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Upper Crust

Move over, sub, hero and hoagie: the sandwich has gone upscale. And for enterprising entrepreneurs, it's the best thing since sliced bread.

The year is 1765. A marathon card-playing session is underway in a London club. One famished player, John Montagu, the fourth Earl of Sandwich, orders a bit of salted beef between two slices of toasted bread. Within a few short years, the tasty and portable sandwich, as it came to be called, was the favorite food of working people all over England.

More than two hundred years later, sandwiches have become an American fast-food staple. Sandwich chains such as Subway and Blimpie have thousands of outlets nationwide; sandwich franchises can even be found in exotic locales like Saudi Arabia and Taiwan. While the market for sandwiches seems to be very close to becoming saturated, according to retail and restaurant marketing consultant Ray Coen, the truth is there's always room at the top for restaurants offering higher quality at a correspondingly higher price. "In every [fast-food] category, after the initial expansion, there comes segmentation, because the only way to grow a category beyond a certain point is for new entries to develop a different position [for themselves]," says Coen. "Upscale sandwich shops are definitely identifying a new segment position."

Like politicians and actors, food items can undergo image makeovers to improve their salability. Take Ruth's Chris Steak House, the wildly successful Metairie, Louisiana-based steakhouse chain. When Ruth's started franchising in 1976, many felt it would drown in a sea of steakhouse competitors, all offering essentially the same food. But Ruth's took the steakhouse concept upscale, serving gourmet beef on a white tablecloth with a good bottle of wine. While a steak at Ruth's was more expensive than one at, say, Sizzler, diners with a taste (and budget) for quality food flocked to Ruth's in droves.

"The improved national economy is giving consumers the confidence to go out and spend money on a better quality sandwich or meal," says Coen. "People are simply enjoying the money they're making. As long as things go well, these upscale stores will continue to proliferate. Even when the economy falters, the stronger sites will survive and prosper."

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This article was originally published in the June 1999 print edition of Entrepreneur with the headline: Upper Crust.

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