Schlotzsky's

Schlotzsky's operates in the $1.2 trillion Limited Service Restaurant market. The American fast casual chain is known for sourdough sandwiches and pizzas and has pursued a modern repositioning built around its long operating history, unit economics, and updated store formats.

Don and Dolores Dissman opened Schlotzsky's in 1971 on South Congress Avenue in Austin, Texas. The original menu centered on The Original, an 8 inch round sandwich inspired by New Orleans muffulettas and made with mixed meats, cheeses, black olives, dressing, and toasted sourdough bread. Franchising began in 1976, followed by the first franchised restaurant in Bryan and College Station, Texas, in 1977. In 1981, the Dissmans sold their 100 store company for less than $3 million to Austin real estate investors John and Jeff Wooley and Gary Bradley. The Wooley brothers expanded the menu with specialty pizzas, toasted wraps, salads, and soups. Schlotzsky's became a public company on December 15, 1995, and traded under the NASDAQ ticker BUNZ until 2004.

Schlotzsky's is headquartered in Atlanta, Georgia. In March 2024, it had 337 United States locations. Its 2025 Franchise Disclosure Document reports 308 total units, including 280 franchised restaurants and 28 company owned restaurants. Focus Brands acquired Schlotzsky's on November 21, 2006, and changed its name to GoTo Foods on February 21, 2024. GoTo Foods is a private equity affiliate of Roark Capital Group and also oversees Auntie Anne's, Cinnabon, Jamba, McAlister's Deli, Moe's Southwest Grill, and Carvel. Cinnabon products are now included at many Schlotzsky's locations. The brand competes through its sourdough bread, broad menu, and position in the $46 billion fast casual segment.

The global Limited Service Restaurant market was valued at US$1.2 trillion in 2024 and is projected to reach US$1.4 trillion by 2030, with a 3.2% compound annual growth rate. Fast casual represents a $46 billion segment and is projected to grow at a 3.2% compound annual growth rate. The fast food restaurant segment is expected to reach US$626.8 billion by 2030, with a 3.9% compound annual growth rate. The sandwich and sub sandwich restaurant industry exceeded $45 billion in 2023, supporting demand for Schlotzsky's core offering.

Consumers continue to seek quick, affordable meals, online delivery, healthier choices, and customizable menus. Delivery sales in the limited service sector rose by more than 20% in the past year. Schlotzsky's addresses these preferences with salads, soups, customizable sandwiches, fresh ingredients, online ordering, and updated payment systems. About 85% of current locations have a drive thru, and virtually all future locations are planned to include one. Social media, digital marketing, franchising, sustainability, and energy savings also influence the category. Schlotzsky's differentiates itself through its sourdough bread, established brand recognition, and Cinnabon co branding in a fragmented and competitive market.

The initial franchise fee is $35,500. Qualifying veterans and members of the Armed Forces pay $20,000. The 2025 FDD reports a total initial investment of $1,348,545 to $1,951,300. Other reported ranges are $568,600 to $1,265,340, $648,000 to $1,951,000, $634,165 to $1,904,550, and $714,400 to $954,400 for a new restaurant with a Cinnabon Express Bakery under a 2019 FDD. Costs vary by location, restaurant size, format, and regional construction expenses.

Construction and build out generally cost $293,050 to $526,500. Equipment costs $87,750 to $170,820, millwork costs $40,500 to $53,820, and furniture costs $17,550 to $35,100. Menu boards, graphics, and interior signs cost $12,000 to $22,600, while exterior signs cost $20,400 to $46,800. Architect and engineer fees range from $21,200 to $37,300, and permits range from $1,800 to $11,000. First month rent is estimated at $5,000 to $10,800. Grand opening marketing costs $15,000 to $25,000. Legal and accounting fees range from $2,500 to $10,000, insurance costs range from $1,825 to $9,100, miscellaneous opening costs and office supplies range from $500 to $1,500, and security deposits range from $500 to $8,000. Training travel and living expenses range from $10,000 to $40,000. Initial inventory is estimated at $15,000 to $21,800, with another source reporting $7,500 to $21,800. A Cinnabon Express Bakery can require an additional franchise fee of up to $8,000 and build out costs of up to $40,100, with another source reporting build out costs of $23,600 to $40,100. Franchisees should also reserve $39,000 to $51,000 for the first three months of operation.

Schlotzsky's requires $500,000 in liquid capital and generally requires a minimum net worth of $1.5 million. The royalty fee is 6% of gross sales. The marketing and advertising fee is currently 4% of net sales and may increase to 5% of gross sales. Schlotzsky's has a Loan Activity Score of 49, rated Fair. The required capital makes the concept more suitable for experienced entrepreneurs, multi unit operators, and investors with significant financial resources. GoTo Foods, an affiliate of Roark Capital Group, provides corporate support and related brand resources.

Restaurant operations center on The Original sandwich, specialty pizzas, toasted wraps, salads, soups, and Cinnabon products. Schlotzsky's introduced tech driven prototypes in the fourth quarter of 2020 to support off premises sales. The Design 1000 includes a drive thru window on each side and a separate curbside pickup window. The Design 1800 includes one drive thru and 35 dine in seats. Both formats use smaller footprints while emphasizing drive thru service. Drive thru access is present at approximately 85% of current locations and is planned for virtually all future restaurants.

Owners are not required to manage daily operations themselves, but Schlotzsky's advises against absentee management. Each franchisee must appoint a primary contact with decision making authority and responsibility for restaurant operations. Required trainees must complete management training before opening. One source reports 36 to 200 hours of on the job training and 18 to 50 hours of classroom instruction. Another source reports 240 hours of on the job training and 50 hours of classroom training.

SCHLOTZSKYS FRANCHISE LLC provides support with restaurant development, training through a national training center, communication with franchisees, and regional and national franchisee meetings. The franchisor also develops and monitors supplier and distributor relationships and coordinates national and regional advertising programs. Franchisees receive an Area of Protection with specified protected rights, but Schlotzsky's Bakery Café does not grant a traditional exclusive territory. Other Schlotzsky's restaurants may be developed within the broader market. In September 2024, the brand signed a five unit agreement for the Detroit metro area, with the first location expected by mid 2025. This reflects an emphasis on multi unit development.

The 2023 FDD reports fiscal year 2022 results.