From its start in Virginia Beach, Va., Zero's Subs is now in seven states and two international markets, with more growth planned.

Thirty-nine years ago, a group of cousins -Gene Schmidt, John Schmidt, David Miele and Martin Palacios from Virginia Beach, Va. -started a mom-and-pop sub shop. At its inception, the cousins knew they wanted to serve oven-baked sandwiches, but claimed they had “zero money,” thus, they named the business Zero’s Subs. Initially serving only sandwiches, Zero’s has expanded its menu to offer buffalo wings, oven-baked pizza, salads and low-fat wraps.

Setting itself apart with its many choices, Zero’s commitment to quality remains the same, Director of Operations Elizabeth Fitzpatrick says. “Even though we are now focused on making ourselves a national chain, we won’t compromise our quality of food and service,” she says. “We understand the trend to go healthy. Zero’s Subs is a healthier concept due to the fact that we bake our products, use low-sodium meats, fresh sliced vegetables and we offer alternatives such as baked french fries and chips.”

Today, Zero’s has more than 67 franchise stores in seven states, and is planning to open nine more. It also has two stores in China and five in New Zealand. Fitzpatrick spoke with Food and Drink recently about Zero’s success in the market and how it is adapting to market changes.

Food and Drink: Tell us about Zero’s position in the industry.
Elizabeth Fitzpatrick: We currently have two corporate offices -one in Virginia and one in Southern California. We have a national presence with the ability to fully service those interested in franchising in the East and West. Having a corporate office in California enables us to have a hands-on approach to the buildout and operations of the new Zero’s stores in the West. With both corporate offices, we are conscious of the different trends in different regions of the country.

The president of Zero’s Subs, Martin Palacios, has been with the company since its inception. His main focus is to continue the tradition of Zero’s high quality of food, as well as bolstering the relationship with each franchisee to better serve the public’s needs. While Mr. Palacios makes the company more successful from the East Coast, the West Coast corporate office is focused on growing the company by ensuring consistency in all aspects of the food, look, design and operations for all franchisees who come into the Zero’s family. The two offices collaborate on marketing issues, as well as more effective communication between corporate and our franchisees.

FAD: How do you train your franchisees?
EF: Training is a big part of the Zero’s concept. We work with real estate professionals to help the franchisee find a store location. Pepsi, through Spectra Corp., will run a comprehensive demographic study of the area around the site to see if it can be a successful (location).

We have two phases of training: First, the franchisee attends training at one of the corporate training facilities for two weeks. Then, at the time of opening, corporate will send a trainer to the store for two weeks to make sure that the franchisee is running their store as efficiently as possible.

FAD: How is Zero’s adapting to industry challenges?
EF: Every time you pick up a magazine pertaining to the franchise industry, you hear more about the specific demands made by today’s customers. Three issues that are important to the consumer are “quick, delicious, choices” -Zero’s Subs’ new slogan. We have improved and adapted our concept to fit the needs of today’s ever-changing society. We are using new technology involving convection ovens, which speeds up the cooking process. A sandwich can be baked in under a minute and a pizza in about five minutes.

We are a healthy concept -we do not use fryers. We serve salads and wraps with quality meats. We also have delicious vegetarian sandwich choices. We’ve recently added a kid’s meal to our menu. Zero’s understands the consumer is busy. We have delivery and catering options. We provide many choices under one roof for quick service.

FAD: What does the future look like for Zero’s?
EF: We are currently developing Zero’s stores in nine states. We are excited about our growth on the West Coast, which includes California, Arizona and Nevada. As we grow nationally, we have assessed the costs of franchise development and operations. We constantly strive to help make our franchisees more successful, and in so doing, have made our company into a more flexible concept.

We have made significant changes without affecting the integrity of our product. Because of new technology, we have been able to reduce the cost of the franchise buildout by removing the grill and hood from the kitchens. This not only saves the franchisee money, it speeds up the buildout time. The convection ovens are more efficient and produce a more consistent product. Because the new ovens are small, we are able to be successful in smaller venues. Traditionally, we look for sites between 1,000 to 1,600 square feet. Now, we can be in venues with as little as 500 square feet.

In 2006, Zero’s was in two minor league baseball parks, in the Myrtle Beach Pelicans stadium and the Durham Bulls stadium. Our immediate plans include building a Zero’s in a hockey stadium in Norfolk, Va. Zero’s buildout goal for our locations is to complete the store within 60 days of receiving the building permit. We will have completed 18 new locations in 2006 and are looking to at least double that number in 2007.

FAD: What ties does Zero’s have with the local communities?
EF: (We are) passionate about our relationship with the communities in which the Zero’s stores are located. One example of our continued commitment to the community is our Boiling Springs (N.C.) Zero’s owned by Tom Bell. Our new store in Boiling Springs is being built across the street from Gardner Webb University and will be an integral part of their business program. Bell is an alumnus of the university and strongly believes in Zero’s corporate philosophy of contributing to the community. He will be donating a portion of the Zero’s profits to the university’s programs. Zero’s corporate is committed to giving back to the community, and we are passionate about working with the Zero’s franchisees to benefit U.S. charities.  FAD