McAlister's Deli: Expanding and Preserving Southern Identity

Since its debut in Oxford, Mississippi in 1989, McAlister's Deli, owned by Focus Brands, has expanded to 529 restaurants. Pictured is its West Midtown branch in Atlanta, Georgia.

Franchising and growth

Launched in Oxford, Mississippi in 1989, the city that writer William Faulkner called home, McAlister's Deli has expanded to 529 restaurants in 29 states. But Michael Freeman, chief brand officer for the company, which is based in Alpharetta, Georgia, said they've stayed true to their small-town roots after more than 30 years.

Building on its Southern heritage, McAlister's Deli sticks to its small-town roots and focuses on suburban and rural locations and mid-sized cities rather than large metropolitan areas.

Franchising has been key to McAlister's Deli's growth. Of the 529 restaurants, 497 are franchise-owned, while just 32 are company-owned.

It is owned by Focus Brands, an affiliate of US private equity firm Roark Capital Group, which operates a number of restaurant chains including Moe's Southwest Grill, Jamba Juice, Cinnabon and Schlotzsky's. McAlister's Deli franchisees have access to Focus Brands' experts in real estate, construction, marketing support and its own supply chain.

Growth and Success

Why has franchising worked so well for McAlister's Deli? Freeman explained that their restaurants have "remarkably simple operations - they don't require grills or fryers, which allows franchisees to save resources. "

In addition, they rely on several revenue streams, including drive-through, takeout, catering, online ordering, pickup and delivery. In fact, revenues at their restaurants average $1.9 million in net sales for the fiscal year 2022.

Multiple revenue sources prevent "one-dimensionality," Freeman said, and make them flexible and adaptive.

On a list of the top 50 fast-food restaurants (QSRs) in a leading restaurant trade magazine, its growth remained steady but lower than many of its competitors. For example, it opened 27 new restaurants in 2022, which is just over 5%.

While expanding further on its modest growth, Freeman described it as a "strategy. We're growing at the right speed, and we don't want the brand to grow too fast. "

Freeman also pointed out that they have opened 21 new locations since January 2023, but said they have 14 more in the pipeline to open by 2023. Then 35-40 more McAlister's Deli restaurants are expected to open in 2024, so they're clearly increasing their growth rate.

Success in multiple locations

Freeman said many of their restaurants are thriving in suburban environments because "they offer a broad menu and a family-friendly atmosphere of genuine hospitality." In addition, real estate in suburban and rural areas is less expensive than in a large metropolitan area, and they rely on their existing supply chain.

They also thrive in small towns, where their menu of sandwiches, soups and baked potatoes fills in the gaps. In May 2023, the trade magazine Restaurant Business noted that when they opened a branch in London, Kentucky, a city of 8,000 people, the mayor and local economic development manager attended the opening ceremony. That probably wouldn't happen in New York or Chicago.

They are, however, in top-10 cities like Houston and Dallas, and mid-sized cities like Orlando, Atlanta and Charlotte.

Menus and advertising

Their features include a 13-layer club that uses 13 layers of smoked turkey, Black Forest ham, bacon, cheddar and Swiss cheese, McAlister's French dish consisting of Black Angus beef and Swiss cheese on a baguette, and their classic sweet tea that is brewed throughout the day to maintain freshness.

Health-conscious guests can choose from a variety of options including vegetarian meals, small portions, fat-free dressings and low-fat soups.

It's not as well-known as comparable chains like Chick-fil-A or In-N-Out Burger. Freeman recognized that TV advertising is too expensive, so they rely on a variety of other channels to raise their profile, including social media, YouTube, TikTok and marketing through their app.

Guest reviews

Yelp users have commented positively and critically about McAlister's Deli. At one of his restaurants in Houston, Bill from Addison, Illinois, said: "Great soups, large portions and good prices." But Abbi, of Houston, complained that employees got her order wrong for the second time in a row. But Elle from Houston wrote that the sandwiches were delicious, fresh and filling.

Future plans

When asked what changes to expect from McAlister's Deli in the future, Freeman said 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 a healthy meal to guests who choose to eat vegetarian." Today's consumers want "hassle-free convenience because they are so time-constrained," he said.

When asked about the keys to McAlister's Deli's continued success, Freeman said: 1) Continuing to build on the foundation of value and diversity for every customer; 2) Protecting the profitability of its franchisees; and 3) Ongoing world-class support from Focus Brands.