Carving a new slice of business

By Mark Hansel

Friday, April 10, 2009 | 2 a.m.

Reno-based Port of Subs recently introduced its Sliced-Fresh Grillers hot sandwiches with the biggest new product launch campaign in its history.

Some companies have spent recent months just trying to survive, but Port of Subs has aggressively moved forward with a bold new concept it hopes will help maintain or even increase its market share.

“Many companies, small or large, make the mistake that when times are tough of pulling the plug on advertising or trying to run labor a little too tight,” said Mike Powell, Port of Subs president. “While we certainly make every effort to be as lean as we can, it has always been a core business philosophy not to cut portions or product quality and to not reduce our advertising budget.”

Port of Subs has actually gone in the opposite direction by aggressively promoting the new hot menu, which offers customers a choice of five sandwiches for lunch or dinner and three breakfast grillers in stores that offer breakfast service.

The company has spent $100,000 on its initial advertising campaign and will follow that with a similar promotion in a few weeks.

When all of the costs are added up, the company will have spent about $700,000 from the time it first considered upgrading its hot sandwich offerings 18 months ago.

Although that cost will not rival the aggressive national campaigns of major restaurant chains, it is a sizable investment for a regional company with about 150 franchises.

Port of Subs has always offered hot sandwiches, but previously they were microwaved and, by Powell’s own admission, were not competitive with other hot sandwiches on the market.

Powell said the company felt it had an edge over many competitors because its meats were sliced to order, but that advantage was lost in the hot-sandwich market because of the equipment.

By upgrading to grills, he says the company offers the same freshly sliced meats that are as good hot as they are cold.

“It’s an entirely new product and preparation procedure for Port of Subs,” Powell said.

Last year the company asked its advisory council, which is made up of franchisees, to approve an expenditure of funds to try the grillers in two markets — Palm Springs, Calif., and Boise.

The company has stores in Arizona, California, Nevada, Idaho, Oregon, Utah and Washington, so the goal was to make sure the sandwiches appealed to customers in both warm- and cold-weather markets.

Powell said company officials were fairly confident the new concept would be well-received, but was not ready to make a franchisewide commitment until the tests were completed.

The response was so positive, Powell says, that the company decided to purchase 190 grill presses in December and began to roll the grillers out companywide in March. Grillers are available at all but three stores.

Grillers are served on a choice of bread and are available with hot pastrami, Italian, grilled chicken, N.Y. steak and cheese and barbecued pulled pork for lunch or dinner and sausage, egg and cheese; smoked ham, egg and cheese; and bacon, egg and cheese for breakfast.

Unlike many national chains, Powell says most Port of Subs franchisees are individuals or couples, some of whom own two or three franchises, but there are no large franchise groups.

Franchise costs vary depending on the size and location of the restaurant, but all-in operating costs for most new owners are $250,000 to $275,000. Prospective owners must meet the application requirements and must have a net worth of at least $250,000 to $80,000 in liquid assets.

Powell said the company continues to experience measured growth and has expansion opportunities in most of the markets it now operates in.

Mark Hansel covers retail and marketing for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4069 or at [email protected].