Wienerschnitzel at 50 years

Wienerschnitzel at 50 years

Q&A with chain president Dennis Tase on growth, pricing and secret chili

Fifty years ago this month, John Galardi opened a hot dog stand in Wilmington, Calif., dubbed Der Wienerschnitzel, a name invented by his wife.

Galardi had worked with Taco Bell founder Glen Bell Jr. and wanted to start a concept of his own. As the hot dog stand evolved, it became one of the first quick-service restaurants with a literal drive thru — not a driveway up the side of the building, like most, but one that went right through the middle of what was then typically an A-frame building.

Today, Wienerschnitzel claims the title of largest hot dog chain in the world with 352 locations. At 50 years old, the brand is continuing to evolve.

Over the years, Wienerschnitzel dropped its “Der” — though it reappeared this year briefly in honor of the anniversary — and the menu grew to include hamburgers, turkey dogs and Angus beef dogs. The brand was named the official hot dog of several sports venues, including those of the Los Angeles Angels of Anaheim baseball team, the Mighty Ducks hockey team and the Sacramento Kings basketball team.

In 2003, Wienerschnitzel bought co-branding partner Tastee-Freez LLC and now offers ice cream in 90 percent of the chain’s units.

Parent company The Galardi Group, based in Irvine, Calif., also owns The Hamburger Stand brand.

Same-store sales have been positive this year as the message of everyday value strikes a chord, said Dennis Tase, who also celebrates an anniversary this year: 30 years as president of Wienerschnitzel.

Anniversary events for the chain planned all year have helped drive traffic, he said.

On Sunday, Wienerschnitzel locations are offering three core menu items, including chili dogs, mustard dogs and kraut dogs, for 61 cents each, to correspond to the founding year of 1961. Guests can also win a trip to Germany, a new Fiat car, free food and other prizes. And this month the chain’s Wiener Wagon has been visiting California cities to give away free chili dogs.

Tase spoke with Nation’s Restaurant News West Coast bureau chief Lisa Jennings about the road going forward for Wienerschnitzel.

Wienerschnitzel is an all-franchised brand. How did that come about?

John had friends who wanted to open stores, and that’s how he started franchising. At one point, there was talk of going public, but he never did. He was a young guy at the time, and there were guys in New York trying to convince him it was the best thing to do. But it turned out it wasn’t the best thing to do.

Today, we are a fully franchised company, but about 80 percent of stores are traditional franchises and 20 percent are what we call limited franchises. It’s basically a 30-day franchise agreement where the franchisee is responsible for the customer and employees, but we guarantee food costs in the back door.

We’ve been doing that for a long time. It gives people that don’t really have money to get into their own franchise business the opportunity to get in, go through training and run their own store. We control the land, building and equipment for limited-franchise stores, so their only investment is a small deposit.

How has growth been trending?

It slowed down three years ago, especially over the last two years. There was no money for anyone to build new buildings or invest in anything. But we’ve seen in the last six months people who want to build again. We have about eight stores coming in the next 12 months.

What’s your pitch for potential franchise owners?

We’ve been in business for 50 years and we have a very good family culture. We know how to control food costs and labor. We’re good with the numbers. We’re known for hot dogs and chili, as well as ice cream. Our average volumes are around $700,000 to $725,000. Some do less, but we have others doing $1 million. Quite frankly, we court people that we approve for franchisees. We want them to be part of our culture.

My favorite Wienerschnitzel location is one of the old-fashioned A-frames in Santa Monica, Calif. How will the look change going forward?

Our growth will come from new business model of making more of less, so to speak. Real estate is expensive in the western U.S. and we have to figure out a way to build for less and still make money on existing models.

One thing we’re looking at is an in-line concept with no drive thru. That type of real estate is [much] more available. When we do drive thrus, we’re also looking at doing end-cap positions. There seems to be more of those available today.

We’ll be doing a very limited number of freestanding units in future. That’s not a viable position in today’s economy.

Our most recent opening was a full-sized restaurant in a Texaco gas station. It’s doing significantly more than we ever thought it would do. We have four or five of those in gas stations, so we’re going to be looking at that.

How has the menu evolved over the years?

The original hot dog is still the focal point. The best sellers are the original dog and the Angus all-beef dog, which is much larger.

Over the years, we’ve added others. We have a turkey dog. We have a chili hamburger. Anything we put chili on sells well. It’s the original chili and the “secret recipe” is kept in a safe.

We have sold the chili in stores, but the grocery business is a lot more competitive and it’s not something we need to focus on. We also sell corn dogs in schools and mini corn dogs at Sam’s Clubs and such, but we’re not building that business.

Anything new coming to the menu?

We have some menu changes in test. There’s a Junk Yard Dog, which is a chili dog with cheese, onions, mustard and fries on the dog, for $1.99. We’re also testing a Texas-size Angus dog with chili, jalapenos and other things. And there’s a corn dog in a bun with chili and cheese.

We recently brought back pretzel buns, and in the fall we’re bringing back pastrami on hot dogs as a limited-time offer. Every time we’ve brought pastrami back, it has resonated very high in sales. Franchisees would like to see it permanently on the menu, but I see it like the McDonald’s McRib. Every time they bring it back it’s an event.

You lowered the price of your corn dog last year to 79 cents. How are commodity costs affecting your pricing?

Like everyone else, we’re seeing an increase in food cost. I think the best way to handle it is what you do with promotions: What you promote at what time of year. Promoting hamburgers now would be tough.

We took a 2-percent price increase in June. But since January, we’ve experienced on average about a 4-percent to 4.5-percent increase in same-store sales. Customer counts and check averages have gone up, too. With those going up, you don’t need to chase everything with price.

We kicked off this year by lowering the price of our chili dog, the best seller, to 99 cents and we saw tremendous increases in sales. We’ve had other promotions like five for $5. We’re keeping the pressure on everyday value.

Contact Lisa Jennings at [email protected] [3].
Follow her on Twitter: @livetodineout [4]