Franchising | March 2013 | By Robert Thomas
Breaking Out in Captivity
January marked Rick Glitchen’s 20th year in the coffee business. Previously a lawyer, Glitchen started off in the quick-service industry with his brother, opening his own street-side café location in 1993. The duo ran their own units for more than two years before signing on with Seattle’s Best Coffee in 1996 and converting their existing locations to Seattle’s Best stores.
Glitchen now owns and operates three units in Southern California and Las Vegas. His store inside South Point Hotel, Casino and Spa has been thriving since opening in 2005. He explains how other franchise businesses can find success in a captive unit like a hotel.
1. Build a positive relationship
Being in a captive venue brings you back to the basics. Starting out, you want to build positive relationships, especially with your customers. Inside a hotel, we are constantly building the relationship with hotel management. When you’re successful in a Vegas hotel, or any hotel for that matter, one of the things they look at is to see if they could have the same result by using their own food and beverage affiliate.
In captive venues, you need to realize that your customer is the hotel’s guest first, and your guest second. We have an obligation to provide the highest quality of service for the guest, who turns into one of our customers.
The other reason you need to ensure a positive relationship with the management has to do with the lack of relationship you have with customers inside a captive venue. The street-side shops might let me serve the same customer three to four times a week, every week. Conversation and relationships develop with the customer and staff because of the frequency. In the unit inside of South Point, there’s not much time to build that relationship with the customer, so your business has to find a way to grow in another area.
2. Be able to adapt quickly
The biggest challenge in a captive venue, particularly in a hotel, is being able to make adjustments at a fast pace. The hotel holds a little more than 2,000 rooms. There may be a day during the week that only half of the rooms are occupied. During the weekend, not only will all the rooms be filled, but all the convention and arena space is also occupied. In two days’ time, we can go from 300 customers to several thousand. Our success has come from being able to anticipate these kinds of changes.
Being able to adjust and smooth out the bumps in staffing was difficult and remains a challenge, but what helps is the customer mentality. Customers are more concerned about their time and efficiency rather than turning our location into a regular spot. The communication and relationship with the store and staff is not as critical of an element to customers inside captive venues. We actually spent a lot of time with our staff inside the hotel on how to communicate with a relaxed but fast-paced customer.
3. Take advantage of the location
One of the positives of being in a captive venue is having a lot of legwork done for you, particularly in terms of bringing in potential customers. The hotel takes care of the marketing for us. They have a great desire and necessity for bringing in people, and we also participate in any coupons, deals, guidebooks, and specials that the hotel might be offering. I don’t have to create a new marketing strategy each month. In my other locations, I have to work with the franchisor and develop a new approach constantly.
Additionally, because of the nature of a captive venue, our menu inside the hotel has developed over time. It started as a typical coffeehouse and small bakery selection. Then the hotel asked us to provide different types of menu options, such as sandwiches or salads, which we now offer. Whenever the hotel asks if we can do something, I try as hard as I can to say yes. This goes back to the goal of building positive relationships. The venue can make things very difficult for you if you’re not easy to work with.
4. Do your homework
It takes a lot of time and effort for franchisees looking to potentially operate in a captive venue. You’ll need to do your homework and evaluate customer traffic. Captive venues provide a unique opportunity by giving you a location that’s always in flux. Scout the traffic patterns. What amenities are available before you sign the agreement? Be specific about what your needs are. Make sure you have enough clientele that will ensure a positive and quick ROI.
Additionally, the franchisor will be satisfied with the success. Seattle’s Best has been great and very flexible with the South Point location. I’ve followed the terms of my franchisee agreement, but they’ve allowed us to adapt to what the hotel desires. At times, it will seem as if there are two managing bodies involved, but they work hand in hand. For instance, when the hotel asked us to implement some new menu items, the franchisor was very open to the fact that they didn’t have to originate the idea, but they made sure that whatever we were going to serve was of sufficient character and reflected well on the brand itself.
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