Lenny's News and Interviews
QSR Magazine - Ones to WatchAugust 01, 2005
An elderly lady wobbles, leaning on a cane as she enters the restaurant. She’s 94 and on an errand for a friend who doesn’t get out much. Her friend is 104 and above all meals loves a Lenny’s Philly cheesesteak, because it reminds her of home. The story is featured in a new Lenny’s Sub Shop advertising campaign titled “Lenny’s Truth.” It illustrates one of the main reasons George Alvord, CEO and majority owner of Lenny’s, saw the chain as a good investment. “It has a cult following that almost guarantees success,” Alvord says.
In 1998, Len and Sheila Moore opened Lenny’s, a Philadelphia-style sub shop in Bartlett, Tennessee, offering fresh-baked bread and high-quality meats and cheeses. They began franchising in 2001, growing their chain to 63 stores. Alvord and a group of partners bought the chain in August 2004 and created a more organized franchising plan. The Moores remain minority partners and franchisees, developing an 80-store franchise in Texas.
“Len created a great brand and recognized its potential,” Alvord says. Still involved in the company’s branding, Len Moore wrote the franchisee manual that explains the Lenny’s culture.
“Our slogan is ‘More Food with More Taste and More Service,’” Alvord says. “We believe the quality of the food and the customer’s experience are equally important.”
Alvord’s investment is promising a big payoff. The chain has announced a 125-store franchise agreement in Florida valued at $1 billion. Alvord expects to have more than 500 restaurants open by late 2008. The company is focused on the Southeastern and South Central United States and will move into other regions later.
The concept practically sells itself, Alvord says. “Beyond the great food, Lenny’s is a fun place to eat.”
Lenny’s builds each sandwich in front of the customer, slicing meats and cheeses to order. Chicken and tuna salads are made fresh daily. Meat for the Philly cheesesteak, which comprises 25–30 percent of sales, comes from Philadelphia. The company offers 60 proprietary items, including hot pepper relish, potato chips, and Lenny’s famous bread.
The franchisee manual directs staff to greet customers when they enter and to say “thanks and goodbye” when they leave. A trashcan-free dining area is intended to ensure employees clean every table between customers.
A 1,800-square-foot stores can serve 200 customers per day. The restaurants are open seven days a week, from 10 or 10:30 a.m. to 8 or 9 p.m. Between 65 and 70 percent of sales occur at lunchtime. Catering makes up 20 percent of total sales. In fact, the high volume of to-go and catering sales led the new owners to build a comprehensive web site, including a photo of every menu item. “We see our web site as our first line of sales for both franchisees and customers. We want a secretary ordering for an office to be able to go online, see what the sandwiches look like, and how to get to the closest store,” Alvord says.
That closest store is likely to be convenient in many markets over the next several years, as Lenny’s moves toward its goal of becoming a well-known national brand. “We will remain focused on keeping our product and stores current,” Alvord says. “We’ve seen so many chains sell, sell, sell and then die out. We will always work to keep the concept alive for the future.”
Why it Bears Watching:
Lenny’s Sub Shop has a rich history dating to 1979 when Len and Sheila Moore opened their first sub shop in New Jersey prior to creating the Lenny’s concept in 1998. But the new owners aren’t counting on past success to carry them forward. Majority owner and CEO George Alvord and his partners have a calculated growth strategy grounded by attention to food quality and customer service.
“The difference between us and everyone else is not just in our food—which is equivalent to a great mom-and-pop deli—it’s in our personality,” Alvord says.
The growth plan begins with selling franchises at a low cost compared to competitors; startup costs are between $150,000 and $225,000, while royalty and marketing fees are 7 percent of net sales. Other strategies include building company stores and creating new concepts—perhaps a Lenny’s Express, perfect for replicating in airports. The chain’s only airport venue, located in Memphis, is its highest volume store, grossing $1.3 million a year.
The Lenny’s team is being true to its promise to grow carefully. Potential franchisees in Las Vegas, Reno, Denver, and Phoenix have been turned down so far, because the company “can’t comfortably supply product to that region yet,” Alvord says.
“Our goal is not just numbers,” he explains. “Some of our competitors have been much more aggressive. We are being careful to make sure every store is successful.”
CEO: George Alvord
HQ: Memphis, Tennessee
Year Started: 1998
Annual Sales: $38 million
Total Units: 70
Franchise Units: 68
Contact Lenny's Public Relations:Jenna Duett
Marketing and PR Manager