Growth | October 2013 | By Mary Avant

Home Sweet Home Office

Forget New York and Los Angeles. Quick-serve operators have all the resources they need in these four mid-American cities.

U.S. cities like Dallas provide fast food operators with resources to grow.
Dallas is one of four U.S. cities that have proved to be popular quick-serve headquarters. thinkstock
Bookmark/Share this post with:
Email this story Email this story
Printer-friendly versionPrinter-friendly version

When it comes to business, everyone wants to be in the middle of the action, which is why quick-serve brands like Shake Shack, Fatburger, and McDonald's establish their corporate headquarters in big cities like New York, Los Angeles, and Chicago, respectively.

But not every brand can—or wants to—deal with the hustle and bustle that these major metros bring. Instead, some quick serves are finding that other untapped cities across the U.S. offer a positive environment for headquarters, whether they've been there all along, just got their start, or recently made the move to the city.

Over the years, four such cities—Dallas, Denver, Atlanta, and Columbus, Ohio—have become de facto hubs for the quick-service industry by being home to several small and major brands alike, and more chains are discovering the riches these well-kept secrets have to offer, from local resources and talent pools to favorable tax climates.

 

Dallas

A central city

Though a quick-serve brand may not always have control over where it is founded, it can determine whether or not it makes business sense to relocate, keeping in mind that the more central the headquarters is to the system’s units, the better.

“You have to look at being able to get back and forth in the corporate office and directors being able to check on the units and keep the core value of the units in line,” says Andre Neyrey, president of Manhattan Restaurant Consultants.

Population: 6.53 million

Size: 871 square miles

Home To: Pizza Inn; Pizza Patrón; Mooyah Burgers, Fries, & Shakes; Dickey’s Barbecue Pit

Fun Facts:

  • The Dallas metro area is home to 23 of the 400 richest Americans
  • Dallas was ranked No. 3 on Forbes 2012 list of best places for women to launch businesses
  • Nearly 30 million Americans visit the city every year

Source: U.S. Census Bureau, Dallas Convention & Visitors Bureau

That’s why Red Mango, which has frozen-yogurt stores across the country, relocated to Dallas from its West Coast home in 2009. The Texas city’s central location means the Red Mango team can easily travel across the country to visit restaurants, vet potential franchisees, and conduct meetings. “You can get to Seattle in three hours, you can get to New York in three hours, and it’s something you can’t do when you’re on the coast,” says Dan Kim, the brand’s founder and chief concept officer.

It also doesn’t hurt that the Dallas–Fort Worth airport is one of the largest in the country, making it simple to get in and out of the city both domestically and internationally. Kim says the travel-friendly environment has helped Red Mango see the success it’s experienced.

“We’re at about 230 locations, and it didn’t really start to happen until we started to base things out of Dallas,” he says. “The ability to just meet with people and visit locations a lot faster than being on the coast … has been key to our ability to grow and support our stores.”

In Central Time, it’s also easy for chains in Dallas to communicate with franchisees and other businesses across the country. “We can deal with folks on both coasts relatively easily without materially extending or shortening our business day one way or the other,” says Blake Bernet, senior vice president of development for Dallas-based Corner Bakery Café, which got its start in Chicago in 1991 and moved to Texas in 2000.

Bernet says the abundance of quick-service and fast-casual players headquartered in Dallas—including Pie Five Pizza, Pizza Inn, and Dickey’s Barbecue Pit—means recruiting experienced workers to both the corporate team and the local units is a cinch.

“It’s relatively expensive to move folks, so to have the home-office talent, culinary talent, accounting and finance, development, real-estate construction, and design [talent] … nearby is important,” he says.

Not only is Dallas a restaurant hotspot, but it’s also home to 25 Fortune 500 companies and 268 corporate headquarters. With a population of 6.5 million people (as of 2011), the Dallas metro area has 2,015 small businesses per 100,000 people. It’s also the sixth-largest economy in the U.S., and the city’s unemployment rate sits below the national average.

When necessary, Kim says, Dallas’s stable real estate, relatively low cost of living, strong health-care system, and high-profile sports teams make it an easy sell when seducing outside employees to the corporate office. Add to this perks like no personal state income tax, and Kim says Dallas has been “a nice sell for us when we’re recruiting from other high-cost-of-living areas where there are really good restaurants.”

Also on Dallas’s side: The city is progressive and forward-thinking, Kim says, and the balance between urban and suburban communities helps with both opening restaurants and recruiting employees. And for Red Mango and brands like it, the population’s growing interest in healthy eating and living means the health-conscious restaurant segment is set to prosper in the future.

Denver

Home of the next big brand

Denver may be a breeding ground for successful concepts like Chipotle, Smashburger, and Einstein Bros., but it’s also the place where established chains come for a breath of fresh mountain air. Famous Brands, parent company for TCBY and Mrs. Fields, made the move from Salt Lake City to the Mile High City in June 2012 after the brands were churning out “lackluster results,” says Dustin Finkel, senior director of Famous Brands International.

“Denver is a hotbed for franchising organizations [and] good marketing strategy. You have good consumer packaged goods companies here, you have an incredible wealth of resources at franchisee headquarters,” he says. “So the leadership at the time thought moving the company here could really revitalize the thinking, get fresh perspective, and begin anew in terms of how we think about these brands.”

Population: 2.6 million

Size: 153 square miles

Home To: Chipotle, Noodles & Company, Smashburger, Quiznos, Einstein Noah Restaurant Group

Fun Facts:

  • The Mile High City receives an average 300 days of sunshine a year
  • Denver brews more beer than any other city in the U.S.
  • The city is home to a higher percentage of Baby Boomers than any other major city in America

Source: U.S. Census Bureau, Travel.Ogate.com

Finkel says not only is the city home to some of the biggest names in limited service, but it’s also the “home of the concepts that will become the next Chipotle.”

“People in Denver, Boulder, and the Denver area as a whole are free-thinking and innovative thinkers, so a lot of concepts get started here,” Finkel says. “There’s not the constraints of those fast-moving corporate worlds like you’d find in New York, Chicago, and L.A. It’s allowing people to explore their interests, explore different opportunities, and people really support it in Denver.”

The Colorado capital, Finkel says, offers a “significantly lower cost of business ownership and cost of living” for the brand and its employees. “We’re a smaller big city, and you have an incredible work-life balance that you can have here,” he says. “You have the mountains, you have the outdoor experiences. A lot of employees are willing to come to Denver as a location to work, so you can get great talent here.”

Denver also boasts low taxes and business costs, and the area offers incentives that focus on job creation, employee training, tax deductions, and infrastructure improvements.

“For most corporate offices, as you get bigger, you’re looking at quality of life and cost of living,” Neyrey says. “And I think Denver is pretty good right now with that.”

With the Rocky Mountains and more than 200 parks nearby, consumers in Denver are focused on health and wellness, making TCBY a perfect fit for the market, Finkel says.

“We’re fun, we’re free-moving, we’re quick to change,” he adds. “We’re quick to have fun and recognize and reward our people, and that really fits in with the way people in Denver like to work and experience their job.”

Atlanta

Worth the move

After calling one town home for 79 years, operators may find it a hard sell to uproot the entire brand and move more than 120 miles away. But that’s exactly what burger brand Krystal did when it made the transition from Chattanooga, Tennessee, to Atlanta earlier this year. Doug Pendergast, the brand’s president and CEO, says the decision to move was based on four factors: logistics, access to partners and suppliers, economics, and access to talent.

“We call our corporate office the ‘Restaurant Support Center,’ and as we think about truly fulfilling that mission, it’s critical that we can quickly and cost-effectively access our markets,” Pendergast says. “We have 60 restaurants in Atlanta and only 20 restaurants in Chattanooga, and all of our markets can be reached with direct flights from Atlanta,” thanks to the busiest international airport in the world, Hartsfield-Jackson Atlanta International Airport.

Not only do quick-serve companies like Chick-fil-A and Focus Brands abound in The Big Peach, but its growing population means the talent pool is deep. Atlanta’s metro-area population grew by 20 percent, to 4.1 million, between 2000 and 2010, and it’s estimated to expand by another 20 percent this decade.

Population: 5.38 million

Size: 8,480 square miles

Home To: Chick-fil-A, Tin Drum Asiacafé, Moe’s Southwest Grill, Wing Zone

Fun Facts:

  • Atlanta is home to famous figures like Martin Luther King Jr., Jimmy Carter, and Hank Aaron
  • The Hartsfield-Jackson International Airport carries more than 68 million passengers with nonstop service to 186 U.S. cities each year
  • In the decade between 2000 and 2010, the median income grew from $34,000 to $50,000

Source: U.S. Census Bureau, Atlanta Convention & Visitors Bureau

“Because there are so many restaurant companies, [quick serves] in particular, that are either headquartered in Atlanta or have large regional offices in Atlanta, that creates a source of talent that, as we build and grow the company, we can draw from,” Pendergast says. He adds that Krystal is now able to connect more easily with some of its biggest partners and suppliers in the area, Coca-Cola being one of them.

But Krystal isn’t the only quick serve to pack up its stuff and head down South. Arby’s made the move in 2005 after acquiring its largest franchisee, Atlanta-based RTM. Chief operations officer George Condos writes in an e-mail to QSR that the city’s infrastructure is some of the best in the world, which comes in handy when supporting 140 restaurants in the area and throughout the state of Georgia.

Atlanta is known for having a relatively low cost of living, Condos says, as well as a favorable economic landscape. The Georgia Quality Jobs Credit, for example, offers tax credits to companies headquartered in the state that pay employees above the average county wage in which the company is based. “The credits are first used to offset the company’s Georgia income tax liability, but any unused credit can then be used against the company’s payroll tax liability,” he says.

Pendergast says Krystal was able to secure a corporate-office location with lower rent than it was paying in Chattanooga—good news for everyone down the line. “Since we sell 70-cent hamburgers for a living, every penny we’re not spending in rent means we can pass on lower prices to our customers,” he says.

To leverage its home base, Krystal recently formed a sponsorship with the Atlanta Braves. “There’s some great promotions that we’re doing that help drive business in our restaurants, but that also give us access to tickets,” Pendergast says. “We provide those for folks in the Restaurant Support Center, folks who work and support our Atlanta-based restaurants. So there’s amenities and access to events that were just not available in Chattanooga.”

Though traffic can be a headache, Condos says, Atlanta’s culture makes the city a perfect fit for the brand. It also boasts high-quality education, a good housing market, and a wealth of events and activities.

“While Atlanta is a large metropolitan city, it’s also rich in history and culture. The people that live here are business savvy and hard working, but there’s also a charm and genuineness to them,” he says.

Pendergast says the city’s Southern history and tradition—combined with its modern feel and a clear, forward-looking vision—resembles the way Krystal wants to be seen moving into the future. “That’s part of what we want to do with the Krystal brand—to take advantage of this great 80-year heritage, but also keep an eye on moving forward with innovation on the menu to appeal to a whole new generation of customers,” he says. “The Krystal brand is all about family, friends, and Southern goodness, and Atlanta, I think, is a combination of all the best of the old South.”

Columbus

Humble innovation

Of the four up-and-coming cities, Columbus may be the least obvious. The city is smaller than metros like Dallas and Atlanta—home to 1.86 million people, based on 2010 estimates—but it’s a powerful and attractive force to be reckoned with. The area’s tax climate has been ranked in the top five in the country by both Ernst & Young and KPMG, thanks to the lack of personal property, inventory, or corporate income taxes. The city’s cost of living, based on an index of 100, was 91.9 in 2010, and in the same year, Forbes named it the fifth-most relaxed city in the U.S.

Many in the area would argue that the location couldn’t be more ideal; 47 percent of the U.S. population is accessible within a 10-hour drive. Columbus is also home to two of the biggest burger chains in the game—Wendy’s and White Castle—as well as more than 170 food and beverage manufacturers.

Population: 1.86 million

Size: 532 square miles

Home To: Wendy’s, Jeni’s Splendid Ice Creams, Donatos, Charley’s Grilled Subs

Fun Facts:

  • The Columbus Zoo and Aquarium was ranked No. 1 in the nation in 2009 by USA Travel Guide
  • Half of the U.S. population lives within a 500-mile radius of Columbus
  • Columbus boasts the nation’s second-highest number of college students per capita, with more than 120,000 students attending 12 higher-learning institutions in the area

Source: U.S. Census Bureau, USA Travel Guide, City Of Columbus

Jamie Richardson, vice president of government and shareholder relations at White Castle, says the city’s rich educational resources—Ohio State University (OSU), Capital University, and Ohio Dominican are among the several nearby institutions of higher education—mean the brand can not only tap into the knowledge of these universities, but also the students who flock to the area. He says the brand occasionally works with OSU on testing and research, while Columbus itself is a popular market for national brands to do menu testing.

While a corporate-headquarters location may be most important from a branding and culture perspective at the beginning of a brand’s life, Neyrey says, resources and financial advantages like those found in Columbus become the bigger factor “as your financial status grows, as your position in the industry grows.”

Because White Castle has been calling Columbus home since 1934—it was founded in Wichita, Kansas, in 1921—the brand has a large presence in the city. “That hometown identity connects our customers a little bit tighter, knowing that we’re based there,” Richardson says.

It also means the brand has taken on some of the community’s attributes over the decades. “There’s a personality to the town itself that’s really in line with the restaurant personality,” Richardson says. “It’s a hard-working town, but it’s approachable. It’s a friendly town, and I think when you’re in the hospitality business, being in a town that’s known for its friendliness seems to be a nice combination.

“One of our values as a family-owned business is what we call being a humble family, and there’s a humble quality to Columbus,” he adds.

Though it’s not a big metropolitan area like New York or L.A., Richardson says, there’s “a quirkiness to Columbus that makes it kind of cool.”

It’s also a self-proclaimed foodie hub. “There are great, great food people in Columbus who really have an appreciation for the craft of great cuisine and what it takes to make incredible-tasting food,” Richardson says. “We get to spend time with some of the best restaurant people in the world, and we don’t have to fly to Paris to be able to do that. We just have to walk down the street.”