Food franchises find home in Springs

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When journalist Eric Schlosser chose to base his 2002 book Fast Food Nation in Colorado Springs, restaurants were opening here at a faster rate than in any other part of the country.

The city perfectly illustrated Schlosser’s vision of a fast-food nation with McDonald’s, Burger Kings and strip malls popping up all over town as the population continued to grow.

Of course, he admitted in the first chapter, Colorado Springs wasn’t really any different from other suburban centers — and he could have based his book in any number of cities.

Today, Colorado Springs again is seeing regular announcements about new franchise restaurants like Which Wich, Larkburger and Bird Dog BBQ moving into town. And others like Mooyah, CiCi’s Pizza and Quaker Steak & Lube are looking actively for franchisees to own their brands in Colorado Springs.

These quick-service restaurants have funny names and sometimes fancy food. They’re not the run-of-the-mill McDonald’s or Taco Bells of yesteryear. McDonald’s announced in November that it blames lower third-quarter revenues in part on increasing competition from a wider variety of fast food.

Nationally, quick-service restaurant chains are growing faster than other franchise brands — 2 percent instead of 1.5 percent, said Matt Haller, vice president of public affairs for the International Franchise Association.

So it’s possible the growth Colorado Springs is seeing in quick-service restaurants is just the echo of a national trend. Haller says the association does not keep track of local or regional figures.

But Colorado Springs does have the 18th-most fast food restaurants per capita in the country, according to a published study, and there are a few reasons the city, along with the state, could see more food franchise activity than most.

Melting pot of palates

Colorado is known to be a credible test market for food concepts, said Kevin Hein, an international franchise attorney and partner at Faegre Baker Daniels in Denver.

“We’re a good melting pot of people from around the country here,” Hein said. “People here are used to a lot of different flavors. We have diverse palates.”

Franchisers look to the Colorado market to test their concepts, Hein said, because it’s a good low-cost place to see how America will respond to the concept.

“We’re a market that likes to try new things,” he said.

If diverse palates are a draw for restaurants, Colorado Springs is a gold mine, says Cindy Rayfield, a franchise consultant with FranNet Colorado in Denver.

Not only will franchisers look to move into the military-rich community where people come from diverse backgrounds across the country, but the people who decide to stay will look for those franchises.

“So many people leaving the military are settling there,” Rayfield said. “It’s comfortable with a good quality of life. But they still miss home.”

And they want to bring a piece of it with them. What better than the food?

But it’s not just the people who live in Colorado Springs that contribute to the city’s allure.

“When you think of Colorado Springs, you think of families and people on vacation,” said Thomas McCord, vice president of franchise development for CiCi’s Pizza.

The company has done its market research. And Colorado Springs, considered as its own market, is a target for the restaurant chain. Not only is Colorado Springs a hotspot for family vacations, it draws a lot of Texans, where the CiCi’s brand is strong, McCord said.

The company is just looking for the right franchisee to own and operate its Springs locations. CiCi’s wants several.

Lower risk locally

While people in Colorado like to try new things, there are limits, Hein said.

Hein had a client try to franchise a Cincinnati Chili restaurant, but it failed because the flavor profile just didn’t work outside of Ohio and there weren’t enough transplants to support it. Colorado is a much safer, lower-cost place for such an experiment than New York or Los Angeles, Hein said. But there are people from New York and California living here.

“There’s a lot less risk here,” he said.

Some brands think of Colorado as one market, while others look at individual cities within the state and separate Colorado Springs from Denver. A lot of it depends on how they want to grow.

Haller says most restaurant concepts today are looking for franchisees who can own and operate multiple locations — the more the better. For some smaller brands that would only have 10 locations in Denver and two in Colorado Springs, it makes sense to consider the two cities as a single market. It just depends on the franchiser’s model.

Healthy market

Aside from being diverse, Colorado has a reputation for being ahead of the national trend toward health-conscious eating, Hein said.

“People are paying a lot more attention to what they eat,” Hein said. “And you have companies that embrace that.”

That’s part of why there are so many new quick-service restaurant concepts today, he said. A lot of them are catering to a more health-conscious crowd, and Colorado is at the center of that trend.

“It’s no accident that the nation’s two largest burrito franchises (Qdoba and Chipotle) are based in Denver,” Hein said.

He’s skeptical the big burger and frozen yogurt crazes will last. Several fancy burger chains like Five Guys, Smashburger, Good times and Larkburger, are growing concepts. But the market might be getting saturated, they’re not in keeping with the health trend and they’re not cheap either, Hein said.

Frozen yogurt — there’s just so much of it, he says. The market might be overloaded.

Military presence

Fast-food franchises are attracted to Colorado Springs for a lot of the same reasons all franchises like the area, Hein said, including the military presence.

“People who have been in the military are generally regarded to be great franchise owners,” Hein said. “They’re very good at following the rules, they’re trained and they’re smart.”

Franchises are systems, Rayfield said. And people leaving the military are typically very good at working within a system.

Because former military members and franchises blend so well, the IFA announced at the beginning of 2012 that it aimed to bring 75,000 veterans into the franchise world this year. So far, franchises have hired more than 65,000 veterans, and 4,300 veterans have become new franchise owners.

Several brands, including Cici’s Pizza and Quaker Steak & Lube, an auto sports-themed wing restaurant looking to move into the Colorado market, have special programs for veterans interested in becoming franchise owners.

“There are a lot of factors that make Colorado Springs a highly attractive community for franchises,” Hein said.