Special Report | September 2012 | By Jordan Melnick

The Town-Gown Affair

Page 2
McAlister's college town locations seek life long brand customers.
An employee at a college-town McAlister's location helps the brand earn potential life-long customers. McAlister's Deli
Email this story Email this story
Printer-friendly versionPrinter-friendly version

For this reason, National Restaurant Consultants president David Kincheloe calls the college town “a blessing and a curse” for quick-service restaurants.

“When college is in session,” Kincheloe says, “your labor force is plentiful and so is your guest base. When college goes away, in many cases your labor force also goes with it.”

A related challenge to operating a restaurant in a college town is keeping up the flow of revenue when school is on break. The best way to do so, experts say, is to earn loyalty among permanent residents, even as operators derive the majority of their business from the transient population of students.

“It’s important to maintain an emphasis on the non-college student,” Tristano says, adding that it is no easy task. “The real big challenge is focusing on the customer who is there every day. You almost have to have two different strategies, one for the college students and one for the neighborhood.”

Tristano likens the scenario to tourist towns that see their business opportunities rise and fall depending on the season.

“It’s about realistically managing the peaks and valleys of your business,” he says. “How do you earn as much as you can when it’s peaking and dial it back when it’s in the valley?”

In certain cases, Tristano says, restaurant operators may want to follow the students’ lead and take a break themselves when school is out. “When business is in the valley, that is maybe a good opportunity for the operator to go on vacation and enjoy the summer,” he says.

Kincheloe echoes this advice. “If you have totally embraced the student market,” he says, “then you might consider shutting down for a week or two [in the summer].”

To that point, Saxton says his college-town McAlister’s locations see a 20 percent drop in sales volume during the summer, though he says they are among his best-performing restaurants on an annual basis. On the other hand, he says university campuses are becoming increasingly more active in between semesters as schools develop year-round programming and introduce myriad amenities to keep students continuously entertained.

“There are fluctuations in business, but I find today, as opposed to even five years ago, that colleges … have more and more going on in the summer,” Saxton says, citing camps, special events, seminars, and college-prep programming as events that populate college towns during the summer.

Another of the big challenges in college markets is also one of its big opportunities: tapping into the Millennial generation, also known as Generation Y. Defined as those born between the early 1980s and the late 1990s, Millennials dine out in groups frequently relative to other generations (though they tend to spend less money); they are adventurous (if somewhat picky) eaters; and they are zealous pioneers of online social networking. All of this bodes well for savvy restaurant chains that manage to capitalize on these characteristics, but be wary: Millennials can also be hard to please. They want it their way, and not just from Burger King.

“Flexibility and customization is very important to Millennials,” says Tristano, citing a Technomic study called “The Generational Consumer Trend Report.” The preference for flexibility translates to Millennial demand for quick serves that stay open late (indeed, many college-town quick serves stay open well past midnight) and can accommodate various dietary restrictions.

“You see a lot of different [dietary] trends taking place,” Tristano says. “Vegan, for example, is very popular among college students. Maybe that changes when you go into the workplace and you realize what Morton’s steak tastes like. But there are definitely differences, not just generationally but also within the college-student [market].”

Kara Nielsen, a trendologist for the food and beverage product-development company CCD Innovation, echoes this analysis. Citing a Bon Appetit Management Company study, Nielsen says the share of vegetarian college students rose from 8 percent in 2006 to 12 percent in 2010.

“They’re really taking a break from meat,” Nielsen says. “So these [quick serves] on campus really need to offer alternatives to accommodate these new dining styles.”

What emerges from all of the data, analysis, anecdotes, and observation is a complicated picture that leads to a simple conclusion: college towns and quick serves work well together. Ebb and flow notwithstanding, there is a good reason that so many quick-serve operators are looking to expand into as many college-town markets as possible.

“The reality is that it’s just a solid opportunity,” says Benson, the Dunkin’ Donuts vice president of development.

Opportunity. For students and quick serves alike, that’s what college is all about.