2018 was a pivotal year for Penn Station. The sandwich brand implemented new technologies to streamline the sales and operational processes and a franchisee incentive program that are both in line with industry trends and are expected to help the brand grow further in 2019.
For one, the brand started offering online ordering via its app, mobile website and desktop website. This online ordering feature integrates with the brand’s existing loyalty program and was officially rolled out in all of their 300 plus locations in March.
“This year, a big internal focus was on improving our technology offerings, and it’s provided us with a huge competitive advantage,” Penn Station Director of Development and Franchising Greg Goddard said. “We tested our online ordering platform extensively in the Louisville market before we officially launched it to great success. Today, without any marketing of either the app or online ordering to date, we’ve seen those sales grow to over 5 percent since inception through our online ordering platform. We expect this incremental sales trend to only continue to grow.”
The customer response to this technological advancement has been positive. “The feedback that we’re getting from our customers has been very good,” Goddard said. “Industry trends show that more diners are interested in takeout services, and it’s important to us at Penn Station to be able to provide those options for our loyal customers.”
In terms of franchise development, Penn Station launched an incentive program in 2018 that will be extended into 2019. When a new franchisee signs a lease or signs a franchise agreement under this program, they will not be required to pay royalty fees for one year.
“We are already seeing traction from that incentive program,” Goddard said. “It has been successful in that we’ve been able to attract the types of franchisee candidates that we want to attract.”
The brand also made a major menu change by adding wraps.
“Wraps are a lighter menu option our customers can enjoy,” Goddard said. “While we pride ourselves on having a relatively simple menu, we also don’t want to get too complacent. It’s important that we make sure to stay on top of eating trends and offer our diners more options when we can. With our wraps, our customers can still enjoy their favorite made to order sandwich fillings. It’s also a more portable dining option, which helps with our carryout orders.”
When it comes to sales growth, Penn Station saw a five percent system-wide sales increase in October and November of 2018. The brand also opened three locations in key markets in 2018, two in North Carolina and one in Ohio. The Boone, North Carolina franchise opened in April and a second Penn Station opened in the Raleigh area in March. The third location opened in February in Xenia, Ohio, which is in the state’s Dayton metropolitan area.
Markets the brand is targeting for development in 2019 include Richmond, Virginia, Nashville, Tennessee, Kansas City, Missouri, Atlanta, Georgia, Chicago, Illinois, Raleigh, North Carolina and Pittsburgh, Pennsylvania.
Goddard described the ideal Penn Station franchisee as someone who has restaurant experience and, more specifically, multi-unit franchise experience. The ideal prospective candidate should also be well-financed, with at least $100,000 in liquid capital and a net worth of at least $200,000. They must also possess P&L experience and have good business acumen.
While previous restaurant experience is considered an advantage, it is not required. That said, prospective franchisees should know that Penn Station is “not a passive investment,” according to Goddard.
“Small business and personnel management experience are important,” Goddard said. “We’re a tiny business and one of our values is that we’re Spartan by nature. We’re not cheap, and we certainly don’t sacrifice quality, but we’re also looking for an industry veteran who can think like an owner and keep operational costs low.”
Goddard pointed to Penn Station’s relatively simple menu as an example of that.
“A lot of our ingredients can be used on multiple sandwiches,” he said. “While running a business is never simple, our less complex menu can be a draw for someone who already owns a franchise with a different brand. Penn Station is not going to require them to take on a whole new concept that will be difficult for them.”
The brand is also distinctive from other sandwich enterprises in that they offer freshly-made fries in restaurants. Penn Station does sell chips, but their fries are a huge draw.
“Thanks to offering fries, we’re able to not only capture the lunch market but also the dinner crowd,” Goddard said. “And our fries are made fresh onsite.”
Goddard pointed out how Penn Station was ranked on Training magazine’s “Top 125 Organizations” for 2018.
“That recognition meant a lot to us,” Goddard said. “We work hard on training every employee and every franchisee. It’s important to us that everyone at Penn Station has a solid understanding of the business, which is why our employees even train in our restaurants when they are first hired and help prepare food and take customer orders.”
Goddard is excited to see where the brand goes in 2019 and what new markets it expands into.
“We’re very much interested in attracting multi-unit franchisees,” Goddard said. “I think they will enjoy our solid unit-level economics. We focus on both the top line of sales and the bottom line. Our food and paper costs are very competitive in comparison to other players in the industry.”
The startup costs for a Penn Station franchise range from $290,984 to $594,478. The franchise fee is $25,000. For more information on franchising with Penn Station, visit http://www.penn-station.com/franchise/.