Restaurant Chains Dip Into Soup

Two San Diego-based restaurant chains have shunned traditional main courses, including beef and fish, in favor of meals consisting of home-style soups, unlimited salad bars and health-conscious desserts.

Another flaky fad from Southern California? Maybe. But restaurant industry analysts believe that American diners are ready for meals without main entrees.

“It could be the next generation of fast food,” according to Joan Lang, executive editor of New York-based Restaurant Business magazine. “There’s definitely a market for that kind of thing . . . especially in the Sun Belt and the big cities. It could be a real go-go kind of a situation.”

Craving for More

Slightly more than 60% of consumers dine at least once a month at restaurants with salad and food bars, according to a 1987 survey conducted by the Washington-based National Restaurant Assn. A like number of consumers wish that self-serve salad and food bars were more widespread, according to the NRA survey.

The NRA survey also suggested that 70% of the nation’s consumers believe that salad and food bars will satisfy their hunger for good values.

“The popularity of salad and self-serve food bars among consumers is undisputed,” according to the NRA. “Word of a good food bar will bring in new customers.”

But simply installing a salad or food bar is not enough to attract new customers and retain old ones, according to the NRA. Consumers are looking for a salad or food bar that “stands out from the crowd,” according to a recent article in the NRA’s monthly magazine.

Both San Diego chains, Soup Exchange and Souplantation, offer home-style soups, salad bars with more than 30 daily items and a variety of seasonal fresh fruit and fresh baked goods.

Salad-bar offerings include the traditional--iceberg lettuce, sliced cucumbers and carrots--and the offbeat--chow mein noodles, azuke sprouts, guacamole and chicken marinara. Salad doesn’t mean only greens: Both chains include pasta, rice, chicken and potato offerings.

Soup Under Scrutiny

Restaurant operators also are paying closer attention to the soups on their menus because older consumers, who have the most discretionary spending power, make up the group most likely to order soup. Diners who are 55 or older accounted for just 22% of restaurant visits during 1986, but accounted for 42% of soup orders, according to the NRA.

Although just 1% of fast-food orders placed in 1986 included soup, soup orders rose by 15% from 1984 to 1986, according to the NRA. Overall, fast-food orders increased by just 9% during that period, according to the NRA. Soup is more common at mid-scale and upscale restaurants, where it was ordered on 8% and 13% of occasions, respectively.

“Soup has come of age,” according to Ken Frydman, food editor of Nation’s Restaurant News. Soup’s move to the front burner has been chronicled in recent trade magazine articles with headlines such as “Soup Getting Hotter” and “The Great Soup Wars.”

Despite its name, Soup Exchange’s revenue stream is driven largely by the salad bar.

Soup will generate just 15% of the chain’s $25.6 million in 1988 revenue. Salads--green, pasta and otherwise--will generate the rest. During one week, a typical Soup Exchange will go through 1,440 heads of iceberg lettuce, 972 pints of cherry tomatoes, 1,300 melons, 2,376 cucumbers and 924 broccoli stalks.

“We turn soup and salad into an entree,” said Scott King, a founder and vice president of operations for Soup Exchange, which has 17 company and franchise restaurants in Southern California and Nevada. “We’ve proven (in Southern California) that soup, salad and dessert are a bona fide meal.

‘Not a Fad’

Michael P. Mack, president of Souplantation, with 12 company-owned restaurants in San Diego, Orange and Los Angeles counties, acknowledged that diners in the Northeast and Midwest might initially view soup-and-salad restaurants as “just another crazy idea from California.”

Mack maintained that they “are not a fad . . . . We’re part of a larger trend toward healthy food that’s fun to eat.”

But, with the exception of a Soup Exchange in Las Vegas, neither chain has ventured out of Southern California, a fact that concerns some industry observers.

“They’ve been talking about (expansion), but they’re not much beyond where they were years ago,” according to Frydman. “The time may indeed be right, but I’d suggest that they investigate the market slowly.”

Soup Exchange and Souplantation will run into competition wherever they expand, Frydman said. Boston’s 12-year-old Souper Salad chain already has 12 locations in Massachusetts, and chains with similar concepts have been expanding their presence in Dallas, Denver, Washington and other large cities.

Soup Exchange, which has 17 company-owned and franchise restaurants in Southern California and Nevada, will open company-owned restaurants in Las Vegas, Denver and Dallas during the next two years. Soup Exchange also has signed a 100-unit franchise agreement with the San Francisco-based owners of Magic Pan International.

‘A Natural Extension’

Magic Pan, a privately held company, has begun construction on a handful of restaurants in Florida, according to Tony Baldino, vice president of operations. The Soup Exchange franchise agreement is “a natural extension” for the company that owns about 50 Magic Pans, he said.

Souplantation has opted to expand through company-owned locations rather than franchising, according to Mack, including outlets in Beverly Hills, Marina del Rey and the San Francisco Bay Area, during the coming year. The company has attracted $15 million from investors such as T. Rowe Price Threshold Fund; Los Angeles-based Brentwood Associates; Canaan Venture Partners, formerly a wholly owned subsidiary of General Electric, and Rockefeller & Co.

Executives at the two companies declined to discuss profitability.

However, a typical soup-and-salad bar restaurant--about 7,000 square feet--serves 1,400 customers daily, according to Restaurant Business magazine. Unit sales have climbed to about $2 million annually, which “yields a healthy pretax profit of 15% to 20%,” according to the magazine.

Contrasted with full-menu restaurants, soup-and-salad outlets enjoy relatively low operating costs, according to Frydman, because food preparation, although labor intensive, can be left to relatively lower-cost help.

“We’re not ordering cases of Beefeaters (gin), expensive steaks and lobsters, so our food costs are relatively low,” said King, the Soup Exchange founder and vice president.

Typical Checks of $6

Typical checks at Souplantation and Soup Exchange restaurants total about $6 a customer, which pits the chains against better-known steakhouse chains such as Sizzler and Western Sizzlin, according to Steven Rockwell, a Baltimore-based restaurant industry analyst with Alex Brown & Sons.

Women, because of dietary and health concerns, were quicker than men to embrace the soup-and-salad concept, and women between the ages of 25 and 49 still account for a hefty percentage of Soup Exchange’s clientele, King said.

Soup Exchange, the older of the two chains, served its first bowl of chicken noodle soup in 1976, shortly after King and co-founder John Turnbill dreamed up the concept while working as waiters in a La Jolla steakhouse.

Two other employees at that same steak house founded Souplantation. Mack and Tony Brooke, who had been employed as management consultants in England, acquired most of privately held Souplantation’s outstanding shares in 1984.