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QSR Feature
Outside the Box
Several quick-service brands are ramping up development in nontraditional venues. QSR looks at the pros and cons.
A franchised operation located where masses of people are is a powerful way to market the brand.

Ever get the feeling you’re surrounded by quick-service restaurants? That’s probably because you are. They’re tucked into airport terminals, squeezed into bus stations, crammed onto college campuses, and rammed into retail stores.

In just the past year, at least eight quick-service brands have opened or announced plans to expand in nontraditional venues, with some identifying the strategy as a key component of future growth. From established brands to ambitious up-and-comers, fast feeders are finding opportunities outside the box.

Nontraditional venues are nothing new. The first Taco Bell Express, a scaled-down version of the restaurant meant for convenience stores, truck stops, airports, and other out-of-the-ordinary sites, opened in the early ’90s, and other big brands have been operating outside of stand-alone stores for some time. But today, setting up shop in nontraditional spots seems to be an especially attractive option.

While sales in limited-service restaurants are expected to remain stagnant next year, foodservice sales in supermarkets, colleges and universities, primary and secondary schools, senior-living centers, and military locations are projected to grow, according to a report from market research provider Technomic. Sales in convenience stores, hospitals, and long-term-care facilities are expected to hold steady, even as those in full-service restaurants and bars and taverns continue to decline.

One possible reason why sales in these sites have held up relatively well is because, unlike traditional restaurants, which must be destinations in themselves, the nontraditional varieties are located within a larger draw, such as an airport, theme park, or gas station.

“You can count on a captured audience always being there,” says Chris Cheek, vice president of franchise development at Bruegger’s, a nearly 300-unit bakery-café chain that has opened four airport locations since mid-2008.

That’s not to say nontraditional sites are recession-proof. Though sales in nonrestaurant locations as a whole declined at a slower pace this year than at traditional full-service restaurants, they fell nearly a full point faster than sales at restaurants overall (including full-serves, limited-serves, and bars and taverns), according to Technomic. Next year they are projected to fare better than restaurants overall, but only slightly. Moreover, foodservice sales at travel and leisure sites, such as recreation facilities, lodging, airplanes, and business and industry environments, saw some of the steepest declines across all segments and are expected to shrink again in 2010.

Even so, Cheek says nontraditional locations are still a good bet. Though lower passenger counts have meant fewer travelers recently, tighter security since September 11 and longer flight delays mean passengers spend more time in airports. Colleges and universities are still adding students, and as the baby boomers age, more people will likely spend time in healthcare facilities.

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