate them with greasy spoons, he said. He wants to change that perception, so that potential patrons think of hot dogs as creative and healthful items offered in an updated environment.

His restaurant "is nice, it's clean, so the hot dog will be cleaner and better than the others," Wurmann said. "That was very important to us, how we present ourselves to the customer."

Wurmann said he is especially proud of the clean restrooms.

All of the units have wood floors and offer free wireless Internet service, he said.

Even the name of the restaurant is based on the concept of crafting hot dogs a new image, he noted. The idea is that at Franktitude "we have a different attitude, not only toward hot dogs but toward customer service, quality, atmosphere," he said.

Franktitude offers hot dogs--or the more elegant-sounding franks, as Wurmann prefers to call them--with a variety of toppings and variations. The "Complete Frank" is a hot dog served with avocado, sauerkraut and cheese. "Fiery Frank" has hot cheese sauce, jalapeno peppers, wasabi mayonnaise and chopped onions.