Over the past few years, the proliferation of sandwich shops has intensified competition—and not just for customers. That’s because many of these concepts are on the hunt for remarkably similar sites: 2,000 square feet to 3,500 square feet of leased real estate in urban areas and suburban strip malls.
The intensified demand for these sites is driving up the price many chains pay in rent—especially in competitive markets like California. But thanks to its relatively smaller footprint and flexibility in locations, one brand is particular is poised to thrive even as the real estate market tightens—Togo’s.
“Real estate is one of the biggest challenge a brand will face when it comes to development. The demand for top sites is considerably different than it was just six years ago, when few concepts were growing and landlords were begging for tenants. Today, it’s a much different situation—whether it’s a fast casual concept or a quick-service restaurant, they’re all after the same real estate,” said Todd Peterson, the chief development officer for Togo’s. “As demand has grown, the costs for real estate have become extraordinary. More and more, a brand needs to find new ways to stay competitive.”
With nearly 300 locations that are currently open or in development, Togo’s has found a great advantage in the fact that its restaurants can excel in smaller locations. At 1,200 to 1,800 square feet, a typical Togo’s storefront can fill a significantly smaller space when compared to the highly-sought-after real estate that many brands are targeting. This is due, in large part, to the fact that nearly 65 to 75 percent of Togo’s business comes from take-out, which dramatically lessens the need for more tables and seating. And in California, one of the brand’s key growth markets, they can also rely on warmer weather year-round, allowing each restaurant to take advantage of patio space, too.
Another important strategy is flexibility.
“It’s imperative that our prototype is flexible enough that it can go into a number of different spaces. Togo’s doesn’t require ventilation hoods, because we’re not cooking with grills or fryers. That opens up a lot more possibilities for us where others might see a setback,” Peterson said.
In particular, Togo’s has found success in converting existing spaces into something that can quickly and efficiently meet its needs. To date, Togo’s has been able to turn to dozens of storefronts that previously housed other sandwich brands.
“These kind of spaces are ideal for us. They’ve already been modified for restaurant use, and it makes the transition easy. That’s why, for us, conversion opportunities are ideal,” Peterson added. “And from a franchisee’s perspective, there are a lot of cost savings there as well. We’re able to utilize what we have and make something really great and unique to the Togo’s brand.”
Backed by these unique advantages, Togo’s has also developed a comprehensive support system to make restaurant development as easy and seamless as possible for new franchisees. From finding locations and negotiating leases to restaurant build out, the brand provides industry-leading support throughout the entire site selection process. Togo’s works with each franchisee to survey the market—studying demographics in the territory and reviewing the competitive environment to identify potential shortcomings. Then, once sites have been identified, Togo’s reviews the demographics of nearby residents and daytime workers—assessing things like their age, gender and income. It’s this kind of support, Peterson says, that ultimately makes the difference in finding a home for a new Togo’s location that’s destined to thrive.
“Franchisees that are interested in coming on board all have the same apprehensions and concerns—how do they find a good site? And once they find that site, how do they negotiate a lease? We embarked on a process to build what we believe is a comprehensive support structure that’s in place from day one,” Peterson said. “We want franchisees to learn the ins and outs of the entire real estate process. For us, it’s about teaching a man to fish rather than giving them a fish. We can guide franchisees throughout the entire process, and we provide a lot more hand-holding than most brands. But that’s because we truly believe that if we do it right, there’s nothing stopping our franchisees from being successful.”