Restaurant Chains Minimizing Risk with Smaller Stores
This is my new passion, Reading everything I can about Franchises and how to own/run one successfully.
Karen Robinson-Jacobs The Dallas Morning News wrote:
With lenders still
holding tight to their purse strings, local restaurant chains looking
to add outlets are discovering that size matters.
Many major sit-down chains, which often
have restaurants of at least 5,000 square feet, have all but stopped
adding locations as consumers cut back on dining out.
Meanwhile, several local brands
whose eateries average 2,000 square feet or less posted double-digit
growth even as the economy was imploding.
"When you work with smaller store
footprints, it reduces your risk," said Bill Chinn, a franchisee with
the Dallas-based Red Mango frozen yogurt chain.
"Picking a bad location when you have
multiple small sites is much less painful than finding you have made a
mistake with a large footprint and now a big percent of your portfolio
is hemorrhaging from the bottom line."
Red Mango is among five "hot
concept/emerging growth" chains to be honored Monday at the Multi-Unit
Foodservice Operators Conference at the Hilton Anatole Hotel in Dallas.
The conference, a gathering of chain
restaurant operators, also will include a tribute Monday to restaurant
icon Norman Brinker, a former co-chairman of the group, who died in
June. He is widely credited for growing concepts such as Chili's and
Steak and Ale.
To help grow Red
Mango, Chinn will take the big-bang approach: He plans to open five of
the shops in Dallas in the next two months, beginning in mid-October in
the food court at NorthPark Center. That would make for a splashy
entrance even if the economy weren't still struggling.
Chinn's debut also is unusual because of
the funding. When he found bank terms too onerous, he opted to pay for
the openings with gains from his stock in Grapevine-based GameStop,
where he worked for nearly 20 years and was senior vice president.
With the Red Mango outlets averaging about 1,100 square feet, Chinn said he could more easily afford to open several.
"It would have been harder if they were bigger stores, and certainly more costly," he said.
The company hopes opening six Dallas-area
stores (Chinn's, plus one from another franchisee) will generate
interest in the brand in the crowded frozen-yogurt segment.
Among chicken chains, franchisees of
Richardson-based Wingstop Restaurants Inc. opened 71 U.S. restaurants
in 2008, including three in Dallas-Fort Worth. This year, an additional
34 have opened, including two locally, a spokeswoman said.
Wingstop restaurants average 1,400 to 1,800 square feet.
Which Wich
One of the fastest-growing sandwich
chains is Dallas-based Which Wich. In 2008, it added 27 outlets,
including eight in the Dallas area. This year, an additional 22 have
opened, including another eight locally.
Jeff Vickers, vice president of
development, said the chain has carved about 400 square feet out of the
average store, in part to make them more affordable for franchisees.
"We've saved roughly 10 percent compared
with the earlier prototype," said Vickers, referring to reduced
construction and operating expenses.
Earlier Which Wiches ran up to 2,000 square feet, Vickers said. Today's model is closer to 1,400 to 1,600 square feet.
That's a continuation of the
"right-sizing going on in the restaurant market," said Brian Glaser,
president of the D/FW commercial retail division of The Weitzman Group.
"In the last decade, real estate costs
have skyrocketed, but restaurant sales aren't skyrocketing commensurate
with the cost of real estate," he said. "The only way to balance that
is to downsize."
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This is my new passion, Reading everything I can about Franchises and how to own/run one successfully.
