The sandwich is no humble thing: research says market exceeds $121 billion

A love of sandwiches has created a U.S. market worth more than $121 billion in 2005, according to “Sandwiches in the U.S.: Foodservice and Retail Market and Trends,” a report by market research firm Packaged Facts.

Packaged Facts projects that the market will continue to grow exponentially, riding partly on the major success of sandwich chains. The research firm said the sandwich chains “have successfully risen beyond hoagie heaven to reach new realms of sandwich bliss. Adding fresh hearth-baked artisan breads grilled into paninis, filled with other-worldly creations often inspired by well-known chefs, the business of sandwiches is booming.”

As varied as the sandwiches themselves are, the outlets where they are purchased are even more diverse, according to the research firm. From retail outlets and warehouse clubs to convenience stores, restaurants and institutions, sandwiches continue to be a dominant force, making up 25 percent of the total U.S. foodservice sales, according to Package Facts.

In c-stores, foodservice (including sandwiches) continues to grow in importance, according to the National Association of Convenience Stores. The association definition of foodservice includes all food made on site: made-to-order and commissary sandwiches; hot, cold and frozen dispensed beverages; and other hot foods like grilled chicken, hamburgers, and pizza. It is one of the most purchased in-store categories at c-stores, accounting for 11.9 percent of all in-store sales dollars in 2005, according to NACS' 2006 State of the Industry report.

The 2006 SOI listed some per-store average sales for foodservice categories in 2005. For example, “food prepared on site,” including sandwiches, averaged $53,763. “Commissary/packaged sandwiches” averaged $8,546.

“The gross profit margin for foodservice in convenience stores ranks second among all in-store items, at $9.0 billion dollars in 2005,” the report noted. “This figure was nearly one-quarter of all in-store gross margin dollars in 2005. However, foodservice is inherently more labor intensive and a larger portion of direct store operating expenses is dedicated to foodservice sales than to other merchandise.”

Packaged Facts said sandwich chains, while trumped in overall sandwich sales by burger joints (which accounted for 45 percent of the sandwich market), realized the greatest revenue growth from 2003 to 2005, while at the same time adding units faster than any other sandwich segment. It noted that Entrepreneur Magazine ranked Subway as the top franchise opportunity for 2006.

"With the introduction of paninis and international flavor profiles, the opportunity to raise sandwiches to a new art form has taken place as even local delis and convenience stores have begun to upscale and add health-infused ingredients to their sandwich arsenals," said Don Montuori, the publisher for Packaged Facts, in a prepared statement. "Sales in retail outlets now surpass sandwich chains, and restaurants sales, which dominate the market with more than half of sandwich revenues, show no signs of slowing up."

The report by Packaged Facts examines the current and future market, detailing the role of sandwiches in retail, commercial and non-commercial foodservice outlets, and focusing on trends driving sales and sandwich innovation.

With the size of the sandwich market growing to such proportions, maybe it shouldn’t be surprising that the sandwiches themselves are growing larger in some cases. For example, D'Angelo Grilled Sandwiches, a sandwich chain owned by Papa Gino's Inc., Dedham, Mass., on Jan. 5 introduced a “One Pound Steak and Cheese Sandwich,” claiming it is “one of the largest steak-and-cheese sandwiches in the industry.”

The sandwich is an expanded version of the chain’s top-selling item; D’Angelo said it already sells more than 3.5 million steak-and-cheese sandwiches annually. The new version features “a full pound of 100 percent USDA choice beef, cooked on a grill and piled onto a toasted roll with American cheese. It retails for $9.99.