Above and Beyond the Strip Mall: Non-Traditional Options for Franchise Development
Airport concessions may, at first glance, seem like a risky endeavor. Traffic has been steadily declining for a year - down nearly 12 percent in February 2009 when the FAA released its last traffic statistics - and the barrier to entry remains high.
But consider the upside. The largest U.S airports host an average of 60 million passengers each year. Not one U.S. air carrier offers their coach passengers breakfast, lunch, or dinner service on domestic flights. Locations offering healthy, fresh, portable options are limited, yet travelers often have hours to wait for delayed flights, missed connections, or - in the best case scenario - a shorter than average security wait time.
As multi-unit operators or franchise systems pursue options beyond traditional locations, how can they prepare themselves? Here's what I consider a good "check-in process."
Airport construction is a very lengthy process and choices are often made years ahead of time. While the process is always open to the public, those operators that have an interest in non-traditional locations will benefit from a well-thought out plan. Armed with a good plan, franchisees and operators assure they are in the "right place" at the "right time." Consider the following to include in a development plan:
- Build a Target List. Despite a limited number of airports in the country, operators and franchisees still need to carefully examine potential airport opportunities and determine which is best to pursue. As a rule, operators with a strong brand presence in a city have a higher likelihood of being chosen for an airport location and will, most likely, have a stronger customer base than those concepts that are not recognized by the community. It's also important to consider the size of the airport. These sites are often more costly to operate than traditional locations, so it is critical to consider revenue opportunities before pursuing a location. A smaller airport may not yield the ROI your brand requires. On the other hand, larger airports could yield profits despite considerable pursuit costs.
- Be involved early. Upcoming RFP's are announced publicly in most cases, but if you've waited that long to research an airport location you will be too late. Using the target list you created, get to know the airport's construction history, the concepts currently available, and where there might be gaps. Most importantly, a smart franchisee or operator needs to know the decision makers.
- Network. It's critical to build relationships with the decision makers for airport restaurant space, including the airport director, concessions director, concessions manager, or master concessionaire, as well as city and county officials. Airports are governmental entities, so franchise operators and franchisees must be the lobbyists for their brand. Associations such as the Airport Minority Advisory Council host conferences throughout the year. If you are serious about an airport location, you should pursue active membership in these groups. Additionally, a number of trade publications support the industry, such as Airport Business and Airport Revenue News.
- Be proactively reactive. Sometimes the right time never appears, no matter how much planning the operator/franchisee has done. You can't force a space to open up, but you can be watching for even the slightest hint of a brand that is closing up or leases coming due - and grab it.
- Have the right concept. During their preliminary research, franchisees may find they want to add a new brand to their mix, and are well advised to research franchising requirements for new concepts to fill out their portfolio in advance.
Pizza, fast food, coffee, and breakfast offerings are staples of airport concessions, but trends, such as budget and health consciousness will impact an airport's restaurant offerings.
For example HMSHost, a Bethesda, Md.-based concessionaire, recently reported that because of wallet tightening "tapas and small plates are exceedingly popular at the company's casual-dining concepts." (Nation's Restaurant News, May 4, 2009)
In the end, franchisees that have a strong brand will benefit from an airport location. Bringing street concepts creates greater customer satisfaction and loyalty and can offer a boost to overall revenue as traditional locations wait out the recession. That's a successful flight!
Chris Cheek is vice president of franchise development for Vermont-based Bruegger's Enterprises, franchisor and operator of 290 bakery-cafés in 24 states. A sales and marketing professional in the franchise industry for nearly 20 years, Cheek has successfully led Bruegger's entry into non-traditional locations, including opening four airport locations over the last 18 months. In 2008, he signed a record 46 new development agreements in one year for Bruegger's for both traditional and non-traditional locations.