Why chains pick Columbus, Ohio, as test-market target

Wendy’s, Max & Erma’s and Panera experiment with new prototypes in Midwestern city

Columbus, Ohio-area chains Wendy’s, Max & Erma’s and Panera Bread have found the metro area a good fit for testing new restaurant prototypes. The three chains are experimenting with new designs and remodeled units in the area, which has 1.8 million people in its eight-country region, including 125,000 college students.

Covelli Enterprises — the largest franchisee of Panera Bread, with more than 200 units — plans to build 30 new locations in the Columbus area over the next five years, the Columbus Dispatch reported [3]. Many of the new locations would be in Panera’s new restaurant design, which features a drive-thru, the Warren, Ohio-based Covelli Enterprises said.

Max & Erma’s, the 78-unit casual-dining chain based in Columbus, is testing two different prototypes there as part of a plan to restart growth after its sale from bankruptcy last year to American Blue Ribbon Holdings LLC [4].  The new designs will be company-owned locations; Max & Erma’s plans to open three franchised locations this year and five in 2012.

Dublin, Ohio-based Wendy’s has used the Columbus area as a test market for new products in the past, and is currently evaluating two new restaurant prototypes in the city. Spokesman Denny Lynch said the city’s advantages don’t seem unusual to Wendy’s, since it’s always been the chain’s backyard. But there are many reasons why the chain has chosen Columbus as a test market.

“It has affordable media, and you have the ability to advertise without messaging spilling over into adjacent markets,” Lynch said. “Columbus is also a younger town because of the university, and many OSU [Ohio State University] graduates stay in town [after graduating], meaning you have a vibrant 20- to 30-year-old population, and it’s growing.”

Lynch said Wendy’s is “very pleased” with initial results for the two most recent Columbus prototypes.

“We’re seeing more people in the dining rooms, so that’s an encouraging early read,” he said. “For most of QSR, it’s 60 percent to 70 percent of business done at the pick-up window, but we’re seeing a greater percentage in the dining room.”

Because Wendy’s company-owned and franchise system is so large, the brand tests almost everything in various U.S. regions simultaneously, Lynch said. Columbus is a reliable facsimile for a large swath of the Midwest and other parts of the country. While the chain is testing restaurant prototypes there, Wendy’s next big menu rollouts — breakfast and Dave’s Hot ’N Juicy Cheeseburger — were not.

“In the event that you can’t test regionally, there’s a reason Middle America is called ‘Middle America,’” he said. “Columbus is very representative of American demographics.”

So are comparable cities, like Indianapolis and Denver, Dennis Lombardi, executive vice president of foodservice strategies for WD Partners, a program management firm for multi-unit foodservice operations also based in Columbus, said. Those cities make good test markets because they are state capitals insulated somewhat from shocks to the state economy, with several major universities and corporations to supply customers.

“They’re attractive because it’s less expensive to do business in those cities,” Lombardi said. “The fact that they’re on several major interstate highways helps, as does the fact that it’s easier to get around logistically there than in Chicago or New York. You don’t need 500 stores to get into those markets.”

In Columbus’ case, its central location also makes it alluring.

“There is a reasonable amount of transference when you’re in the middle of the country, as opposed to taking something from Maine to Florida or to Washington state,” Lombardi said.

Contact Mark Brandau at [email protected] [5].
Follow him on Twitter: @Mark_from_NRN [6]