Experienced franchisees looking to diversify their brand portfolios look to tick several key boxes when it comes to finding their next business opportunity. Overall, the factors that most catch the eye of prospective franchisees include a strong business model, a product they believe in and, of course, the potential for high profitability.
Penn Station East Coast Subs has all that—and a bag of hand-cut fries.
Eric Fairbanks is one of the many impressive multi-brand owners who have added the sub sandwich brand to their portfolio over the years. In 2005, Fairbanks opened his first Hungry Howie’s Pizza right out of college and has since grown his reach to 14 units around the Charlotte, North Carolina metropolitan area.
He opened his first Penn Station in April 2018, acquiring an existing store for his second location a year later.
“It fit all the criteria I was looking for. I loved the product, the simplicity of the operations, the model for profitability and the whole team,” said Fairbanks. “When I visited the office, it felt like a family brand that was a good size—not too big, not too small.”
When searching for his next business, Fairbanks knew he wanted to stay in the food industry, but diversify his experience. “With Penn Station, I could focus more on operations. That was a nice change from all the marketing of discounts and coupons that the pizza industry requires. I knew I wanted to get away from that,” he said. “It was tempting to look outside of food, but that is where my passion was. It’s also a more stable market than others. Plus, I’ve always been a big fan of customer service.”
And after nearly 15 years of experience in the restaurant industry, Fairbanks knew what to look for in a profitable business.
“I saw a lot of opportunity in Penn Station,” explained Fairbanks. “Most brands are focused on sales: The higher the sales numbers the better. But Penn Station really focuses on the bottom line, which is really refreshing. And what that boils down to is higher profitability than that of other brands. ”
With more than 300 locations and only one company-owned unit, Penn Station has perfected its methods for keeping costs down for franchisees. Despite rising food and real estate costs across the foodservice industry, Penn Station’s food costs remain steady—and some of the lowest the system has seen in the history of the brand. Plus, because the brand doesn’t currently offer any discounts or delivery, franchisees never have to deal with those common encroachments on profit.
“A lot of other brands in the industry can say their sales are up, but the majority of the time, that’s driven by delivery, which cuts into your bottom line,” said Greg Goddard, Penn Station’s Director of Development and Franchising. “When Penn Station’s sales are up, that means take-home profits are higher, and that’s something that really sets us apart.”
Penn Station’s simple operational model also drives this profitability. “You operate with minimal staff and offer a simple menu without too many items,” said Fairbanks. “At Penn Station, every item is good and we only offer 13 delicious subs, fresh-cut fries and drinks. We do what we do and we do it right. That leads to profitability.”
Penn Station makes operations even easier (and more rewarding) for multi-brand franchisees with its unique philosophy of sharing profits with general managers to incentivize performance and drive sales.
“Anytime a customer visits a restaurant, you can interact with an actual owner, which means a lot,” said Fairbanks. “It was a learning curve at first, but the more experience I have with it, the more I look into doing something similar with my Hungry Howie's. It’s nice to provide that map to ownership for managers—something they can make into a lifelong career.”
The startup costs for a Penn Station franchise range from $293,102 to $593,027, with a franchise fee of $25,000. For more information on franchising with Penn Station, visit http://www.penn-station.com/franchise/.