HOLD THE MAYO SANDWICH SHOPS STACKING UP AGAINST BURGER CHAINS.

Byline: Brent Hopkins Staff Writer

The sandwich was once a dowdy leftover, slapped together from packaged meat and cheese for the budget-minded and time-constrained.

No more. There's a rumble on, and it's not just in customers' bellies.

Sandwich shops have evolved into a $15.8 billion business, which food trend-watcher Technomic Information Services rates as one of the fastest growing - and most competitive - segments in the industry.

On Thursday, Panera Bread, a Midwest bakery and sandwich chain announced plans to join the crowded Southern California field. Panera will open 61 shops over the next five years.

In the limited-service category, which includes everything from burger stands to fast casuals like Koo Koo Roo and Baja Fresh, sandwich shops' business has grown dramatically in the past five years and the trend is expected to continue.

Although hamburgers bring in far more dollars - $47.5 billion annually - the segment is likely to grow at only a 3.0 percent annual rate over the next five years, while sandwich shops are projected to increase 8.0 percent in that same period, an unparalleled surge that outpaces the growth in pizza, Mexican and chicken restaurants.

``We're a sandwich-loving nation,'' said Amy Spector, Southern California bureau chief for the Nation's Restaurant News. ``Didn't you grow up on sandwiches as a kid?.''

Things have always been competitive for the noontime meal dealers, but the jousting among the national chains has escalated in recent weeks. Subway began by promoting gourmet breads through mid-summer. Togo's fired back with four new breads, permanent offerings, and a swing toward traditional-deli operations. Quiznos Sub dressed up its shops with new wallpaper and menu displays and trotted out peppers and sauces. Even burger giant McDonald's introduced a new, healthier sandwich and a line of premium salads.

``Everyone's jockeying for the same share of stomach, which is making things really tough for business,'' said Mark Richardson, vice president of Togo's. ``Quiznos and Subway are in a media battle, which we're watching with interest. That's great, because they create interest in the category while we can keep making our same great sandwich.''

The 400-store chain has shifted strategies to become more like a traditional deli and less like its rivals. After trying to become a full-fledged quick-serve chain, it has gone back to the more labor-intensive slicing of meats and cheeses, hand-cutting vegetables instead of buying pre-cut bags. And in the most unusual strategy, it announced that it will bring back sandwiches that were taken off the menu over the years.

The chains' fracas has drawn in consumers like Darryl Pierce, an X-Ray technician for Rocketdyne. The Canoga Park resident said he hits a sandwich shop at least once a week.

``I've been eating burgers since I was a kid, and I'm sick of McDonald's, sick of Carl's Jr, sick of all that junk,'' he said as he waited for a toasted Italian sub at Quiznos in Woodland Hills.

``This is better than what I'd do at home,'' he said, ``because I don't have all those fancy machines like they do. If it was me, I'd slap two slices of bread together, throw some bologna and mayo on and be done.''

Restaurant experts and other chains agree Subway stoked the fire of competition with its aggressive expansion in an attempt to wrest away the the title of largest restaurant chain from McDonald's. On that road to 18,000 locations, the Milford, Conn.-based operation positioned itself as the dieter's friend, championing the 245 pounds lost by poster boy Jared Fogle in his sandwich-based diet.

Spector, from the Nation's Restaurant News, says this promotion gave Subway a reputation as the healthy alternative to burgers - and fueled its robust growth.

While most other fast-food chains focused on their ingredients, Quiznos instead worked to update its image. The chain already claims success for its expansion, driven by its toasted-sub ovens. Now it appears to be focusing on aesthetics.

In recent months, the Denver-based operation redesigned all of its 150 Los Angeles stores, sending crews in for an overnight makeover that changed the wallpaper and added a condiment bar. It also changed its moniker, swapping Quizno's Subs for what it believes to be the sleeker Quiznos Sub.

These seem points, but the chain's corporate leaders believe the moves will win over new customers.

``It's a competitive marketplace, but the consumer's the one that benefits,'' said Stacie Lange, a Quiznos vice president. ``Each concept's coming up with the latest, greatest ideas for their customers. In these economic times, people are looking for value, and part of that is customization. Having a self-service pickle and pepper bar gives you a feeling of indulgence, but it's still very economical.''

Even die-hard burger chain McDonald's has got into the act. The chain endured more than a year of sliding same-store sales, which analysts credited both to overpopularity of McDonald's profit-killing Dollar Menu and a loss in market share to sandwich shops.

In an attempt to reverse that course, the chain's 600 Southern California stores recently launched the ``Salads & More'' menu, adding upscale salads with Newman's Own dressing, whole wheat grilled chicken sandwiches and a meatless McVeggie burger.

``I don't think most of the people at McDonald's thought they'd see this at McDonald's,'' laughed Mary Nichols, an owner-operator who chaired the salad initiative for the McDonald's Operators Association of Southern California. ``If you come in and say. `I don't want a Big Mac today, I want something different,' with these, you can eat them for your nutritional meal.''

The crowded field for sandwich shops will see even more competition, with Wisconsin-based Cousins expanding across Los Angeles and Panera opening its first Southern California store in Palmdale this November.

And the major corporate expansions are in addition to the many mom-and-pop shops lining the boulevards.

In Sherman Oaks, Roman Shishalovsky lent his first name to an upscale joint he opened on Ventura Boulevard several months ago. He aimed for a higher mark, offering breads baked on-site, tri-tip marinated for three days and hand-prepared pesto spreads. Sandwiches at Roman's cost more than at most sandwich shops, ranging from $5.50 to $8.95, but he's found a loyal enough crowd to inspire plans to a dozen spots citywide.

The Subway-led trend back to sandwiches has kept many independent shops in business, but they still have a difficult battle against their national competition, said Spector, the restaurant news Southland bureau chief. said. With no massive advertising budget, independents can't attract customers' attention like a 2,000-store chain like Quiznos, nor can they afford to promote new concepts with Super Bowl ads.

Although chain owners are loath to divulge how much they spend on advertising and new concepts, the costs are substantial. According to Lange, the Quiznos remodel required hiring 40 supervisors and ``significant investment,'' all picked up by the corporate office.

``How does the little guy survive? It's tough,'' said Ron Kulber of Cricca's Italian Deli in Woodland Hills. The 66-year-old proprietor runs the shop with his 88-year-old father, Mickey ``The Dancin' Man'' Kulber.

``You've seen Subway's and Quiznos' ads, but the small guy suffers because we don't get the attention,'' he said.

Although his storefront on Topanga Canyon Boulevard lacks the high profile campaigns of his big competitors, Kulber - like owners of other smaller shops - has got by for the last 25 years because of the deli's loyal following.

All small sandwich-shop operators basically toe the same line, repeating ``good food, good service, good quality'' like a mantra. And anecdotally, this works.

``I've been eating the No. 8, hot roast beef, since '83,'' said Doug Appleton, an MRI technician who makes the commute from his Sherman Oaks office to Dan's Super Subs in Woodland Hills whenever he gets a chance. ``The consistency is great, they always know my name. I moved to Dallas for awhile, and this was the first place I went when I moved back.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com

CAPTION(S):

3 photos

Photo:

(1 -- color) McDonald's burger chain keeps pace with changing consumer tastes with its new McVeggie burger and premium salads.

Gus Ruelas/Staff Photographer

(2 -- color) Delmi Gomez stacks bags of potato chips at Togo's in Van Nuys.

(3) At Togo's, Jonathan Hebreo, center, eats his soup and salad as Darren Schwartzkopf, right, also eats lunch.

Charlotte Schmid-Maybach/Staff Photographer