Schlotzsky’s, known for its unique and delicious sandwiches, has been a staple in the fast-casual dining scene since its inception. While many customers enjoy the brand’s variety of offerings, a common question arises: who owns Schlotzsky’s?
To fully understand the brand’s ownership and its history, we must first look at how the company evolved over time, who currently owns it, and the factors that have shaped its success and challenges.
A Brief Introduction to Schlotzsky’s
Founded in 1971 in Austin, Texas, by Don and Doris Dissman, Schlotzsky’s began as a small deli with a focus on sandwiches and specialty bread. The first store was a hit, thanks to its distinctive menu and welcoming atmosphere. Over the next several decades, Schlotzsky’s expanded into a nationwide chain with hundreds of locations, offering a variety of sandwiches, salads, pizzas, and more.
The brand’s most famous creation, the “Original” sandwich, is still a customer favorite.
However, as with many growing companies, Schlotzsky’s experienced several changes in ownership throughout its history.
Today, the brand is part of a larger parent company, and its journey from humble beginnings to corporate ownership is a fascinating one.
Who Owns Schlotzsky’s Now?
As of today, Schlotzsky’s is owned by Famous Brands International, a South African company with an expansive portfolio of fast food brands. Famous Brands is known for its ownership of several well-established restaurant chains across the world. Schlotzsky’s was acquired by Famous Brands in 2016, marking a significant shift in the brand’s ownership and strategy.
Famous Brands International: The Parent Company
Famous Brands International is a multinational company that focuses on acquiring and growing popular food brands. Their portfolio includes a range of fast food and casual dining establishments, both in South Africa and internationally. Notably, Famous Brands owns other well-known franchises such as Wimpy and Steers. The company has continued to expand its global presence, with a special focus on the North American market.
Acquisition of Schlotzsky’s
The acquisition of Schlotzsky’s by Famous Brands International in 2016 was part of the company’s strategy to build a more robust presence in the U.S. restaurant sector. Famous Brands, which already owned The Coffee Emporium, saw potential in Schlotzsky’s established brand and loyal customer base.
The deal marked a transition for Schlotzsky’s, which had previously undergone changes in ownership several times over the years. While Famous Brands International took over the ownership and management of Schlotzsky’s, the brand retained its distinctive menu and Texan roots.
The Ownership Evolution of Schlotzsky’s
To better understand how Schlotzsky’s reached its current ownership, it’s important to look back at its history.
Early Ownership and Expansion
After Don and Doris Dissman opened the first Schlotzsky’s in 1971, the company began to grow rapidly throughout Texas and the surrounding regions. In the late 1980s and early 1990s, Schlotzsky’s became a national chain, with several new locations opening each year. The company had expanded so quickly that, in 1993, it went public, offering shares on the New York Stock Exchange (NYSE).
Acquisitions And Bankruptcy
Despite its early success, Schlotzsky’s faced some financial struggles in the late 1990s and early 2000s. The company experienced difficulties maintaining profitability, leading to a significant corporate restructuring. In 2004, the company declared bankruptcy and was acquired by Schlotzsky’s, Inc., a group of investors led by Bristol Group, a private equity firm.
Under new ownership, Schlotzsky’s attempted a comeback, refreshing its menu and expanding its brand presence. In the following years, Schlotzsky’s expanded internationally, and the brand became more well-known outside the U.S. However, the brand still faced challenges related to competition and changing consumer preferences.
The Famous Brands International Era
The acquisition of Schlotzsky’s by Famous Brands International in 2016 marked the beginning of a new chapter for the chain. Famous Brands invested in revitalizing the brand and reimagining the customer experience. By capitalizing on its extensive portfolio of food brands, Famous Brands sought to bring new growth opportunities for Schlotzsky’s, especially in the U.S. market.
Reasons for the Closure of Schlotzsky’s Locations
While Schlotzsky’s has been a beloved brand for many, it has not been immune to challenges in the fast-casual restaurant industry. There have been closures of Schlotzsky’s locations over the years, particularly in the wake of its ownership changes. Several factors have contributed to these closures, including:
1. Financial Struggles and Restructuring
The most notable closures came after Schlotzsky’s filed for bankruptcy in the early 2000s. The financial challenges were a result of poor management and rising operational costs. During this time, many locations had to close to reduce the company’s financial burden and focus on more profitable operations.
2. Changing Consumer Preferences
As with many restaurant chains, Schlotzsky’s has had to contend with changing consumer tastes. The rise of health-conscious eating habits and demand for quick-service, healthier alternatives has made it difficult for traditional fast-food chains to thrive. Schlotzsky’s, known for its sandwiches and pizzas, has had to pivot its menu to keep up with these trends.
Despite these efforts, some of the brand’s locations were not able to keep up with shifting market demands and had to shut down.
3. Competition from Other Fast-Casual Chains
The fast-casual dining segment has become increasingly competitive over the last decade. Brands like Chipotle, Panera Bread, and Jimmy John’s have carved out significant market shares, especially with younger, more health-conscious consumers. Schlotzsky’s faced tough competition from these brands, which offered similar products and catered to a similar demographic. This competitive pressure led to closures of underperforming locations.
4. The Impact of the COVID-19 Pandemic
Like many other restaurant chains, Schlotzsky’s was significantly impacted by the COVID-19 pandemic. With in-person dining restricted, many locations saw a dramatic decrease in foot traffic. Although Schlotzsky’s was able to shift its focus to takeout and delivery, some locations were unable to recover from the loss of business during the height of the pandemic.
The long-term effects of COVID-19 on consumer behavior and restaurant industry operations continue to affect Schlotzsky’s today.
5. Franchisee and Ownership Decisions
As Schlotzsky’s operates with a mix of corporate-owned and franchise locations, some closures can be attributed to decisions made by franchisees or the parent company, Famous Brands International. Franchisees might choose to close underperforming stores due to rising operational costs, lease issues, or failure to meet sales targets. In some cases, Famous Brands may have also decided to close certain locations to focus on consolidating operations and improving overall profitability.
Conclusion
Schlotzsky’s, once a small Austin-based sandwich shop, is now owned by Famous Brands International, a company with a significant presence in the global restaurant market. Over the years, the brand has faced financial challenges, shifting consumer preferences, and intense competition, all of which have contributed to the closure of certain locations. Despite these obstacles, Schlotzsky’s continues to thrive in select markets, and its ownership under Famous Brands International offers hope for future growth and reinvention.
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