Lenny's News and Interviews
Restaurant Insider - Full Speed Ahead for Lenny's SubsMarch 27, 2006
It must be something in the yeast. Regional sub players Lenny's Sub Shops, McAlister's Deli and Jason's Deli all think it's the right time to rise out of their comfortable markets and take on the likes of Subway, Quiznos and Blimpie. The 76-unit Lenny's has fewer units than McAlister's (200 units) and Jason's (142 units) but it has floor plans, build-out costs and a menu more in line with the big three. And with better products and aggressive growth plans, its presence should be felt in a few years. If the company executes its outlined growth strategy for its nearly 500 contracts, it could go right past the rest, racing to be a new sandwich king.
Lenny's Franchisor, LLC, the parent company of Lenny's, has massive nationwide development plans through 2008. CEO George Alvord, the former CEO of Dobbs International, and 15 other Memphis investors purchased the chain in 2004. Len and Sheila Moore founded the chain in 1998 in Tennessee and a slow controlled growth followed. The new ownership saw a winner in the concept and went to area development deals to quickly grow the chain. Lenny's signed several big investment groups last year. And this year is no different, with the addition of the Las Vegas market - its first deal in the West - an agreement for 100 stores in a Texas MSA and 41 stores around Sacramento, Calif., Reno, Nev., and Lake Tahoe.
After signing a 123-unit deal for Florida with Dynamic Growth Partners in April 2005, Lenny's started getting interest from groups with bigger plans. The Dynamic deal is expected to generate more than $1B in revenues for the company.
VP of Real Estate and Brand Management Linda Costas is seeking area developers with significant restaurant experience and at least $1M net worth, or the ability to finance at least five stores. Most deals are on a larger scale with markets coast to coast being targeted.
The first of 25 units in Las Vegas is expected to open in April. Vegas is a crucial market and has already been a springboard for the company to close the deal in Northern California/Nevada region. Costas is in talks with various groups to cover Southern California and deals have closed for coastal Georgia, Virginia and Chattanooga, Tenn. The new ownership opened 11 units in 2005. Fifty to 60 openings are planned this year and 100 per year after that.
Like most sub concepts, the majority of Lenny's sales come from lunch, so dense employment areas are ideal. Inclines and end caps are preferred. Floor plans range between 1,200 s.f. and 2,500 s.f., but most come in around 1,800 s.f. and seat 45. Units cost between $150k and $225k to open. Franchise fees are $25k, but deals are structured on the size of development plans. A 10-store deal has a $20k fee, with the operator agreeing to pay for the first, as well as 50% of all future units, upfront. The royalties are 5%, plus 2% for advertising.
Contact Lenny's Public Relations:Jenna Duett
Marketing and PR Manager