Restaurant Development & Design

JAN-FEB 2018

restaurant development + design is a user-driven resource for restaurant professionals charged with building new locations and remodeling existing units.

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4 6 • r e s t a u r a n t d e v e l o p m e n t + d e s i g n • J A N U A R Y / F E B R U A R Y 2 0 1 8 SITE SELECTION saving strategy — it needs large kitchens to produce its full menu and prides itself on spacious, safe and convenient drive-thru service requiring ample land and good ingress and egress. Rather, it is looking more closely at second-generation site op- portunities, leasing versus buying, following population shifts to more urban areas, and investing in sophisticated analytics to sup- port franchisees in their site-selection efforts. "There's no silver bullet, and even with the technology that's out there now, there's still nothing that replaces on-site visits — standing on the site with the franchisee, driving the trade area with them and getting a good feel for things," O'Brien says. "It's a multifaceted effort to try to eliminate as many red flags as possible. And as we get into more urban areas, we want to make sure we don't overlook some of the existing op- portunities versus always trying to be in new developments. We don't want to bypass op- portunities to convert a building or scrape a site that's in a heavily traveled area. We've converted everything from movie theaters to Applebee's to banks." Rethink Retail With retail sales continuing to migrate online and traffic in all but the most pro- gressive malls on the decline, the economic model of placing restaurants in malls no longer works for many concepts. "Most companies in our category are moving away from traditional mall op- portunities," says Ingram. "There may be an exception here or there, but in general, mall food courts or large, enclosed malls are not something that we would consider going forward. We've exited quite a few over the past few years. Our franchisees find it's too hard to make any money there. You're even starting to see chains like McDonald's, Chick-fil-A and Subway exit some malls because rental rates and CAM (common area maintenance) charges have gotten out of control. Leasing companies are trying to offset loss of shopping revenue by increas- ing rents. You can't justify the investment for what is an extremely seasonal business." Buxton's Polanski concedes that tradition- al mall locations' attractiveness is fading fast, thanks to the advent of online shopping. But he points out that rather than disappearing, malls are in a period of dramatic reinvention and that opportunities for restaurants are still strong: They're just evolving. "Everyone talks about the fact that malls are dying," Polanski says. "The reality is that they're changing. I know of a mall in the Midwest, for example, that is convert- ing to 70 to 75 percent office space. A traditional demographics study or even mall traffic study isn't going to tell you if that opportunity is relevant to your concept, but there is absolutely opportunity for growth in the segment if you're smart about it." Chase notes that emerging chains and even strong local independents have an edge in today's market. As malls and other retail centers in particular struggle to reinvent themselves, developers increas- ingly seek unique concepts and/or concepts with local connections. "Rents are As Culver's moves into new markets across the country, it requires sites with great visibility, easy ingress and egress, and ample space for safe and convenient drive-thru service. Image courtesy of Culver Franchising System, Inc. With drive-thru/takeout business continuing to grow versus dine-in, Taco John's has been able to reduce its footprint for traditional freestanding units to 1,600 square feet. Image courtesy of Taco John's

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