Those outside the Midwest and Southeast may not have heard of Penn Station East Coast Subs—yet. That’s because the 320-unit, Cincinnati-based brand is sticking to a playbook that’s demonstrated great success over the past couple of decades: the beloved sandwich franchise is targeting cities within a 350-mile radius of Ohio’s Queen City. In that way, Penn Station is a well-kept secret with a world of white space to grow into.
“We’re currently in under 40 markets,” says Craig Dunaway, chief operating officer with Penn Station—and a former franchisee at both Penn Station and Papa John’s. “Everything in the franchising world is viewed through the lens of where you have white space to expand. Within a 350-mile concentric circle of Cincinnati, we see over 1,000 white-space opportunities for Penn Station restaurants.”
Penn Station is exploding in markets like Nashville, Detroit, and Charlotte due in part to its craveable menu, which is positioned for the off-premises dining revolution. While the brand has always offered its famous hot sandwiches, it now sells an increasing amount of cold handhelds. Those cold options have grown three-fold since 2020, Dunaway says, often driven by robust takeout and delivery sales.
Thanks in part to growth in these areas, the brand’s AUV has risen to around $840,000. “That’s a number we’re proud of,” Dunaway says. “A lot of franchisors choose to only reflect the top quartile in their Franchise Disclosure Document (FDD) Item 19—that’s a total average of all our units.”
The Penn Station menu is also differentiated by its high-quality lunch and dinner options, like sandwiches, wraps, salads, and side items, including the customer favorite, fresh-cut fries. Unlike competing sandwich concepts, Penn Station enjoys an almost equal split between lunch and dinner sales—Dunaway reports that about 60 percent of sales take place at lunch, while the remaining 40 percent are during the dinner daypart.
“Our quality of product is a key differentiating factor for us,” Dunaway says. “We cook real food and you can tell the difference. From our cheesesteaks, to our fresh-cut fries, to our fresh-squeezed lemonade. Our customers really do appreciate the quality difference and our craveable food is what keeps them coming back”
The brand’s tech stack is also growing alongside its sales, with Penn Station recently hiring an expert formerly of a competing brand to evaluate the brand’s operations and where it could use more efficiencies. It already has a great head start with hundreds of thousands of active users in its email marketing program. Its online ordering has increased from 3-5% to about 15% of its orders.
“We enjoy providing the system and tools to help position our franchisees well to be successful and make money,” Dunaway says. “We know that is what franchisee investors want and we try to make things as simple and uncomplicated as possible for them. We don’t want to try and be everything to everybody—if you like sandwiches, and want to eat them when you want, how you want, you’ll really like Penn Station.”
Penn Station is currently looking for seasoned franchising veterans to open multiple locations in cities across many major markets including, Detroit, Chicago, Atlanta, Charlotte, and Raleigh—among others. Dunaway says that Penn Station also doesn’t shy away from single-unit operators, as the brand has a franchising structure that gives franchisees maximum support regardless of how many stores a franchisee has. As a former franchisee, Dunaway would know.
“We offer a hands-on culture,” Dunaway says. “Everybody who works in our corporate office, their main focus is, ‘How can we maximize ROI for franchisees?’ We have a relentless approach on trying to help our franchisees strive toward success while also keeping things simple for them. We believe the Penn Station business opportunity for prospective new franchise groups is an exciting one.”
The brand currently has over 100 more locations in the pipeline. Before long, it hopes to be a 500-unit brand that will be recognized on the national stage alongside competitors, Dunaway says. It will accomplish that with franchisees who are looking for a new business venture and want to grow with a brand that customers love in their own markets and territories where there is not already a Penn Station sub shop.
“What you find with Penn Station is that our current franchisee base is highly motivated and they enjoy being a part of our franchise system,” Dunaway continues. “Based on satisfaction surveys conducted with current franchisees, the vast majority say they would do it all over again. We want our approach to development and brand growth to be fact-based, balanced, and fair for both franchisor and franchisee, and we have made significant investments in both technology and our franchise development team to support this growth plan.”
For more on franchising with Penn Station East Coast Subs, visit the brand’s franchising site.
