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Restaurant chains get a higher education

Denny’s, Bojangles’, Einstein Bros., Moe’s Southwest Grill share lessons learned from non-traditional growth

Editor's Note: A previous version of this story has been updated to include the correct size of Bojangles' University of North Carolina–Greensboro location.

Restaurant brands are learning to love on-campus locations as growth vehicles and testing grounds for new operations or service techniques.

Nation’s Restaurant News recently spoke with movers in the segment, including Bojangles’ Famous Chicken ’n Biscuits, Denny’s, Einstein Bros., Moe’s Southwest Grill and Beef O Brady’s to share lessons learned.

Bojangles’ Famous Chicken ’n Biscuits opened its first on-campus restaurant Monday at the University of North Carolina–Greensboro. First-week sales surpassed $50,000 for a unit of about 2,800 square feet, said Eric Newman, executive vice president of Charlotte, N.C.-based Bojangles’. That kind of performance makes higher-education locations “a valuable tool” for accelerating the brand’s already rapid growth, he said.

“[Non-traditional growth] can bolster what you already have and increase market share in penetrated markets, or be a spearhead to introduce more people to the brand,” Newman said. “It’s a great addition to reach people you’re not reaching normally at certain dayparts.”

For instance, he said, Bojangles’ can drive strong sales at lunch from students at the on-campus unit without cannibalizing sales from its three locations in Greensboro near the university.

“You’re basically serving a contained market not leaving campus for mealtimes during school hours,” Newman said.

Bojangles’ also operates on-site restaurants at Charlotte’s convention center, football stadium, transit center and airport, as well as in Union Station in Washington, D.C.

Last week, Denny’s reported that this year franchisees would open five restaurants, rather than the 10 it had previously planned, on college campuses, where the chain operates both food court restaurants and fast-casual counter-service units.

Denny’s chief executive John Miller said the chain plans to grow on campuses, but said the timing of new-store development complicates plans. On campuses, Denny’s is dealing with two new types of franchisees: universities and contract foodservice organizations, like Sodexo or Compass.

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“We are very excited about the 11 university units we have opened since the beginning of 2010 and the attractiveness of the Denny’s brand in new distribution points,” Miller said. “Although we do not expect to open any more university units in 2011, we remain focused on building our pipeline for 2012 and beyond.”

High-volume lessons

Einstein Bros. Bagels also has a growing presence on campuses around the country. Sixty-five percent of the brand’s 240 licensed locations are located at higher-education institutions, said Jeff O’Neill, chief executive of Lakewood, Colo.-based parent company Einstein Noah Restaurant Group. Recent campus openings include units at the University of Virginia, the University of Wisconsin and the University of Arkansas, he added.

“This is a great third leg of the stool and a good, balanced growth opportunity for us,” O’Neill said. “A lot of young kids are looking for fresh-baked and healthier choices, so [on-campus expansion] is working for us, and we’re getting strong unit growth as well.”

He added that higher-education openings and other on-site growth with partners like Aramark or Sodexo make a “beachhead in our franchising push” and help get locations in new markets quickly. Also, these locations average about 800 square feet, compared with a typical 2,500-square-foot Einstein Bros. unit, so brand officials learn a lot about through-put.

“Our location in the Denver airport is the single largest sales venue across the company,” O’Neill said. “They’ve got to be ready to roll, but they do a good job keeping the line moving and use handheld terminals for line-busting.”

Extra credit for unit growth

Paul Damico, president of Atlanta-based Moe’s Southwest Grill, also loves ringing up large sales figures in small spaces at colleges and other on-site accounts. But he particularly likes having campus restaurants as a growth vehicle that is incremental to Moe’s traditional expansion.

“Almost every brand wants to get into this because you get lifelong customers at a young age,” Damico said. “Students are educated consumers who want great food that is better for them, and they’re willing to pay more for it. To be part of their campus meal plan makes it so much easier.”

Aramark operates the majority of Moe’s non-traditional locations, Damico said, while Compass or Sodexo manage other properties. A few campus locations — at the University of Buffalo, Penn State University and the University of Notre Dame — are self-operated, he said.

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Higher-education locations make up most of 420-unit Moe’s on-site restaurants, he added. The brand has 11 campus units open and six more in development, compared with five units in malls, four apiece in airports and train stations, and one location apiece in health care, business and industry, and travel plaza settings.

“The nontraditional venues let us get our brand in front of the masses and introduce us to people who couldn’t see our restaurants where they’re from,” Damico said.

Classing up the joint

Sometimes on-campus locations are the only places where restaurants can open with enough traffic and good locations, said James Walker, chief development officer for Beef ‘O’ Brady’s.

“There are towns out there where a college itself could support a Beef ‘O’ Brady’s, but there’s no real estate available nearby,” Walker said.

The Tampa, Fla.-based family sports pub chain opened its first on-campus restaurant this year at the University of South Florida, also in Tampa, in partnership with Aramark.

“We’ve looked at the results of USF, and we feel that we’ve got enough of a track record there that we’re ready to jump on more campus opportunities in 2012,” Walker said. “That’s where we’re more value-oriented, and college students are looking for value and good sports.”

The sports teams that campus customers want to watch in Beef ‘O’ Brady’s casual-dining atmosphere quite often are the college football and basketball teams from the school, he said, which gives Beef ‘O’ Brady’s a chance to tailor its on-site restaurants to a very passionate fan base.

“Most of our traditional restaurants are about big-name sports teams, like the New York Yankees or the Boston Red Sox, and then a strong local element,” Walker said. “But when this brand moves to campuses, you’re in a bit of a co-branding situation where the team’s brand is center-stage throughout. It’s nothing different from what we do in our traditional locations, but we take this local element and shine a spotlight on it.”

Beef ‘O’ Brady’s has more than 210 restaurants in 22 states.

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

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