Feature – Site Selection
Amy Hunn, vice president of construction and facilities for Floyd’s 99 Barbershop, wants to know as much as she can about the franchisor’s customers and where they live. “The first thing we research and consider is the demographics of the neighborhood. We look at population density, income levels, and past and projected stats. Understanding these key pieces of information helps us determine if a community can support a successful Floyd’s 99 location.”
WHAT COMES FIRST? Carl Jenkins is director of real estate for the 350+ unit Huddle House. His decades in franchising include time working in real estate for McDonald’s, and he still depends on the acumen that directs that franchisor’s site selection. “I always start by looking at where the McDonald’s are,” he says. “They usually have the best locations, especially for restaurants. Then I look for the best location nearby.” For Huddle House that means good locations close to commercial and residential retail businesses that offer parking and are accessible from primary and secondary roads. Eve Sembler is director of peripheral leasing for Brixmor Property Group, which owns and operates more than 400 retail centers across the U.S. The first thing she considers is who will interact with the business at a new location. “I want to know who will see the site when driving by, who shops at the property, and who lives in the area. This is so important, because the best operators know exactly whom they are trying to serve. When the operator’s target customer aligns with the consumer shopping at the center, that’s great real estate.” At PuroClean—which provides remediation for water and fire and smoke damage, mold removal, and biohazard cleanup to commercial and residential customers—site selection doesn’t depend on a strong retail presence. “As an emergency restoration company, a key factor that contributes to our site selection process is the ability to respond to customers within an hour,” says Tim Courtney, vice president of franchise development. “We have large, open territories in which franchise owners are assigned a protected office location signifying their dedicated service area and consisting of 100,000 in population by ZIP code. Also, we have established relationships with national accounts within the insurance industry, and we select sites based on the areas where they receive claims requiring fulfillment.”
Dunkin’ Brands also considers several factors in site selection, focusing on one in particular. “The most important is the convenience the site provides,” says Ian Poole, director of real estate development (West). “Dunkin’s core consumers are people who are on the go and looking for speed and convenience in their coffee and food orders. So all of our sites strive to offer quick service, whether our guests order in-store or in the drive-thru.” Dunkin’ also strives to be as flexible as possible, says Poole. “We offer our franchisees a variety of flexible concepts for any real estate format, including freestanding restaurants, end caps, in-line sites, gas and convenience, travel plazas, and universities, as well as other retail environments—in addition to the opportunity to co-brand alongside Baskin-Robbins.” WHAT MATTERS? At Huddle House, Jenkins likes to look for areas in flux—markets that are changing because of new business activity. “You can get a shift in the market and some areas that once were strong become less so,” he says. “That means asking where are the new jobs coming from? Where is the new housing? Pay attention to those things.” Brixmor’s Sembler wants to know more details about an area too. “I start by thinking about the community,” she says. “Who lives in it, what needs do they have, and how can we best serve them? From there, it’s great to get a feel for the operators currently in the market and how they are performing. This gives me a good sense for the demand and what the community responds to. The best way to get a sense for these questions is to spend time at the center, seeing with your own eyes while using market research data.”
Customer profiles do change, however, as do franchises. “Usually a franchise knows who their customer is,” says Emily Durham, partner and director of hospitality services for Houstonbased Waterman Steele Real Estate Advisors. “That doesn’t mean this doesn’t evolve, and you need a critical mass of units for good data. The older franchises have more data.”
Matt Stanton, chief development officer at Wellbiz Brands (Elements Massage, Amazing Lash, Fit36, Fitness Together), agrees. “The first thing to consider is market research,” he says. “You want to know everything from demographics to shopping patterns in the area. You should also consult the franchisor for what data they are able to provide based on what has worked and what hasn’t for other units in the system. If you jump right into looking at what’s available without doing your due diligence and market strategy, you might get sucked into the trap of taking whatever is available at that moment, when it might be more beneficial to be a little more patient and get the right real estate.”
In Durham’s 30-year career in the restaurant industry, she also has witnessed many changes. “You find that some of the older franchises are being replaced by newer ones. You can assume a lot about the transfer of a customer from one franchise to another, but we’re in a time when it’s all evolving.”
Typically, he says, franchisors have likely invested in a research firm to help with real estate analytics to discern which markets are the best to target for expansion. This research can vary from basic customer demographics to psychographics, co-tenancy statistics, competition, and site attributes.
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FRANCHISEUpdate
ISSUE 3, 2019