Schlotzsky's Offers Free Wi-Fi in Restaurants in Six States; Free Use of In-Store Computers Adds to Wi-Fi Appeal

AUSTIN, Texas--(BUSINESS WIRE)--Feb. 18, 2004--Schlotzsky's today announced it has expanded its popular free wireless Internet access (Cool Cloud(tm)) from its Austin base to include 38 restaurants in a total of six states (Texas, North Carolina, Georgia, Ohio, Arizona, California) with more to come. The expansion reflects the Company's business model that "free wireless is great for business," says Monica Landers, spokeswoman for Schlotzsky's Inc. (Nasdaq:BUNZ).

The Company has tested free Wi-Fi in selected restaurants in its home state of Texas for more than a year, and the early results are in: More than 40 percent of customers say that free Wi-Fi or the free use of in-store computers are factors in choosing Schlotzsky's(R) to dine, and six percent say that free Wi-Fi is the key reason they chose to come to Schlotzsky's restaurants that day.

“It's also extended our business beyond the lunch hour so that the restaurant feels alive at all times. It has made our restaurants truly 'hotspots' - and after all, isn't that what every restaurant wants to be?”

"We get incredible heartfelt 'thanks' from customers for making free Wi-Fi available, and they reward us with their business," says Landers. "It's also extended our business beyond the lunch hour so that the restaurant feels alive at all times. It has made our restaurants truly 'hotspots' - and after all, isn't that what every restaurant wants to be?"

Wired magazine in its September 2003 issue wrote "If you want to see the right way to serve wireless access, find a Schlotzsky's."

Among Schlotzsky's free Wi-Fi initiatives:

-- All 38 restaurants with free Wi-Fi offer free use of computers ("Cool Deli(R) stations"), where customers can hop on and surf the Web, check e-mail and play games. They can also access the Web for free with their own wireless laptops or PDAs.

-- Schlotzsky's has sponsored a research project with the Wireless Networking and Communications Group at The University of Texas at Austin -- the first of its kind. Graduate students, led by Dr. Ted Rappaport, studied usage patterns and network impact. Rappaport says, "It appears that the typical wireless LAN user uses upstream traffic (from their PC to the Internet) at only one-fifth the rate as downstream traffic. Also, most restaurant-goers appear to engage in Web browsing. What surprised us, however, is the rapid growth of peer-to-peer programs that are not yet identified by standard protocol analyzers and which can occupy huge amounts of bandwidth over several minutes."

-- Schlotzsky's has developed a proprietary content-filtering system for its wireless system that helps keep restaurants family friendly.

-- Schlotzsky's free Wi-Fi is not confined to the walls of its restaurants. The Company is experimenting with distances of up to a quarter-mile -- extending free Wi-Fi to neighboring communities. In Austin, it is underwriting the purchase of antennas to provide free Wi-Fi at the City of Austin's 22 libraries.

-- Each Schlotzsky's restaurant that offers free Wi-Fi is marked by a "Cool Cloud" decal inspired by the international war-chalking symbol for free wireless ")(".

-- Schlotzsky's President and CEO John C. Wooley has spoken on panels at numerous technology conventions, including Comdex and the Wi-Fi Planet Conference in Boston.

-- Cities that now offer the popular Cool Cloud program are: Amarillo, Austin, Bastrop, College Station, Houston, and Huntsville, Texas; Athens and Atlanta, Georgia; Brea, California; Centerville, Franklin, Maumee, and Willoughby, Ohio; Jacksonville, New Bern, Raleigh, and Statesville, North Carolina; and Mesa and Tempe, Arizona.

"The Schlotzsky's business model is all about customer service, attraction and loyalty. When customers are pleased, they visit more often, stay longer and buy more," says Landers. "While some other companies are trying to figure out how to charge for the service, we think our approach gets closer to the true potential of the wireless revolution. We continue to be excited by what we see in our business and are encouraging all of our Franchisees to get on board."

For more information on locations and technology specs, visit www.cooldeli.com/wireless.html.

Schlotzsky's Inc., founded in Austin, Texas, in 1971, through its wholly-owned subsidiaries, is a franchisor and operator of restaurants in the fast casual sector. As of September 30, 2003, there were 583 Schlotzsky's(R) Deli restaurants open and operating in 37 states, the District of Columbia and six foreign countries. Visit www.schlotzskys.com or www.cooldeli.com for more information.