Chain Innvovators: Auntie Anne’s Pretzels

Published on Friday, July 01, 2011

Written by Dana Tanyeri and Lisa White

Auntie Anne's celebrates the simple pretzel in a wide range of sweet, savory and surprising ways. It's a formula that's given rise to one of the largest fresh, hand-rolled pretzel companies in the world since its founding in 1988 by Anne and Jonas Beiler.

Product innovation has long been part of the company's legacy. Soon after its founding, Anne began coming up with new flavor variations. In the mid-1990s, the chain added R&D and food technology capabilities to its infrastructure, and a collaborative approach to menu innovation has been nurtured using input from franchisees and customers alike, says CEO Bill Dunn.

More recent product twists brought proteins into the mix. A few years ago, Auntie Anne's introduced the Pretzel Dog, featuring fresh pretzel dough wrapped around a 100 percent all-beef hot dog. More recently, the Pepperoni Pretzel — a traditional pretzel topped with pepperoni and a three-cheese blend — was introduced. Beverages have also been a focus, with the chain adding frozen lemonade mixers, blended shakes, lattes and smoothies, says Dale Smucker, director of construction.

The existing equipment package has thus far handled the chain's expanding menu, but one big change is in the works. Auntie Anne's is rolling out a new, customized two-tier warming and display cabinet. "It's a real focal point for us. It's now in about 70 stores and is expected to roll out to more soon and will be part of the standard package for new stores. It's proving to be very successful for its merchandising value, the volume of product we can display, and its ability to deliver on product quality," says Dunn.

Fast Facts

• Year founded: 1988
• Headquarters: Lancaster, Pa.
• Menu specialties: Hand-rolled soft pretzels
• Service model: Quick service
• Ownership: FOCUS Brands
• Units (as of 2010): 875 domestic, 251 international (99 percent franchised)
• 2010 sales: $394 million
• 2010 growth: 9 percent in revenue, added 58 units (domestic and international)
• Projected 2011 growth: 9.5 percent increase in revenue, 119 units (domestic and international)
• Typical location: Shopping malls, airports, train stations, colleges/universities
• Average unit size: 450–500 sq. ft.
• Average kitchen space: 50 percent of the unit or 225–275 sq. ft.
• Average check: $4.50
• Average unit investment: $197,875–$364,100
• Average kitchen investment per unit: $90,000–$175,000

Key Players

• President and COO: William Dunn Jr.
• Chief Administrative Officer: Beth Monaghan
• Chief Financial Officer: Jim Moss
• Director of Construction: Dale Smucker
• Smallwares and Equipment: Andy Fausnacht, supply chain analyst
• Architect and Design: Sean Keyes, director of construction