There's an obvious gap in the sandwich market - and this Whole Foods-backed restaurant wants to close it

There's a gap in the sandwich market, and a restaurant chain backed by Whole Foods wants to close it. 

In an interview with QSR magazine, Ellen Chen, founder of the LA-based chain Mendocino Farms, said there's a glut of restaurants selling $5-$8 subs, as well as more upscale outlets offering sandwiches in the range of $14-$15.

But there are few chains offering mid-priced gourmet sandwiches - which industry analysts call the "better-sandwich" category - and that's where Mendocino Farms is trying to compete. 

Mendocino Farms is a fast-casual concept featuring organic, locally sourced ingredients on freshly baked bread.

It has 13 locations in the Los Angeles area, and it's in the process of expanding beyond Southern California with the support of an investment from Whole Foods.  

The grocery chain took a minority stake in Mendocino last year, marking a first investment of its kind for Whole Foods.

"Whole Foods is providing some great mentorship," Chen told QSR. "We can tap into their supply chain, their sustainability practices, and the partners they work with, and learn from them."

Mendocino will use the investment to open standalone restaurants, as well as new locations inside Whole Foods stores.

The first Mendocino Farms inside a Whole Foods will open this year in Tustin, California, according to QSR.

The Mendocino restaurants inside Whole Foods stores will serve the sandwich chain's full menu and be wholly operated by the sandwich chain.

The menu includes items like "not so fried" chicken, spicy lemongrass steak banh mi, house smoked chicken and street corn torta, and prosciutto and free range chicken.

Prices are comparable to those at Chipotle, with customers paying an average of $12.50 for a meal, according to Nation's Restaurant News. The average unit brings in about $3.2 million in revenue.

The restaurants' interiors feature chalkboard walls and wood and stainless steel accents, with glowing signs that read "EAT HAPPY." Green turf covers parts of the ceiling, chairs, and walls in some restaurants.

Some restaurants also feature foosball tables.

Whole Foods will most likely add Mendocino units to its new cheaper-store concept, called 365 by Whole Foods market, according to NRN.

The grocery chain is planning to opening its first five 365 stores next year, including one in the Los Angeles neighborhood of Silver Lake. The 365 stores will target millennials, according to Whole Foods executives.

Here's a vegan wrap:

This sandwich features thick-cut turkey, tomato, avocado, smoked Gouda, chili aioli, and jalapeno relish.

The restaurant also smokes its own barbecue. This sandwich features pulled pork that has been smoked for eight hours.

The chain features hearty salads like this one with chicken and prosciutto. 

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