TOGO’S CASE STUDY - · PDF fileand Baskin Robbins brands—had decided the West...
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www.mainsailpartners.com Togo’s was founded in 1971 as a local sub-sandwich shop in San Jose, Calif. to serve San Jose college students. The shop’s big, meaty sandwiches quickly gained fame in the area, and Togo’s opened a sec- ond location nearby in 1974. Franchising began in 1977. Over the years, the chain added new menu items, grew quickly and, in 1997, was acquired by food giant Dunkin’ Brands Inc. But by 2006, Massachusetts-based Dunkin—owner of the global Dunkin’ Donuts and Baskin Robbins brands—had decided the West Coast sandwich chain was no longer a good fit. The next year, former Baskin Robbins President Tony Gioia approached Mainsail Partners, the San Francisco growth-equity firm, to acquire Togo’s and revitalize the company, which had been neglected under Dunkin’s ownership and strayed from its quirky, California roots. Key priorities included building out a new management team, relaunching the storied Togo’s brand and expanding into new markets. CHALLENGES Gioia and Mainsail faced several challenges in rejuvenating Togo’s venerable, 40-year old brand. First and foremost, Togo’s needed to update its food offerings and refresh its stores—an effort touching everything from the core menu to store décor to staff uniforms. Togo’s management team was also in transition at the time, making these changes even more difficult. Finally, Togo’s had to reach out and nurture a somewhat distant franchise base so franchise owners would buy into the changes and execute the turnaround. VALUE CREATION In partnership with Togo’s management, Mainsail has helped create significant value for the company, its shareholders and franchise owners. Major focus areas included: • Management. After the buyout, Togo’s was able to recruit experienced executives for key vice-president roles, including VPs for franchise development, marketing and operations. Gioia became chairman and CEO. The new executive team, and Mainsail, initially focused on refin- ing Togo’s overall corporate and retail strategy, and its core mission, before starting new growth initiatives. • Branding/operations. The new management team re-launched the Togo’s brand, including unveiling a new Web site and an updated brand statement. It described Togo’s as a “West Coast original” serving “big, made-to-order sandwiches stuffed with the freshest ingredients.” Togo’s also revamped its menu to include new items like healthy wraps and toasted sandwiches; implemented a new, more-modern design for retail stores, including the ability for customers to actually see sandwiches being made; and created a new company logo. • Franchise improvements. Togo’s has focused heavily on franchise development, including launching a new Web portal to engage potential franchisees and a powerful lead-management software plat- form to recruit them. The company partnered with Franchise America Finance and the Bancorp Bank to establish a $15 million line of credit to provide franchisees access to capital for store remodels and new restaurants. The company also moved into new markets, expanding Togo’s footprint to smaller, secondary markets in core states, where stores have performed well. Finally, Togo’s has opened compa- ny-owned and operated stores to showcase best-in-class training and operations. • Technology. In addition to new Web sites for Togo’s customers and franchisees, the company has implemented other front- and back-end technology improvements to streamline operations and improve the customer experience. The new customer Web site is now optimized for mobile phones and the company is in the process of rolling out on- line ordering. The company also is transitioning to a new cloud-based, point-of-sale system and has launched an online-training platform for store employees. RESULTS • 35 franchise agreements signed in 2012, 11 new restaurants opened • Ten consecutive quarters of year-over-year average same-store sales growth through the end of 2012 • As reported by franchisees, increased profitability by an average of 200 cumulative basis points between 2009-2012 • Togo’s base of Facebook fans has grown to over 50,000 from 15,000 in less than a year Based on this momentum, Togo’s is on track to open more than 30 new stores in 2013. Clearly, there is a lot to “like” about the new Togo’s. TOGO’S CASE STUDY
Transcript of TOGO’S CASE STUDY - · PDF fileand Baskin Robbins brands—had decided the West...
www.mainsailpartners.com
Togo’s was founded in 1971 as a local sub-sandwich shop in San Jose, Calif. to serve San Jose college students. The shop’s big, meaty sandwiches quickly gained fame in the area, and Togo’s opened a sec-ond location nearby in 1974. Franchising began in 1977. Over the years, the chain added new menu items, grew quickly and, in 1997, was acquired by food giant Dunkin’ Brands Inc. But by 2006, Massachusetts-based Dunkin—owner of the global Dunkin’ Donuts and Baskin Robbins brands—had decided the West Coast sandwich chain was no longer a good � t. The next year, former Baskin Robbins President Tony Gioia approached Mainsail Partners, the San Francisco growth-equity � rm, to acquire Togo’s and revitalize the company, which had been neglected under Dunkin’s ownership and strayed from its quirky, California roots. Key priorities included building out a new management team, relaunching the storied Togo’s brand and expanding into new markets.
CHALLENGESGioia and Mainsail faced several challenges in rejuvenating Togo’s venerable, 40-year old brand. First and foremost, Togo’s needed to update its food o� erings and refresh its stores—an e� ort touching everything from the core menu to store décor to sta� uniforms. Togo’s management team was also in transition at the time, making these changes even more di� cult. Finally, Togo’s had to reach out and nurture a somewhat distant franchise base so franchise owners would buy into the changes and execute the turnaround.
VALUE CREATIONIn partnership with Togo’s management, Mainsail has helped create signi� cant value for the company, its shareholders and franchise owners. Major focus areas included:
• Management. After the buyout, Togo’s was able to recruit experienced executives for key vice-president roles, including VPs for franchise development, marketing and operations. Gioia became chairman and CEO. The new executive team, and Mainsail, initially focused on re� n-ing Togo’s overall corporate and retail strategy, and its core mission, before starting new growth initiatives.
• Branding/operations. The new management team re-launched the Togo’s brand, including unveiling a new Web site and an updated brand statement. It described Togo’s as a “West Coast original” serving “big, made-to-order sandwiches stu� ed with the freshest ingredients.” Togo’s also revamped its menu to include new items like healthy wraps and toasted sandwiches; implemented a new, more-modern design for retail stores, including the ability for customers to actually see sandwiches being made; and created a new company logo.
• Franchise improvements. Togo’s has focused heavily on franchise development, including launching a new Web portal to engage potential franchisees and a powerful lead-management software plat-form to recruit them. The company partnered with Franchise America Finance and the Bancorp Bank to establish a $15 million line of credit to provide franchisees access to capital for store remodels and new restaurants. The company also moved into new markets, expanding Togo’s footprint to smaller, secondary markets in core states, where stores have performed well. Finally, Togo’s has opened compa-ny-owned and operated stores to showcase best-in-class training and operations.
• Technology. In addition to new Web sites for Togo’s customers and franchisees, the company has implemented other front- and back-end technology improvements to streamline operations and improve the customer experience. The new customer Web site is now optimized for mobile phones and the company is in the process of rolling out on-line ordering. The company also is transitioning to a new cloud-based, point-of-sale system and has launched an online-training platform for store employees.
RESULTS• 35 franchise agreements signed in 2012, 11 new restaurants opened• Ten consecutive quarters of year-over-year average same-store
sales growth through the end of 2012• As reported by franchisees, increased pro� tability by an average of
200 cumulative basis points between 2009-2012• Togo’s base of Facebook fans has grown to over 50,000 from 15,000
in less than a year
Based on this momentum, Togo’s is on track to open more than 30 new stores in 2013. Clearly, there is a lot to “like” about the new Togo’s.
TOGO’S CASE STUDY
