Competition | August 2014 | By Daniel P. Smith

Uncommon Ground

Operators are finding ways to squeeze their brands into every nook and cranny this country has to offer, from schools and hospitals to markets, festivals, and casinos.
Unusual quick service restaurant units locate in high traffic customer locations like casinos.
Dunkin' Donuts is pursuing growth opportunities in nontraditional units like casinos. DUNKIN’ DONUTS
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A cruise ship on the Rhine River in Germany.

The FBI headquarters in Washington, D.C.

A Toys“R”Us in Manhattan.

The Camp Pendleton military base near San Diego.

Where moving people are, quick-service restaurants want to be, a reality that continues shaping the rapid and aggressive evolution of the nontraditional restaurant marketplace. From casinos and college campuses to museums and hospitals, retail stores, and theme parks, quick serves have moved far beyond street locations and mall food courts to launch units just about anywhere they can capture customers.

“We even had one store that was a truck following a particular military unit,” says Elizabeth Rolfe, Subway’s director of new business development.

For growing quick-service concepts, nontraditional units offer a compelling play, allowing companies an opportunity to increase their unit counts, reach new customers, expand their franchisee network, and

capture some impressive revenue courtesy of a captive, convenience-craving audience. Such benefits have heightened competition in the nontraditional space and, subsequently, demanded brands enforce more strategy than ever before to land the right sites with the right partners.

A smart brand play

Few quick serves know the nontraditional space quite like Maui Wowi Hawaiian, which runs about 50 traditional stores and 400 mobile units across 35 states and seven countries.

“Nontraditional is our tradition,” Maui Wowi CEO Mike Weinberger says.

The Colorado-based concept peddling coffee and smoothies boasts outlets in stadiums, theme parks, convention centers, racetracks, and at temporary events across the U.S. At the Houston Livestock Show and Rodeo last March, franchisees Rob and Jean McLean served more than 42,000 smoothies over 20 days, a sign of the appealing revenue a well-placed nontraditional unit can bring.

“A lot of people are realizing nontraditional is a great niche, particularly for franchising companies,” Weinberger says.

Auntie Anne’s executives are among them. In 1992, the pretzel-slinging enterprise made its first foray into nontraditional waters when it opened an outlet in the Pittsburgh International Airport; three years later, the company debuted an outlet at Penn Station in New York City. In subsequent years, however, Auntie Anne’s largely maintained its focus on shopping malls, the bread and butter of its business, says Brian Boycan, Auntie Anne’s vice president of nontraditional development. At best, nontraditional development was a modest side project.

That all changed in 2009, when the Pennsylvania-based company’s strategic plan earnestly examined the company’s growth prospects. With mall traffic trending downward and Auntie Anne’s already claiming a presence in many of the nation’s favorable mall destinations, company leaders recognized the need to “fish in other ponds,” Boycan says.

“We were running out of space with the malls, and branching into nontraditional development allowed us the best opportunity to keep growing,” Boycan says. The company began opening outlets in airports, amusement parks, and military bases, reaching hordes of American consumers who avoided shopping malls, namely men.

Today, nearly one-fifth of Auntie Anne’s unit count falls under the company’s nontraditional umbrella, a number Boycan says is rising fast.

“Nontraditional development now outpaces our traditional growth … and it has been a windfall for us,” Boycan says.

Companies like Maui Wowi and Auntie Anne’s are far from alone in pushing the nontraditional development button. Dunkin’ Brands has largely re-entered the California market through nontraditional venues in military bases, travel centers, and hotels, an aggressive play that the Massachusetts-based company believes will help it fulfill its long-term goal of operating as many as 1,000 units in the Golden State.

Dunkin’ Brands director of nontraditional development Chris Burr says nontraditional units are helping the company introduce the Dunkin’ name to new customers and markets, propelling product trials and the concept’s westward
development push.

But Dunkin’s nontraditional development, which accounts for about 9 percent of the chain’s total asset base, also allows the company to re-engage with light or lapsed users, while simultaneously providing its existing customer base greater access (read: frequency) to the brand. Best of all, Dunkin’ does not have to discover the real estate, but can seize existing space in visible, high-traffic spots.

“Those opportunities are immensely attractive,” Burr says, adding that some nontraditional venues, such as universities, office complexes, and hospitals, not only offer a regular customer base, but also opportunities for catering and other revenue-building maneuvers.

Many quick-service concepts developing in the nontraditional space also relish the opportunity to work with experienced foodservice operators, such as master concessionaires like Aramark and Sodexo, especially since positive relationships with well-resourced concessionaires or corporate partners can deliver a large number of sites in quick time.

In 2010, Auntie Anne’s inked a deal with HMSHost, a master concessionaire at airports and travel plazas. From fewer than 50 airport and travel-plaza locations before the HMSHost deal, Auntie Anne’s now has more than 80.

Similarly, Subway has leveraged its partnership with Pilot to quickly assemble a roster of more than 200 restaurants in Pilot fuel stops across the country.

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