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Page 18 — Retail Properties Quarterly — May 2015
that have led to expansion and the
success of fast-casuals in Colorado.
“The economy is strong, there is a
diversity of demographics in this area
and it is an attractive place to live,” said
Brown. “We have found Colorado to
be one of the states that is quickest to
recover from the recession, which has
sparked an increase in franchising.”
The increase in franchises as well
as company-owned fast-casuals has
created some concern, mostly in
regard to the shortage of quality loca-
tions. “Everyone wants an end cap
unit with quality signage on a main
thoroughfare, but the truth is there is
a lack of high-quality available space,”
said Henrichs. The competitive Colo-
rado market is an issue that every
fast-casual restaurant, including Jersey
Mike’s Subs, has to deal with going
forward.
“Because of the limited inventory of
space, we have done a lot of new con-
struction,” said Brown. “The timelines
are a little bit longer, but having a
brand-new store is something people
can get excited about, and then we
can get positioned in the right loca-
tion.”
However, Jersey Mike’s doesn’t just
rely on new developments for its
stores. “We have one broker in town
who works exclusively with Jersey
Mike’s,” said Brown. “Location, demo-
graphics and traffic count all play a
role in which sites are chosen. There
definitely is a synergy that develops
between the broker and our manage-
ment.”
Taking location one step further,
even when several fast-casuals show
interest in a specific shopping center,
the center cannot have several differ-
ent restaurants within one category.
For example, pizza places – Pizzeria
Locale, Mod Pizza, Blaze Pizza and Live
Basil – all compete for locations within
the same shopping center. Often, non-
compete clauses are built into leases
in an effort to allow only one category
of restaurant within a center.
Economics play a considerable role
in an owner of a shopping center
choosing a particular concept. But
concept selection is more than look-
ing at which tenant can pay the most
rent. Landlords must sort through a
variety of critical factors to determine
the best tenant for a center – brand
awareness and credibility, creditwor-
thiness of the franchisee, average
sales per unit and how well a brand
complements other tenants in the
center.
Many experts predict that a large
majority of activity will continue to
come from fast-casual restaurants
through franchises. “The Denver
metro area is a growing region with
a high number of millennials moving
in,” said Henrichs. “Everything points
to an upward trend in food spending.”
Jersey Mike’s Subs said that it also
plans to keep pace in 2016 with its
record year this year. “We have a prov-
en model that has been around for a
long time,” said Brown. “More people
are showing interest in having control
of their destiny and being the boss,
which is what the franchise opportu-
nity provides.”s
A new Jersey Mike's Subs franchise recently opened in Colorado Springs.
Chart courtesy: CBRE