Newk’s Franchise Co. is updating its in-store take-away area with expanded offerings and a test of new “Newk’s Express Market” branding as off-premise sales continue to grow, the company president said in an interview.
The Jackson, Miss.-based fast-casual brand’s express pilot is in its third week and getting positive reaction from consumers, Michael Clock told Nation’s Restaurant News.
Clock said about 60 percent of Newk’s sales are dine-in, but that has been declining as consumers shift to take-out, delivery and catering.
The brand is fortunate, however, because all 115 units have grab-and-go areas that have been part of Newk’s since its founding 13 years ago, he said.
“The founders had the foresight to dedicate space in our restaurants for off-premise,” Clock said. “We call it Grab-N-Go with cases for premade sandwiches and salads, soup and other things you can use for home-meal replacement.” The areas also have their own dedicated register for easy payments.
Clock said that with dine-in sales softening since the middle of 2016, Newk’s assessed what it needed to do beyond traditional direct mail and other marketing inducements.
“There’s a lot of competition,” he said, “and development for fast-casual is clustered together. For us, our consumer is shifting in the way they use us. That’s something we can really take advantage of. That’s where this refocus on off-premise is coming from.”
Consumers, Clock said, are looking for convenience.
To address that, the company is expanding the to-go menu in the new Newk’s Express Market, adding take-and-bake pizzas, beverages and proteins like salmon, chicken and steak, and more beverages that can be heated at home, he said.
“We do see the consumer who wants the home-meal replacement but doesn’t want to stand in line or wait for the food to be prepared,” he added. “This looks much more like what you would find in a higher-end grocery store.”
In addition, labels on items in the four-unit test in Jackson had been redesigned to be more appealing, he said.
Newk’s is also working on delivery, he said, choosing to use third-party services where available and priced well.
“We want to partner with groups that are reasonable. We think the 32 percent that some companies want is too much. We will have a hard time being profitable,” he said, with Newk’s looking for companies that will deliver for 15 to 20 percent of the sales. The company is currently working with Waiter in some markets, he added.
Off-premise sales in catering have been strong for Newk’s, Clock said.
“About 10 percent of the business is coming from catering,” he said. “We have delivery vans at every restaurant.” The catering menu is also being expanded. “We’re going to introduce hot-food items like pork sliders and some chicken entrees and also include pizza in the catering category,” he said. “We want people to have more options under that catering umbrella.
Clock said the company will monitor the Jackson test through the end of the year and then determined how to roll out Express Market to the system in the first quarter of 2018. Currently, 20 units are company-owned and the remainder are franchised.
“We have to make sure that under the test umbrella that it will work in franchise restaurants,” he said.
Customer reaction to the new convenience format has so far been encouraging, Clock said.
“As the consumer is shifting toward convenience, you can’t just suddenly say, ‘I’ll be convenient.’ You have to do it in a thoughtful manner so that our operators can execute,” he said. “We have to take the time to make sure we do it well.”
In the 2017 Nation’s Restaurant News Top 200, Newk’s ranked No. 170 in U.S. systemwide sales among chains, ending 2016 with estimated sales of $208.9 million.
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