Chances are that you know Charleys Philly Steaks, even if the name doesn’t ring a bell. It has traditionally been a stalwart of the mall food court, serving its hot Philly cheesesteaks to shoppers taking a break from their visits to Hollister or The Gap.
But the Columbus, Ohio-based brand a few years ago began taking serious steps to get its concept to stand on its own without the benefit of the captive customer that knew the chain only as part of a shopping center’s food selection. The company developed chicken wings and other products. It opened a drive-thru location. It began working on technology, such as mobile order and pay and loyalty, both of which were added in 2020.
Those efforts appear to be paying off in a big way. The franchised brand opened 63 units last year, all of them traditional locations in strip malls or stand-alone units. But it expects that growth to really take off. It projects 200 openings this year and another 300 the year after that. Not bad for a 690-unit concept. Take it all together, in fact, and Charleys is on pace to nearly double its unit count in just three years. It has averaged less than 4% unit growth for the decade before last year.
“It’s been a lot of change,” said Brian Hipsher, Charleys chief marketing officer. “And the company, honestly, we’re catching up to it.”
Indeed, Charleys is making a relatively rare step by evolving from a mall-focused concept into a stand-alone brand, though one that has certainly been done before. Chick-fil-A, after all, was first known as a mall-centric concept before it became the juggernaut it is today.
Yet it’s a step a growing number of mall brands are taking. While the death of the mall has been exaggerated, retail traffic trends have nevertheless been less-than-favorable for restaurant brands that have made such centers home. Companies like Auntie Anne’s and Cinnabon have been developing more plans for stand-alone units and drive-thrus.
For Charleys, that effort seems only natural. It is, after all, a sandwich concept, and sandwiches do quite well outside of malls.
The brand was founded in 1986 when Charley Shin, then a student at Ohio State University, opened Charley's Steakery near campus with support from his mother—just one year after he tasted his first cheesesteak. The brand soon found malls to its liking and also found a home on military bases. Today it has more 380 mall locations and nearly 100 on military bases.
In 2017, the company decided to expand its menu, believing that would help it work outside the mall. That year, it opened its first Charleys Cheesesteaks and Wings in Florida. In addition to the chain’s traditional menu of grilled subs, fries and lemonade, the chain sells a selection of chicken wings, appetizers and ice cream.
Franchisees opened the concept both in strip centers and stand-alone locations with drive-thrus. “They do quite well,” Hipsher said. “With the pandemic, everyone who had drive-thrus is going crazy.”
Franchisees have jumped on the concept, seeing an opportunity to grow the brand outside the mall. “Charley himself and our franchise community have really looked at the landscape and saw an opportunity,” Hipsher said. “We have a lot of franchisees ready to go. We wanted to test an improved version of ourselves. So we included wings and shakes and found this really works.”
But that evolution presents some challenges. For one thing, the brand must do some actual marketing. Existing outside the mall means customers need to know who you are, something that wasn’t always necessary in a mall. “Brand awareness wasn’t high,” Hipsher said. “For a brand that has 600 locations, we were probably one of the least-known brands out there.”
The company invested more in marketing to improve that awareness and convince customers to give the chain a try.
Third-party delivery has helped, of course. “People don’t have to go to the mall,” Hipsher said. “They can go on DoorDash. That’s made us a lot more visible outside of our traditional locations.”
Charleys has also added a lot of technology. It began on this effort as part of its outside-the-mall evolution. But that effort picked up steam once the pandemic hit, and in the summer of 2020 it introduced mobile order and pay as well as a loyalty program. Charleys expects that program to hit 1 million members by May, a nice milestone for a small chain.
Charleys is also working on kiosks, testing them in three stores. “With labor being a challenge, it kind of comes to the forefront,” Hipsher said. “Can this help? There’s a little more acceptance by our guests. We’re looking for ways we can make it easier to order.” That said, there are some limits with the technology—rules in many of the malls where the chain’s restaurants are located, for instance, don’t necessarily allow for kiosks.
Still, the company’s future appears to be outside the mall, anyway, where it’s entirely up to the brand whether it wants kiosks or not.