Chain Innovators: Einstein Bros. Bagels

Published on Friday, July 01, 2011

Written by Dana Tanyeri and Lisa White

Fresh-baked bagels and "darn good" coffee may be what brought Einstein Bros. to the top of its niche, but the company's focus on product innovation is helping to keep it there. Einstein has positioned its traditional bagel bakery concept as much more than bagels, building a menu of on-trend breakfast, lunch and specialty beverage options that satisfy consumers' lifestyle and nutrition demands.

"The Einstein Bros. Bagels brand has always had a reputation for offering healthy choices," says James O'Reilly, chief concept officer. "Our most recent major initiatives have been the launch of the less than 400 Calorie Menu in 2009 and then the Lighter Side Menu in 2010. The Lighter Side Menu has become permanent in our restaurants and features a number of healthier choices."

Among them are Einstein's Bagel Thins (thinner, lower calorie, lower carb bagels), healthful alternatives to traditional high-fat cream cheese such as hummus, peanut butter and light cream cheese, fruit and yogurt parfaits, and Bagel Thin breakfast and lunch sandwiches.

Beyond its healthy positioning, Einstein Bros. is working to build its lunch and snack business. Lunch customers can choose from a variety of signature sandwiches, salads, paninis, wraps and soups. And snackers can grab Bagel Poppers — small, round bagel nuggets served in a cup — any time to go with a specialty blended beverage or gourmet coffee.

This year, Einstein intends to continue leveraging its bagels, breakfast and healthy innovations and to boost check averages primarily through beverages, catering, modest price increases and additional premium sandwiches. According to its annual report, "We will reinforce our product differentiation in terms of 'Fresh Baked Goodness' combined with quality ingredients and innovation. Initiatives to increase our average check include bundled 'combos' and additional snack items in the breakfast and lunch dayparts, and a repositioning of our coffee offering to include dedicated baristas and specialty coffee."

Fast Facts

• Year founded: 1993
• Headquarters: Lakewood, Colo.
• Menu specialties: Bagels, baked goods, salads, soups, sandwiches, gourmet coffee, specialty drinks
• Service model: Fast-casual
• Units: 330 company stores, 100 franchised units
• 2010 sales: $411,711,000
• 2010 growth: 0.8 percent revenue growth, number of units grew by 7 percent
• Projected 2011 growth: Projects adding 20–26 franchised units and 45–50 licensed units
• Key expansion markets: Texas; Colorado; Washington, D.C.
• Typical location: Neighborhood or regional shopping center
• Average unit size: 1,800–2,500 sq. ft., 30–40 seats
• Total unit cost: $460,000 (cash investment per company-owned store)

Key Players

• President, Chief Executive Officer: Jeffrey O'Neill
• Chief Financial Officer: Emanuel "Manny" Hilario
• Chief Operating Officer: Dan Dominguez
• Chief Concept Officer: James O'Reilly
• Chief Legal Officer, Secretary: Rhonda Parish