McAlister's founders target Springfield with upstart café

McAlister’s Deli founders have created a new generation of fast-casual restaurants, and a franchisee with ties to McAlister’s Springfield stores plans to bring the new dining option to town.

Daniel Garrett, owner of DancoCafe LLC, hopes to open two Newk’s Express Café locations by early 2012 in Springfield. Garrett’s father, Mark, co-owns the five Springfield McAlister’s with Richard and Katie Vance through Vanco JME LLC.

Jackson, Miss.-based Newk’s Express Café was created by Don Newcomb, Chris Newcomb and Debra Bryson, the founders of the Mississippi-based McAlister’s Deli franchise. Newk’s first restaurant opened in 2004 in Oxford, Miss., and today there are 30 locations in seven states. In 2010, Newk’s posted systemwide revenues of more than $55 million, according to Caitlin Varley, an account executive with Sanderson & Associates, publicist for Newk’s Express Café.

DancoCafe LLC, which owns three Newk’s cafés in metropolitan Memphis, Tenn., and is opening a fourth there in 2011, has plans to open five locations in Missouri within five years. Garrett is targeting two locations in Springfield – at yet-to-be-determined sites – and one each in Jefferson City, Joplin and Columbia.

Garrett has caught a glimpse of the Springfield market through his father’s involvement with McAlister’s Deli.

“The market is fantastic. It’s a growing area,” Daniel Garrett said. “There’s a lot of intelligent, college-educated people, and that’s our market, the people that we are targeting.”

Garrett is scouting locations in Springfield for his Newk’s Café, which typically are 4,500 square feet and seat 150. The initial investment to open a Newk’s Café ranges between $720,000 and $1.05 million, and annual royalties are 5 percent of net sales, according to Varley.

Newk’s plans to open 20 cafés in 2011 and another 25 in 2012, Varley added. Garrett said the menu offers California-style pizzas, oven-baked sandwiches, soups and salads, all with a culinary bend. The cafés feature crunchy and soft French-style bread for its sandwiches, fresh produce for salads and made-from-scratch soups, with an average ticket price of $10 per person.

Garrett opened his first Newk’s café five years ago, and his Tennessee stores have grown in sales each year. In 2010, he said his Southaven site increased revenues by 18 percent compared to 2009; Collierville grew by more than 9 percent; and his Cordova café recorded sales growth of more than 11 percent.

Garrett said the growth was atypical for restaurants during the recession, and the fast-casual restaurant category, which includes chains Panera Bread and Qdoba in Springfield, is a bright spot in an otherwise struggling industry.

A study released in June by food service industry consultant Technomic found that 2009 sales for the top 100 fast-casual chains reached $17.5 billion, a 4.5 percent increase compared to 2008, and total units in that category grew by 4.3 percent to 14,777 locations.

Randy Allen, managing member of Burrito Concepts LLC, which operates 10 Qdoba Mexican restaurants in Missouri, Oklahoma and Arkansas including three in Springfield, said those in the fast-casual category have been well-positioned to survive the recent economic downturn.

“We’ve seen a lot of shifting of our customer base, I think maybe a lot of the fine-dining clientele have traded down to more of a fast-casual offering,” Allen said, noting Burrito Concepts is opening a Qdoba in Rogers, Ark., this spring and has targeted downtown Springfield for its 12th location.

Burrito Concepts’ gross revenues reached $8.23 million last year, up from $6.47 million in 2008, Allen said.

Darren Tristano, executive vice president of Technomic, said Newk’s growth is a sign of strength. “Unit growth is a really important number today because some store sales have been struggling, and many aren’t growing and many are shutting down. So, chains that have unit growth are generally the ones that are doing the best,” Tristano said.
Chris Newcomb, CEO and president of McAlister’s Deli, said the inspiration for Newk’s was to create a restaurant with a culinary focus that was still quick and accessible to patrons.

“We wanted to take what we’d done (with McAlister’s Deli) and take it to the next level,” Newcomb said. “It’s more of a culinary-driven concept and we gave it a warm, Tuscan feel and an exposed kitchen. We wanted to break some barriers there.”

Customers can observe food preparations in the open kitchen, and Newcomb said Newk’s menu is smaller – roughly 60 items compared to around 100 at McAlister’s.  

“Even though it’s not as many choices, the flavor profiles really stand out,” Newcomb said adding that the scaled-back menu is easier for employees to execute.[[In-content Ad]]