Nontraditional locations bring plenty of potential — and special considerations

In the early 1990s, in a move to diversify its portfolio and tap new revenue streams, New Jersey-based Villa Enterprises began exploring expansion into nontraditional locations.
The multi-concept restaurant group first began investigating airport locations, intrigued by their similarities to enclosed malls and the parallels between customer bases. Over the subsequent two decades, however, Villa has gone from exploring to actively –– and consistently –– investing in nontraditional units.

Under the Villa Italian Kitchen, Villa Fresh Italian Kitchen and Villa Pizza banners, Villa Enterprises currently operates more than 260 pizzerias around the globe, about 20 percent of which are found in nontraditional locations, such as casinos, airports, travel plazas, sports arenas and universities. According to Villa Enterprises business development rep Christopher McNamee, the mix of traditional and nontraditional units has fueled Villa’s growth, brand recognition and performance.

For many pizzerias, nontraditional locations entice with robust revenue potential, brand-building merits and traffic volume. Of course, those same promising locations can also bring a litany of challenges.

Last fall, Portland, Oregon-based Sizzle Pie opened two concession stands at the Moda Center, home of the NBA’s Portland Trail Blazers. Though Sizzle Pie’s director of operations Bob Peyton says it’s too early to determine the impact of the arena units on traffic or sales at Sizzle’s two traditional Portland eateries, he acknowledges a new energy around the three-year-old concept.
“These two concession spots have solidified our brand and introduced us to new customers, which we’re confident will translate into results,” Peyton says.

For most, the primary benefit of the nontraditional location is simple: the ability to reach a new and generally captive audience.

“That’s the main and, many would argue, the invaluable benefit of a nontraditional location: getting your brand in front of people who might not know you,” says Steven Brush, head of Brush Enterprises, a Philadelphia-based consultancy specializing in nontraditional development.

As the economy shifts and new trends emerge, nontraditional locations can also help a concept find its niche and resist complacency in an ever-evolving marketplace. Nontraditional locations bring pizzerias outside the foodservice world and push operators to cultivate new business relationships capable of unlocking novel opportunities.

“While the food world tends to be somewhat interconnected, the decision makers from malls and street locations to airports and casinos are often a completely different group of people,” McNamee says.

As nontraditional venues, including airports and stadiums, increasingly recruit local and regional brands to complement national names, the opportunities for independents are expected to accelerate. It’s a welcome development for many local players, but also one that demands restaurant leaders recognize and study nontraditional’s unique elements.

For example, nontraditional locations can have stringent restrictions on food handling, hours and other daily operations, all of which can terrorize a restaurant’s inventory, prep and labor plans. In addition, some concepts might be forced to adjust their product line up or service method to accommodate an on-the-go crowd, something many pizzerias accomplish easily enough with slices or mini-pizzas.

Operators must also be aware of the formal bid process that goes along with many nontraditional locations, a time-consuming process that often includes disclosing large amounts of company information. And, finally, there are often expensive sponsorship fees in addition to monthly occupancy costs that operators must have the capital to satisfy.

The sponsorship fees “are often negotiable, but it’s still a cost of doing business that one must understand,” Brush says.

For Sizzle Pie, moving into the Moda Center has been an eye-opening experience with a steep, yet exciting learning curve. Peyton has had to develop new prep schedules and ordering routines; find staff amenable to unconventional hours and inconsistent scheduling; and learn to work within opening and closing hours determined by a landlord.

“The good news is that in spite of these challenges we’ve found a way to get it done,” Peyton says.

Before jumping into nontraditional waters, McNamee urges pizzeria owners to do their homework. Talk with suppliers and construction teams to determine if there will be added costs to opening and operating a nontraditional location and connect with other restaurant concepts located in a given venue to evaluate the unique challenges of that specific location.

“Research, research, research,” McNamee says, adding that it’s imperative operators also run the numbers “every possible way” to assess if the hassle is worth the potential ROI.

Many landlords of nontraditional venues, particularly airports and their concession management companies, will host informational sessions. McNamee calls these gatherings an invaluable opportunity to learn about the intricacies of running a nontraditional location and to begin building relationships with in-the-know professionals.

“Attending these meetings can not only be informative, but also have the possibility to act as an excellent networking opportunity,” McNamee says.

To that point, Brush calls dealing with foodservice contractors in nontraditional locations a “relationship-driven business.” The contractors, who generally bid on the opportunity to run a venue’s foodservice operations, want winning concepts that produce results and little hassle.

“This is not a real estate deal driven solely by the numbers,” Brush says. “Good ties with a contractor will help create a win-win scenario.”

Chicago-based writer Daniel P. Smith has covered business issues and best practices for a variety of trade publications, newspapers, and magazines.