May 2015 Living Large: Beyond ‘Location, Location, Location’ for Three Brands
BY BETH EWEN
“It was definitely a game-changer for us this past year,” says Nancy Bigley, CEO of Bottle & Bottega. She’s talking about her decision to hire a real estate adviser, Simpson Consulting Group out of Florida, to whom she pays a monthly retainer and who was referred to her by her national builder, Northboro.
Securing the two companies, both of which work with her franchisees across the country, has slashed the time it takes for a new franchisee to secure a lease—it’s three or four months now, down from nine or 10 before. Two franchisees who signed in November and December last year secured leases by the end of March, she says.
“We’ve always gotten good locations, but it takes the pressure a little bit off me, too. Because even though I had criteria and felt comfortable with it, it’s just nice to have somebody who does this day in and day out.”
The builder is paid for by franchisees, the same as hiring a local contractor but Northboro knows Bottle & Bottega specs inside and out. A Bottle & Bottega costs about $140,000 to open, with $50,000 to $65,000 of that amount for build-out.
A fun vibe inside a Wild Wing Cafe restaurant.
The franchisor pays the monthly retainer to the consulting firm. “It was a very tough decision, I’m not going to lie, because it’s money you have to pay out. But to me it was a gap, and we just weren’t getting open fast enough,” she says.
As for criteria, her art-making and wine-drinking studios do well in “cool” neighborhoods with younger demographics and lots of evening activity. “We tell our franchisees and brokers to visit from 6 to 9 p.m. What does the area look like at that time of day? Would you be able to see the business? Are there restaurants that people can walk to?”
She encourages her franchisees to partner with businesses in the area, both referring customers back and forth and finding out in advance what the neighborhood is really like. The pop-up events, which Bottle & Bottega hosts before the franchisee gets a lease, is another opportunity to test out which potential site works best.
Creating a presence
Executive Care franchisees are not allowed to operate out of their homes, as some of its competitors do. “First of all for security reasons,” says CEO Lenny Verkhoglaz, “and also it’s an image. It shows presence” to have an office. “Plus once in a while you have governmental officials popping in and out, and you don’t want them in your home.”
Bottle & Bottega studios feature colorful interiors and comfortable seating.
The home healthcare provider doesn’t get many walk-ins, so a retail storefront is not a must although it does add visibility. Space in an office park works well, and franchisees need between 800 to 1,200 square feet, with a minimum of two private offices and a conference room or training room.
His main advice is counterintuitive, he says. “What we tell our franchisees is don’t look for a location that’s close to your home. Make it convenient for your caregivers, because caregivers will not travel 20 miles out of their way to fill out an application,” he says.
Further, the best spots are where competing homecare agencies are located, because they don’t fight for business at their location but rather go out to healthcare providers to get referrals. “Make it convenient for the caregivers. Caregivers are able to work for multiple agencies at the same time. They just cross the street and pick up another assignment.”
Executive Care’s corporate location is in Hackensack, New Jersey. “There must be 20 other homecare companies within a few square blocks. It’s like a hub for homecare,” he says. He also suggests leasing enough space so there is room to grow. “We learned from our mistakes,” he says. “We probably moved three or four times, looking for more space,” when developing their original business.
First, a strategic plan
Wild Wing Cafe’s quest for real estate starts with its strategic growth plan, which lays out which parts of the country the restaurant chain wants to target.
CEO Tom Lewison’s plan is to grow in contiguous states from their Southeast U.S. base and up and down the East Coast. “We know it’s easier to do that than go into Walla Walla, Washington, next,” he says.
Then they work with a large brokerage company with sophisticated mapping programs, which identify key trading areas that meet Wild Wing’s criteria. And that list of criteria is very, very long—the packet given to franchisees as they select sites, for instance, fills 15 pages, Lewison says. “It’s a lot of work to fill it out,” he adds, and the franchisor doesn’t expect a site to meet 100 percent of the criteria. But those sites that meet most tend to perform the best, too.
About 80 percent of sites franchisees present are accepted, Lewison says, while 20 percent get turned down, often times because a franchisee already owns a site and wants a Wild Wing Cafe on it. The cost to build from the ground up is $1.6 million, excluding the land. A conversion can range from $300,000 to $1.4 million, “depending on what you’re starting with,” Lewison says.
Executive Care franchisees are encouraged to lease space including a conference/training room.
Wild Wing Cafe is a 25-year-old chain, so it inevitably has locations that once were ideal but now the trade area has changed. When Lewison joined the brand last year, he asked for the creation of a watch list, which holds locations with concerns. “Forty percent of the sites on the watch list are on the watch list because of the cost of the real estate and the business terms that were negotiated on those restaurants before we came on board,” he says.
The other group has seen their trade areas decline, and for those he advises franchisees to reach out to landlords and try to renegotiate terms. “The landlord knows they have real estate with less value than it used to, and they’d rather keep their tenant than lose it.”
A franchisee in Alpharetta, Georgia, for example, recently got discounted rent and a “good bit of money” from its landlord to remodel, and they’ve got a shorter term to their lease.
In February, Lewison reported a new store in Dunwoody, Georgia, and in March franchisees were breaking ground on three other Georgia restaurants.
“We’re cooking along,” he says.
“Here’s the key to getting new franchisees. The best way to get new franchisees is to open new restaurants. People see it, they like it,” he says. “In the last year we opened four restaurants, and those four outpace our AUVs by at least 30 percent. And so we like that and franchisees like that.”
When a restaurant opens, such as in Atlanta, Lewison visits with other franchisees in the area and lets them know they need to move quickly or the development agreement will go to someone else. “That’s not just a ploy. It’s true,” he says.
But finding the best sites isn’t easy, and involves both art and science. “It’s very tricky. If it was easy everyone could do it, and have great success,” he says.