[citation needed] In 1971, Don and Dolores Dissman founded the company in a "small, hole-in-the-wall shop" in Austin, Texas, on South Congress.

The Wooleys expanded Schlotzsky's menu to include specialty pizzas, toasted wraps, salads, soups, and other items.

[15] On 21 November 2006, Schlotzsky's was acquired by Focus Brands, an affiliate of private equity firm Roark Capital Group, parent company of Moe's Southwest Grill, Carvel, Cinnabon and Auntie Anne's.

[17] With Kelly on board, Schlotzsky's planned for growth and a system-wide reimage,[18] which included updated restaurants, improved menus,[19] table service, and the addition of Cinnabon.

[20] The company remodeled locations across the country with a "Lotz Better" look, which included bright, bold colors, circle-themed furniture and decor and playful slogans.