Penn Station Is Bigger Than You Think

In September, Marcus Queen, an entrepreneur in Tennessee, opened a Penn Station East Coast Subs restaurant in Nashville. A few weeks later and more than 500 miles away, Penn Station owner Jeff Martyn opened a new location in Raleigh, North Carolina. Both restaurants are the sixth Penn Station location in their town, and each is one of more than a dozen in its state. Since then, the brand has opened locations in Cleveland, Pittsburgh, Detroit and Dayton with an additional 15 stores slated to open across the Midwest in 2018.

An increased roll-out of new-store openings across states has recently become par for the course for Penn Station, which has always taken a measured approach to development.

“We have always developed in concentric circles out from our existing markets,” said Penn Station Director of Development and Franchising Greg Goddard. “When we open any new restaurant, we want to be perfectly sure that that restaurant is well supported in terms of brand recognition, oversight, and logistics.”

Now that the franchise has locations in 15 states across the Midwest, South, and East Coast, Goddard says Penn Station can support a surge in development across new territories.

“With established markets in so many states, we can now develop in any number of locations and ensure the same high level of support that we have always required for every new opening.”

In addition to the operational support and brand recognition buttressing each new store, Penn Station’s development efforts are aided by a wealth of eager franchisee prospects across markets. With a system-wide average unit volume approaching $650,000, Penn Station is becoming a sought-after concept in the sub category but many franchisees said that they became owners because of Penn Station’s efficient operations model.

“I was already compelled by the financials,” said Jeff Martyn, the Penn Station franchisee in West Cary, “but when I walked into the store for the first time, I knew I could make this work. Everything was optimized. The kitchen layout, ordering, payments, everything is streamlined.”

Rob Chinsky, a 17-unit Penn Station owner in Indianapolis, said the brand’s operations model allows him to easily and effectively oversee a staff that manages his restaurants.

“I’ve got a lot of extra help, and the process is still streamlined," said Chinsky. “All my team members are part of this really simple, well-oiled machine that Penn Station has engineered.”

Penn Station’s growth is particularly impressive given the falling sales and tightening of belts elsewhere in the industry. In an interview with QSR Magazine, Penn Station President Craig Dunaway said that the brand has been able to thrive in recent years by bucking the industry trend toward cost-cutting in products, instead emphasizing the quality of their product to capture a larger share of the market.

“I saw a lot of brands that I guess, for lack of a better term, cheapened their product,” said Dunaway. “Either the portion size or the quality of protein they used. We took a very contrarian approach to that, and said, ‘you know, we need to make sure, at a minimum, we’re using the quality products that we are. When we come out of this, people will remember that.’”

That strategy has kept Penn Station durable to the ever-changing economy, making them one of the most consistent concepts in fast-casual franchising. Now, as Penn Station strategizes their growth plan for 2018, the brand is preparing to leverage their position for large-scale growth. To that end, Penn Station’s development team is looking for qualified owners in new markets and working with existing owners to expand their operations.

“We’re excited to enter a number of new markets where we are primed for success, and we’re currently seeking out strong ambassadors for the brand in those territories,” Goddard said. “There are also some markets, such as Kansas City and Pittsburgh, where we’ve already had a strong start but we still have room for 25 or 30 more units, so we are excited to work with franchisees in those areas to fully build out their markets in the next few years.”

As Penn Station prepares to roll out new stores in both new and existing markets, Goddard says the brand is excited to make Penn Station a household name for new customers across the country.

“Our concept has resonated so strongly with customers everywhere we’ve introduced the brand,” Goddard said. “We were voted the best sandwich in American in 2015. Everywhere you go, people are looking for a fantastic tasting meal option that is quick and comforting, somewhere they can stop in on their lunch break or take their whole family for dinner, and that’s exactly what we offer. It’s a great value proposition no matter where you take it.”