Launched in Oxford, Mississippi in 1989, the town that novelist William Faulkner called home, McAlister’s Deli has expanded to 529 restaurants in 29 states. But Michael Freeman, its chief brand officer who is based in Alpharetta, Ga., said that it has stayed true to its small-town roots over 30 years later.
Based on its Southern heritage, McAlister’s Deli clings to its small-town roots, and focuses more on suburban and rural locations as well-as mid-sized cities rather than large metropolises.
Franchising has been key to McAlister’s Deli’s growth. Of its 529 eateries, 497 are franchised and only 32 are company-owned.
It’s owned by Focus Brands, an affiliate of the American private equity firm, Roark Capital Group, which operates a slew of restaurant chains including Moe’s Southwest Grill, Jamba Juice, Cinnabon and Schlotzsky’s. McAllister’s Deli’s franchisees have access to Focus Brands’s specialists in real-estate, construction, marketing support, and its in-house supply chain.
Why does franchising work so well for McAlister’s Deli? Freeman explained that its eateries “have surprisingly simple operations—they don’t require grills or fryers, meaning that franchisees can save on resources.”
Additionally, it relies on multiple revenue streams including dining-in, takeout, catering, online ordering, pickups and delivery. Indeed, revenue at its units averaged $1.9 million in net sales for the fiscal year 2022.
The multiple revenue streams prevent it from being “one-dimensional,” Freeman said, and keeping it nimble and flexible.
But on a list of top 50 quick-service restaurants (QSR’s) in a leading restaurant trade magazine, its expansion remained steady but lower than many of its competitors. For example, in 2022, it opened 27 market locations, or just over 5%. Nonetheless, Freeman called it “steady unit growth.”
Expounding more on its modest expansion, Freeman described it as a “strategy. We grow at a proper rate, and we don’t want the brand to grow too rapidly.”
Freeman also pointed out that it has opened 21 new locations since January 2023, but said it has 14 more in the pipeline set to open by year 2023. Then in 2024, he said to expect another 35 to 40 McAlister’s Deli so it’s obviously picking up the pace on growth.
Freeman said that many of its locations thrive in suburban environments because it “offers a broad menu and a family-friendly environment of genuine hospitality.” Moreover, real-estate in suburban and rural areas are less expensive than in a major metropolis and rely on its existing supply-chain.
It also thrives in small towns where its menu of sandwiches, soups, and stuffed baked potatoes resonate. Restaurant Business, a trade magazine, noted in May 2023, that when it opened an outlet in London, Ky, a town of 8,000 people, the mayor and local head of economic development participated in the opening ceremony. That likely wouldn’t happen in New York or Chicago.
And yet it is located in top 10 cities such as Houston and Dallas, and mid-sized cities such as Orlando, Atlanta, and Charlotte.
Its specialties include its 13-layer club, which is stacked with 13 layers of smoked turkey, Black Forest ham, bacon, cheddar and Swiss cheese, its McAlister’s French Dip, consisting of Black Angus roast beef and Swiss cheese on a baguette, and its classic sweet tea, which is brewed throughout the day to ensure freshness.
And health-conscious guests can choose a variety of options including vegetarian fare, smaller portions, fat-free dressings and low-fast soups.
But it’s not as well-known as comparable chains such as Chick-fil-A or In-N-Out Burger. Freeman acknowledged that TV ads are too costly so to raise its profile it relies on a host of other vehicles including social media, YouTube, TikTok, and marketing through its app.
Yelp consumers had praise and criticism for McAlister’s Deli. At one of its Houston locations, Bill from Addison, Ill. exuded, “Great soups, great portions and great prices.” But Abbi from Houston complained that for the second time in a row staff made mistakes on her order. But Elle from Houston wrote that the sandwiches were delicious, fresh and filled her up.
Asked what changes to expect from McAlister’s Deli in the future, Freeman replied that “We’re investing in digital options and data capture so the app can ask customers if they want to repeat their last order, or offer healthy items to guests who chose vegetarian fare.” Most modern consumers desire “friction-less convenience because they’re so time-sensitive,” he said.
Asked the keys to McAlister’s Deli’s continued success, Freeman replied: 1) Continuing to lean on value and variety for each customer; 2) Protect the profitability of its franchisees; 3) Continued world-class support from Focus Brands.
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