In order to succeed, restaurant groups must be in the business of constantly evaluating their business needs and figuring out how, when, and whether expansion makes sense. Any plans to open a new location involve some level of risk, and when it comes to risk versus reward calculations, launching an outpost in a high-traffic and tourist-heavy area like a downtown shopping district, a theme park, a train station, or an airport features plenty of both. If you’re curious about the pros and cons of choosing a busy and unconventional address for your restaurant expansion, we consulted a group of hospitality executives and funding experts with high-traffic restaurant experience to get the real story.
Before opening in an unconventional location, think carefully about your group’s overall business goals.
Expanding your restaurant’s presence into an unconventional space like an airport or a shopping center can be a lucrative move, but before you decide to pursue that route, it’s important to consider several factors to determine whether this is a logical choice for your business’s growth.
“Depending on the specific non-traditional location you’re looking at, it can be very successful,“ says Erik Herrmann, partner of CapitalSpring, a private equity group that has invested close to $3 billion in foodservice and restaurant concepts. But Herrmann also cautions you to “keep your eyes open” and be realistic about the current state of your restaurant operation. “How are your existing locations doing? What is it about the current real estate model [of your current location(s)] that makes it work?”
If you use the economics of your current location(s) “as a baseline,” you’ll have a starting point to help you decide whether it’s more reasonable to “just keep doing what your doing at another [more] traditional retail site” or to branch into a “non traditional location,” says Hermann. In short, take a close look at all of your potential expansion options before rushing into an unconventional space.
Restaurant locations in high-tourism areas attract higher traffic…and higher rent costs.
According to Rob Dellibovi, founder of RDB Hospitality Group, opening in a major tourism area or travel hub features the enormous “pro” of “a ‘captive audience’ that comes with some guarantee of volume at your establishment.” He cites examples like “Times Square or Fisherman’s Wharf, [where] you will have thousands of eyes on your store per day.”
The trade-off for a high quantity of potential customers is that “the rent will usually reflect this. But there is a very low chance that there will be tumbleweeds in your restaurant space. You’ll need to be careful to position your concept and pricing to cater to the type of captive audience that you’ll be enjoying,” Dellibovi explains, who says pricing can be particularly challenging in these areas. “If you price too high, you won't have as much success, as classic touristy areas can be a bit lower in terms of average spend.”
But Dellibovi also points out that location specifics are important. While some tourists might balk at a marked up entrée or beverage, “you can add a few dollars on every beer you sell at an airport because that volume is pretty steady and people aren’t bargain hunting," he says.
Do your research, talk to local landlords and local business owners, and price competitively.
Be sure to research local bureaucratic policies if you want to open in a transit area.
As far as “captive audiences” are concerned, it’s hard to come up with a better example than the throngs of people who pass through a major airport on a daily basis. While that may seem like an unquestionably positive situation for a restaurant group eager to spread its wings, George Tinsley Sr., president and CEO of Tinsley Family Concessions (which operates 60+ restaurant locations in airports in Kentucky and Florida), cautions that there are drawbacks, “Being in the airport is tougher than being on the street as far as operations and traffic patterns. Having a business in an airport is like moving into a gated community – there are a lot of guidelines, regulations, and stipulations.”
Tinsley says that, for a restaurant group to successfully function in a hectic airport setting, “they would need to be an experienced operator who can meet the demands of airport operations business model guidelines and understand how the contracts work. Individual companies will more than likely have a very tough time getting into an airport unless they work with experienced master concessionaires acting on a request for proposal put out for bid by the airport authority, which would include a proposal on several locations or concessions in that particular airport.”
Master concessionaires, or large global operators who can then subcontract to smaller restaurant groups, work with lobbyists once the airport communicates what they are looking for in the way of food & beverage locations. "Most master concessionaires use lobbyists to help them navigate through the political environment and select companies to fill their needs,” says Tinsley. He also points out that “most airports want to see strong national brands, and some local brands participate in the available business opportunities. This will satisfy both the traveling public, who will experience the national and local flavor of the community.”
Staffing can also be challenging at an airport, as employees will need to go through TSA screenings and may experience commuting debacles. A strong knowledge of the airport’s requirements and policies will enable you to clearly communicate with your staff and gain a realistic perspective on this new endeavor.
Partnering with developers and property owners who understand your vision is a big plus.
“When we look at potential locations, understanding that all locations are not built the same is crucial,” says Ted Zizlsperger, COO of Sally’s Apizza, an iconic New Haven, Connecticut pizza shop that’s been expanding across Connecticut and Massachusetts in recent years and will be opening a location at the high-traffic Boston Seaport in 2025. At its satellite shops, Sally’s seeks to honor the legendary vibes of its original Wooster Street space with “thoughtful restaurant design” and a few upgrades like “a full bar with a craft cocktail program and an expanded, curated menu to complement our apizza.”
Zizlsperger also tells us that a key to Sally’s Apizza’s expansion model involves “having the right mix of like-minded brands as neighbors. We view other brands located near us as partners that help to drive traffic to our business - and ours to theirs. A rising tide lifts all boats.”
On a similar note, Zizlsperger highlights the importance of “partnering with the right developer or landlord. This will ultimately determine what long-term success looks like for both your restaurant and for them. We have been fortunate to partner with some great developers over the last few years and would not have had the success we did if we did not share the same goals. A developer’s reputation and experience along with their current portfolio of brands is important as to what they can bring to a partnership with your brand.”
A strong and experienced team will help you navigate the challenges of operating in a high-traffic location.
When restaurants plunge into unique real estate situations, they need a great deal of support from all sides. But perhaps no support matters more than that of their staff.
In the words of Jack Mashini, co-founder and CEO of Wing Snob, “The only difference in operating in a high-traffic location versus a traditional brick-and-mortar site is having to manage a rush of business within a short period of time. It is imperative that we get [guests] in and out quickly with the quality we hold our standards to. We place our strongest teams at these high-traffic locations to ensure that the quality is upheld while serving customers at a [fast] rate.”
If at all possible, include seasoned staffers on your team for your new and busier location, as these trusted leaders can guide your new employees on the intricacies of your business even when the volume and speed ramps way up.
Vibe Conference 2025 will take place March 3-5, 2025 at Town & Country Resort in San Diego, California.
Contact us now to secure your program for the 2025 Vibe Conference:
Donna Bruns, Sales & Sponsorships, (for companies A-L), Email: [email protected] Phone: 936-522-6932
Fadi Alsayegh, Sales & Sponsorships, (for companies M-Z), Email: [email protected] Phone: 440-454-0239
Connect and follow Questex’s Vibe Conference and community at Facebook and LinkedIn.