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Souplantation Parent ‘In Great Place to Be’ Now

As consumers adjust spending to their recession-era budgets, dinner out is taking a different tone. Before it was fancy drinks and steak. Now it’s a trip through the salad bar at Souplantation.

But even with people going back for seconds and thirds, parent company Garden Fresh Restaurant Corp. is holding its own, reports CEO Michael Mack.

“There’s been a real move to value,” Mack says. “We’ve always been a great value.”

Of course, not everyone ends up at Mack’s soup, salad and pasta eateries. “There are also people trading down right past us, all the way to fast-food,” he said.

Garden Fresh has 111 restaurants in 15 states. Ten are in San Diego. It employs 5,500 people.

Outside of Southern California, where the Souplantation name has its roots, stores go under the name Sweet Tomatoes. While privately held, Garden Fresh measures itself against publicly traded fast-casual dining establishments such as Chili’s, Olive Garden and California Pizza Kitchen.

“We’re not aware of a publicly held company that has same-store sales performance as good as ours over the same period of time,” Mack said recently at his Rancho Bernardo office.

Garden Fresh’s same-store sales for the last quarter of 2008 were flat compared to one year ago. Same-store sales for the year rose 3.2 percent over the previous year, Mack said. Garden Fresh does not disclose financial information, though Mack pegged sales at more than $300 million. It was $245 million in 2005, when the chain’s previous owners sold it to Sun Capital Partners of Boca Raton, Fla.

By offering value and healthy fare, Garden Fresh is in “a great place to be right now,” said Stephen Zolezzi, an executive with the county Food & Beverage Association.

Eye On Performance

Garden Fresh is not closing stores, though it is keeping close watch on their performance, Mack said. He said the company hopes to add three to five restaurants per year. It opened a store near Palm Springs in December, and it has a store under construction in Orlando, Fla.

“We find that the real estate deals are very, very attractive” these days, Mack said. “Landlords are offering larger concessions than I’ve ever seen.

“They’re being nicer to me than they’ve ever been,” the executive added with a grin.

But it’s no time for half-baked expansion plans. “We’re doing it very thoughtfully,” Mack said, adding that the company feels it best to expand in existing markets, where brand awareness is high.

“I don’t think people are willing to try something new right now,” Mack said.

Tapping current markets means Garden Fresh can take advantage of company investments in an area, from central kitchens to marketing.

Zolezzi, the restaurant association executive, would not go as far as to say expansion is a safe strategy for the times , but he said going into existing markets is “safer” than breaking into new territory.

Zolezzi also said companies with access to cash are in a position to grow.

With outlets spread over the Pacific Northwest, Southwest, Midwest and southeastern United States, Garden Fresh has a front-row seat on the rickety economy. Concentrations of restaurants in California and Florida are doing well, Mack said. So is Arizona, though the housing crisis is affecting sales in Phoenix.

Cost-Cutting Measures

Garden Fresh is fighting to stay ahead with cost-cutting initiatives , and has a potent weapon in e-mail.

The company has electronic addresses for 750,000 customers. People who sign up for the company’s “Club Veg” program get discount offers. Garden Fresh gets a way to stimulate sales on very short notice.

Says Mack, “I think it’s helped us, enormously, to get through what’s going on in this economic cycle.”


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