The Top 50 foodservice bakeries broaden their horizons

Dunkin’ Donuts introduced new 4.5-oz. jumbo cookies in three varieties.

Modern Baking

Many Top 50 chains, especially bakery cafes, are trying to draw customers beyond the breakfast/lunch crowd. Dinner menus are being enhanced, and flatbread pizza is the new hot item for bakery cafes. Several chains offer their versions to help grow the dinner daypart when consumers prefer hot foods. Panera Bread, Richmond Heights, Mo., offers the Crispani, a flatbread pizza, which is available in select locations after 4 p.m. Boston-based Au Bon Pain’s version on Indian naan bread is available at its new suburban locations.

Bear Rock Cafe, Cary, N.C., produces five varieties of 9-in. flatbread Pizzetas, which are offered for lunch and dinner. The 35-unit chain also introduced its Hot Off the Grill sandwiches to draw more dinner customers.

Panera also launched a whole grain artisan bread line this year. The breads, made with stone-ground whole wheat flour, meet requirements for the Whole Grains Council’s “excellent source of whole grains” rating. With 16 grams of whole grains per slice, a two-slice sandwich accounts for almost half of the USDA’s dietary whole grain requirements. The bread is available by the loaf and as a sandwich or a side item.

In another move to address dietary concerns, Panera reformulated its products to remove all trans-fats, except for the trace amounts that occur naturally. “Panera recognized that trans-fat was a growing concern to our customers, and we made it a priority to eliminate it from our menu,” said Tom Gumpel, director of bakery development for Panera. The year-long project, completed in February, focused mainly on the chain’s bakery products, which contained the most transfat. Panera worked with suppliers to reformulate products by switching to trans-free alternatives, such as butter, palm oil and vegetable-based oils.

The chain also is beginning to remodel some units to its Generation 2 store model. The new design divides the restaurant into smaller sections with different design elements or “moods” and features sound-deadening material to lower noise levels. The new model is key to unit growth, according to company officials.

Au Bon Pain (ABP) also is making extensive menu changes in its effort to compete with segment leader, Panera Bread. The retooled menu is available at its new suburban locations. ABP has in the past focused on urban customers, but the chain is now looking to the suburbs for growth, perhaps taking a cue from Panera, which has a majority of its locations in suburban markets. ABP’s suburban Bistro prototype features a grill station, which allows the units to expand the traditional ABP menu to include paninis and pasta as well as pizza.

The new suburban design is larger than ABP’s urban units that are typically located in office buildings. Urban locations will keep their current layout and format. Along with the expanded menu, the new stores feature extended hours, some table service and a new design that features an open kitchen. The concept’s more relaxed interior with carpeting, wood accents and more comfortable seating, including booths and armchairs, encourages customers to linger.

Cosi Inc., Deerfield, Ill., also is focusing on improving its customer experience by revamping its store design. The new design, currently at nearly a quarter of its 118 units, leads customers down a short hallway lined with menu boards to the ordering counter. Before, different prep stations offered only select items, causing customer confusion over where to order which products.

Bruegger’s, Burlington, Vt., has completed a system-wide remodel of all its company-owned locations. In less than two years, the company updated its stores with an expanded menu and more comfortable dining environment. Bruegger’s reports that overall sales have increased substantially due to the renovations. Franchised units also are in the process of remodeling to include the chain’s new, softer interior color scheme, oversized plush furniture and booth seating.

Revamping specialty chains
Bakery cafes are not the only Top 50 foodservice bakery segment revamping menus and restaurant appearance. Mrs. Field’s Cookies, a 29-year-old cookie chain based in Salt Lake City and part of Mrs. Fields Famous Brands, opened a new prototype store in North Olmstead, Ohio. The new store replaced the traditional white and red kitchen with a warmer shade of red on the walls, softer lighting and a larger display case featuring the traditional Mrs. Field’s products as well as lighted signs to draw more attention to snack, drink and gift package options. Mrs. Field’s also is offering a new selection of brownies as well as a line of specialty drinks, gourmet coffee, espresso and cappuccino. The store, which opened in September, reported a 60 percent sales gain over the same period a year earlier.

Dunkin’ Donuts, which garners almost two-thirds of its sales from coffee and other beverages and is often seen as a rival to Starbucks, is refocusing attention to its bakery products with its “America Runs on Dunkin’” ad campaign that showcases both the chain’s coffee and bakery products. Dunkin’ also recently rolled out new jumbo-sized, 4.5-oz. cookies available in chocolate chunk, oatmeal raisin and peanut butter cup.

“Dunkin’ Donuts is delivering on our commitment to expanding into new dayparts by offering high-quality snacks and beverages,” said Joe Scafido, chief creative and innovation officer.

The chain also opened a new prototype store in Pawtucket, R.I. last year. The prototype has a double drive-thru, new warm bakery product display and fresh samples throughout the day. The color scheme incorporated tans and browns with the chain’s signature pink and orange. It also offers new menu items: warm bakery products available throughout the morning and afternoon, such as muffins, Danish, croissants, cookies, brownies and blondies; afternoon bite-size snacks wrapped in flaky dough with a variety of savory fillings; personal breakfast pizzas; Stuffed Melts, which are similar to paninis; Cream Bites, mini, cream-filled puffs of the original Dunkin’ cruller and smoothies.

Unit expansion
Aside from menu changes and cosmetic updates, Dunkin’, Panera and Bruegger’s are branching into new geographic markets and planning extensive unit growth. Dunkin’ Donuts plans to grow exponentially from its core customer base in the Northeastern United States. The chain currently operates in 36 states and 30 foreign countries, but only about 70 of its U.S. units are west of the Mississippi River. By 2020, the company plans to almost triple its domestic units to 15,000 locations. The expansion relies on multiple formats, including gas stations, kiosks inside supermarkets and other retailers, but the majority of the new units will be based on the new prototype that opened in Pawtucket. The chain plans to open 650 domestic units in the next year with a focus on the Cincinnati, Nashville, Cleveland, Indianapolis and Jacksonville, Fla., markets.

Panera Bread also has lofty expansion plans. The chain recently purchased a 51 percent stake in Paradise Bakery & Cafe, based in Scottsdale, Ariz. Paradise owns and operates 24 units, with 17 in the Phoenix market. Another 20 units are franchised, with most of the locations along the West Coast and in the Southwest. Paradise plans to open 14 more locations in the next year. Panera intends to operate the units under the Paradise name with no plans to change the menu or operations of the chain.

Panera is continuing the rapid growth it has maintained over the last few years with at least 150 new units opening each year. The chain plans to expand into Canada next year with its first foreign location to open in Toronto. Canada is currently the only non-domestic market the chain is looking into. Ron Shaich, chief executive officer of the chain, predicts the chain could easily sustain 5,000 locations.

Bruegger’s also is expanding with new franchise agreements in Alaska and Winston-Salem, N.C. Five new locations will open in Anchorage and Fairbanks by 2010 The chain also plans to open an additional 70 locations by the end of 2007.

With continuous product development and comfortable and inviting stores, the Top 50 foodservice bakeries are poised for continued growth.

Top 50 largest foodservice bakery operations
Rank					U.S. baking units* (franchised, co-owned, licensed)		Planned	Sales* 2006 (fiscal or calendar yr.; $ million)
2006	2005	Chain	Headquarters	Business	2006	2005	Additions
1	1	Dunkin’ Donuts	Canton, MA	donut shops	5,200	4,418	650	4,143
2	2	Mrs. Fields Famous Brands	Salt Lake City, UT	cookie, pretzel bakeries	1,196	1,125	5	104
3	6	Auntie Anne’s	Gap, PA	pretzel, cookie bakeries	939	679	150	252
4	5	Panera Bread	Richmond Heights, MO	bakery cafes	825	698	155	553
5	3	Daylight Donuts	Tulsa, OK	donut shops	820	835	0	275
6	4	New World Coffee-Manhattan Bagel/Einstein-Noah Bagel	Golden, CO	bagel bakeries	646	700	3	368
7	10	Cinnabon	Atlanta, GA	cinnamon roll bakeries	604	400	75	49
8	7	Bob Evans Restaurants	Columbus, OH	restaurants	577	538	30	992
9	8	Perkins Family Restaurants	Memphis, TN	restaurants	483	470	8	307
10	9	Golden Corral	Raleigh, NC	restaurants	472	468	3	375
11	14	Big Boy Restaurant & Bakery	Warren, MI	restaurants	399	269	12	60
12	11	Krispy Kreme Doughnut	Winston-Salem, NC	donut shops	380	375	2	521
13	*	Scholtzsky’s	Austin, TX	bakery cafes	365	430	0	210
14	12	Ryan’s Family Steak House	Greer, SC	restaurants	344	301	19	825
15	15	Tim Hortons	Dublin, OH	full-line bakeries	289	251	NA	243
16	36	Yum Yum Donut Shops/Winchell’s Donuts	City of Industry, CA	donut shops	258	71	NA	3
17	17	Cookie Bouquet/Cookies by Design	Plano, TX	cookie bakeries	250	230	15	3.3
18	27	Wetzel’s Pretzels	Pasadena, CA	pretzel, cookie bakeries	250	143	40	10
19	16	Bruegger’s Bagel Bakery	Burlington, VT	bagel bakeries	247	246	70	88
20	13	T.J. Cinnamon’s	Atlanta, GA	cinnamon roll bakeries	246	287	0	91.8
21	18	Village Inn	Denver, CO	restaurants	240	224	2	187
22	19	Great Harvest Bread	Dillon, MT	bread bakeries	224	210	18	4.2
23	21	Au Bon Pain	Boston, MA	bakery cafes	207	188	2	194
24	22	My Favorite Muffin/Big Apple Bagel	Deerfield, IL	muffin/bagel bakeries	180	170	5	5.13
25	23	Atlanta Bread Co.	Smyrna, GA	bakery cafes	170	166	6	12.5
Rank					U.S. baking units* (franchised, co-owned, licensed)		Planned	Sales* 2006 (fiscal or calendar yr.; $ million)
2006	2005	Chain	Headquarters	Business	2006	2005	Additions
26	25	Honey Dew Assoc.	Plainville, MA	donut shops	155	148	1	6
27	24	Bakers Square	Denver, CO	restaurants	151	150	4	225
28	26	Marie Callendar	Aliso Viejo, CA	restaurants	138	145	20	227.5
29	28	Coco’s Bakery Restaurant	Carlsbad, CA	restaurants	123	127	0	124
30	32	Cosi	Deerfield, IL	bakery cafes	118	90	50	117
31	33	The Cheesecake Factory	Calabasas Hills, CA	restaurants	113	87	20	117
32	34	Southern Maid Donuts	Garland, TX	donut shops	100	86	0	2
33	30	Frullati Cafè & Bakery	Scottsdale, AZ	bakery cafes	94	94	10	10
34	31	Corner Bakery	Dallas, TX	bakery cafes	90	91	10	183
35	35	Grandy’s	Lewisville, TX	restaurants	85	81	2	30
36	40	Paradise Donuts	Catoosa, OK	donut shops	85	39	20	8.5
37	37	La Madeleine Bakery, Cafè & Bistro	Dallas, TX	bakery cafes	65	62	2	120
38	38	Great American Bagel	Westmont, IL	bagel bakeries	52	47	6	5
39	39	Paradise Bakery & Cafè	Scottsdale, AZ	bakery cafes	44	40	14	25
40	29	Wall Street Deli	Lake Success, NY	bakery cafes	43	100	6	50.1
41	42	Bear Rock Cafè	Cary, NC	bakery cafes	38	33	30	14.5
42	41	Breadsmith	Whitefish Bay, WI	bread bakeries	35	35	3	1.2
43	45	The Kolache Factory	Houston, TX	bakery cafes	33	28	5	13
44	46	Lee’s Sandwiches	San Jose, CA	bakery cafes	32	20	12	NA
45	44	LaMar’s Donuts	Centenniel, CO	donut shops	29	28	1	6
46	46	Andrè-Boudin Bakeries	San Francisco, CA	bakery cafes	28	20	1	35
47	43	Cindy’s Cinnamon Rolls	Fallbrook, CA	cinnamon roll bakeries	28	30	2	9.7
48	48	Finagle A Bagle	Auburndale, MA	bagel bakeries	20	19	3	20
49	50	Champagne French Bakery Cafè	San Marcos, CA	bakery cafes	15	16	0	8.9
50	49	Crescent City	Houston, TX	bakery cafes	14	18	0	1.6

*Actual figures and Modern Baking and industry estimates

Top 50 foodservice bakery acquisitions

During the past 18 months, foodservice bakery chains brokered significant acquisitions and spin-offs. Here is a synopsis of a few.

• Panera Bread Co., Richmond Heights, Mo., purchased a 51 percent stake in Paradise Bakery & Cafe, based in Scottsdale, Ariz. Panera currently has no plans to make any significant changes to the Paradise chain.
• Boston-based Au Bon Pain’s management bought 75 percent of the 207-unit chain leaving parent company, Compass Group, London, with a 25 percent share.
• Brinker International sold Corner Bakery Cafe to CBC Restaurant Corp. CBC is affiliated with Il Fornaio Corp.
• Dunkin’ Brands, parent of Dunkin’ Donuts, was acquired by three private equity firms. As a result of Thomas H. Lee Partners LP, Bain Capital Partners and the Carlyle Group purchasing the company, Dunkin’ Brands is seeking a buyer for its Togo’s sandwich chain to refocus on its Dunkin’ Donuts and Baskin-Robbins brands.
• Schlotzksy’s Ltd., Austin, Texas, was sold to Atlanta-based Roark Capital Group. Schlotzksy’s has become a wholly-owned subsidiary of FOCUS Brands, which operates the Carvel, Cinnabon and Seattle’s Best Coffee brands.
• The Restaurant Co., operator and franchisor of Perkins Restaurant & Bakery purchased Marie Callender’s, and operates under the new name of TRC Holdings LLC. TRC was acquired by Castle Harlan last year.
• Wendy’s International, Dublin, Ohio, spun off its Tim Hortons donut chain.