Bagel chains upgrade menus to compete in fast-casual market

Nation's Restaurant News, Dec 8, 2003 by Lori Lohmeyer

Hampered by overambitious expansion in prior years and the popularity of the growing fast-casual segment, many bagel players are re-evaluating their menus and atmospheres to make sure they appeal to evolving consumer tastes.

To lure customers looking for the high-quality ingredients offered by many fast-casual players, some bagel chains are launching new products or using existing signature ingredients to create innovative menu alternatives. Among the chains tackling the challenges of the crowded bagel market are Bruegger's Bagels of Burlington, Vt., New World Restaurant Group's Manhattan Bagel and Einstein Bros. Brands, and the 18-unit Finagle A Bagel chain of Boston.

"We look at fast casual as a competitive threat, but we feel we have competitive differences to help lead us forward," said Scott Hughes, vice president of marketing for Bruegger's Corp., which operates and franchises about 250 bagel stores.

Bruegger's said it is gearing up for increased growth following the completion of a recapitalization effort by Sun Capital Partners Inc. of Boca Raton, Fla.

Bruegger's also hired James J. Greco as its new chief executive, replacing David Austin, who will continue as the bagel chain's president. Greco most recently served as chief executive of Fieldbrook Farms Inc., a producer of ice cream and frozen desserts that is based in Dunkirk, N.Y. "He comes with a tremendous background in growing the brand quickly," Hughes said.

As the chain begins to ramp up expansion, it also is revamping its bagel menu. In addition to upgrading its coffee program and adding muffins and heartier soups, Bruegger's is debuting several new breakfast sandwiches, including a Jalapeno Western Egg sandwich for $2.99. The new sandwich, which is served on a bagel, includes eggs mixed with red peppers and onions and topped with jalapeno and cheddar cheese.

Bruegger's also is working to increase its lunch business by adding a host of entree salads and new sandwiches to its menu mix. The new salads, which range in price from $5 to $7, include an Orient Express Asian Chicken Salad, a Caesar Salad and a Tangy Tango Salad, featuring dried cranberries, blue cheese crumbles and mandarin orange segments. Each salad is served with bread made from Asiago bagel dough. One of the chain's new sandwich offerings is a Cuban Chicken selection.

Bruegger's is taking its menu upgrades a step further with a new design. The company is testing a new prototype intended to provide a more upscale dining atmosphere for customers at locations in Minneapolis; Pittsburgh; Cincinnati; Avon, Conn.; and Auburndale, Mass. A systemwide rollout of the new look should be completed within two years, company officials said. The new design includes a more upscale dining room, revamped menu boards and enhanced self-service beverage options.

New World Restaurant Group, parent of the Manhattan Bagel and Einstein Bros. bagel chains, is concentrating on expanding its menu to position itself as a fast-casual lunch destination, according to company officials. NWRG's system includes 744 units also under the Chesapeake Bagel Bakery and Noah's New York Bagels brands.

Einstein Bros. recently launched an advertising campaign highlighting its new panini sandwich menu. The 30-second ads, which began airing in September, marked the chain's return to the air following a one-year advertising hiatus. TV advertising for the Einstein Bros. chain had been cut to help its parent company conserve cash as it worked to complete a "major refinancing of debt and an overhaul of its equity structure," according to Paul Murphy, New World's chief executive.

NWRG recorded a $23 million noncash charge in the third quarter ended Sept. 30, attributable to the completion of its equity restructuring. As a result, the company reported a net loss of $34.2 million, or $13.55 per share, for the quarter, versus a loss of $9.5 million in the year-ago period. Total revenues decreased 5.5 percent to $93.2 million.

NWRG, in addition to boosting the appeal of its Einstein Bros. brand, is upgrading its breakfast sandwich menu at its Manhattan Bagel concept. The new offerings include a Tostini sandwich with eggs and roasted peppers prepared on toasted foccacia bread, an Omelet Wrap in a honey wheat tortilla, a Philly Steak & Eggs sandwich, and a Classic Egg Sandwich with cheese and bacon or sausage.

According to Port Washington, N.Y.-based NPD Group, a food-service research firm, breakfast sandwiches were the No. 1 breakfast item ordered at restaurants from August 2002 to August 2003.

Regional player Finagle A Bagel of Boston uses its signature bagel dough to create a variety of new menu items. The chain recently rolled out at its 18 New England-area restaurants a line of grilled-bagel-flatbread sandwiches and pizzas that use bagel flatbread, including Smoky Avocado or Four Cheese.