What To Target In Fast Casual Real Estate

When starting a franchise, there is more than price of rent to consider when choosing a location.

SPONSOREDUpdated 3:15PM • 12/30/15

The infrastructure is all set up, the franchise disclosure document was just reviewed by a lawyer and inventory has been ordered to last through the winter. A franchisor or brand may think that this is the perfect completed checklist to get their business off the ground. But wait—there is no building purchased yet!

The quest to find the perfect spot for your franchise location isn’t as dire as the previous analogy, but choosing the right location is integral for a franchise. Not enough research during this stage of development could result in loss of sales, which is not the best way to start a business. Here are a few things fast casual franchises should keep in mind when targeting the perfect piece of real estate.

Investigate the market and demographics of an area

Before planting a flag and decreeing it as the next franchise location, brands should take a step back and investigate the demographics of the area. Looking at trends of the area and who lives there will give the brand a better idea of if they should invest in a spot. If a senior care franchise sets up shop in an area of town that is predominantly full of millennials, chances are the business won’t be viable. Brands should look out for age demographics, the types of shops in the area and the number of people with spendable income. Van Ingram, the vice president of franchise development for quick service Mexican restaurant Taco John’s, said brands should also keep in mind consumer employment status.

“One key statistic is to look at the unemployment rate. The labor market is very tight and trade areas that are well below the national employment statistics will really struggle to get employees,” Ingram said. “A combination of daytime employment and residential population is key for Taco John’s. We must be convenient.”

Along with demographics, keeping a keen eye on the real estate market is a smart idea. Brands will be out of luck if they purchase a property and discover there is a lien on it. Keep a close eye on foreclosures, building resales and area developments.

Pick a building type that goes well with the business model

The days of people sitting down for a meal for a few hours is a thing of the past. Sure, this still happens from time to time, but people are in a rush and want to be on their way. And that is no fault of the restaurants—people simply have busier schedules. This will play a role in the type of building a franchise will invest in. Ingram said that brands will be accommodating this philosophy more in 2016.

“I think in 2016 you will see a continuation of the trend towards strip center end-cap space,” Ingram said. “It reduces the overall cost of development, but the key is obtaining drive thru access. More developers are recognizing this trend and they are starting to plan drive thru access on the end caps”

Ingram went on to say that Taco John’s is predominantly freestanding traditional buildings, but the company has a good mix of end-caps with drive thrus and co-developed properties with convenience stores and travel plazas. Going in on a development with an existing company could be good for the brand, Ingram said.

“Obviously we want to make sure that the site is viable but there can be many good reasons to look at second generation space,” he said. “A conversion can lead to reduced development costs in relation to new construction. The key is making sure our brand is properly represented on the converted building. Customers need to see that it is a new concept.”

Keep in mind the amount of space to develop

Getting a space with a drive thru space is paramount to sustaining success, but a franchise should still look for pieces of real estate that provide some roomy parking. A cramped space will have customers bickering about who gets the next parking spot, and the last thing a brand manager wants is a disgruntled customer. Getting a large parking lot will alleviate those issues, but it is a bit more complicated than that.

Quick service breakfast franchise Famous Toastery, which is located in Charlotte, ran into that problem earlier this year. The city of Charlotte has 2,720 people per square mile and the city is running out of places for people to park. Famous Toastery has the luxury of only being open during the earlier hours of the day, but other quick service places may not have that luxury. Check the area and the people per square foot and make sure there is enough space for everyone to find a parking spot.

What To Target In Fast Casual Real Estate

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