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Sunday, 09 December 2012 23:30

Chain reaction: Demographics drive national restaurant franchises to downtown GR

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GRAND RAPIDS — Downtown Grand Rapids offers all the right ingredients to attract national restaurant chains.

As the city’s downtown has continued to transform and attract more people, it’s been garnering the attention of restaurant franchisees looking for a piece of the action that in recent memory had been left mostly to locally owned businesses.

While the local businesses welcome the increased diversity of offerings and the additional people coming downtown, they said the success of the restaurant scene lies in the personality of their businesses, a quality that could be diminished if too many chains move in and make the scene too generic.

Starting in mid-2011, Grand Rapids saw a handful of national restaurant retailers enter the downtown market, including SmashBurger, Qdoba and Zoup on Medical Mile. That fall, Ruth’s Chris Steak House opened in the Amway Grand Plaza Hotel. In February of this year, a Buffalo Wild Wings franchise opened on the corner of Fulton and Ionia Street.

The activity continued into October, when Panera Bread signed a lease for space in the Campau Square building at 99 Monroe. That restaurant is scheduled to open next spring.Then came the announcement in late November — which was met with considerable local attention — that the Bagger Dave’s burger chain had leased space in downtown on Fulton Street.

All this activity from national chain restaurants has some wondering why Grand Rapids is starting to catch the eye of franchisees’ site selectors.

“Panera coming downtown is a sign that national retailers are recognizing there is a demographic here that works for them,” said Don Shoemaker, principal at Franklin Partners, the development firm that signed a long-term lease with the restaurant. “There is a herd mentality with retailers. That’s why you always see a Burger King where there is a McDonalds. The retailers are smart. They know where they want to go. It just takes a few to put a (downtown) like Grand Rapids on the map.”

Until recently, the downtown restaurant scene had been dominated by locally owned restaurants, outside of a handful of chain sub shop eateries. TGI Fridays, which opened in 1996, for years stood as the only national chain offering sit-down style lunch and dinner dining in the central business district.

But with the recent additions in the central business district area, as well as the announcement that Qdoba was planning to join SmashBurger on the Medical Mile, national restaurant activity is on the rise.

For Diversified Restaurant Holdings Inc. (DRH), the company responsible for bringing Bagger Dave’s to Grand Rapids, the choice to locate the restaurant downtown falls into a much larger plan that includes locations in Grandville and Cascade.

In addition to operating several Bagger Dave’s locations, DRH is the largest franchisee of Buffalo Wild Wings in the country, including 14 locations in Michigan. However, the company does not operate the location in downtown Grand Rapids. That restaurant is owned by Shelby Township-based franchise group JK&T Wings, which owns 34 Buffalo Wild Wings, 23 of them in Michigan.

In a metro area like Grand Rapids, DRH typically tries to add between four and six franchise locations so the company can capitalize on logistics and marketing efficiencies, said Bill McClintock, senior vice president of sales and development at the restaurant group.

Opening restaurants in clusters just makes sense from a branding perspective and to allow for more efficient transportation of its food products and supplies, he said.

In choosing to locate a restaurant in a downtown, DRH focuses on identifying an area where the business can fill up seats during the early hours between lunch and dinner, McClintock said.

“We always look at downtown population bases during the day,” he said. “Grand Rapids is unique: It has done a nice job of recreating the downtown, connecting the hotels and putting more loft apartments downtown. As a restaurateur, that’s a strong positive.”

The company also hopes to double up on the demographic base by putting its location at 241 West Fulton Street, near the downtown Grand Valley State University campus and its student population as well as draw from some of the Arena District crowds.

“The exposed location was a big factor because our signage is so prominent,” McClintock said. “All our factors come together nicely in this downtown.”

For restaurants looking to open in a core business district, the biggest challenge lies in finding the right space, he added.

But like any business, restaurants need to be where there are customers.

That had Shoemaker a bit worried when Panera said it planned to conduct a pedestrian study to gauge the activity levels around the 99 Monroe location. At the time, Shoemaker said he pushed hard for the company to do the study on a Wednesday or Thursday, hoping to catch the traffic from Blues on the Mall and other events.

“They did (the study) on a Friday and Saturday, and I was cringing waiting for the results because on Saturdays when you walk around (downtown), there aren’t a lot of people unless it’s ArtPrize or something,” he said.

Contrary to his expectations, Panera was “blown away” by the results of its study, Shoemaker said.

To some, the addition of national chain type restaurants might not fit with the city’s “buy local” movement of supporting locally owned and operated businesses. However, others including local restaurateurs Mark Sellers and Greg Gilmore take a “more the merrier” approach.

The week Buffalo Wild Wings opened, Sellers said his HopCat property experienced its best week of sales to date.

“Traffic is up and it’s partially because there is so much variety downtown now,” said Sellers, owner of BarFly Ventures LLC. “The addition of these restaurants have certainly not hurt us at all.”

With more people coming to Ionia Street for its restaurant scene, including to several of his properties, Sellers said he thinks the chains are helping to capture a more suburban demographic.

Although Sellers welcomes the transformation of the downtown restaurant scene, he said it’s been the success of local restaurants that helped paved the way for the national chains to take an interest.

While there is definitely room for more nationals to enter the market, Sellers said he expects to see more establishments driven by lunch offerings and alcohol sales. He cautioned that too many chains can make a downtown feel generic, but he said he doesn’t foresee that for Grand Rapids.

Fellow Grand Rapids-based restaurant owner Gilmore, CEO of the Gilmore Collection, takes a similar view.

“We’ve been growing at The BOB every year for the last 16 years,” Gilmore said. “I think it’s a positive thing that (national chains) are finding out what a great secret Grand Rapids is.”

The cleanliness, vibrancy and safety of the city are very attractive qualities, and with more residential offerings coming on the market, it’s not surprising that the city is drawing more national interest, he said.

Along with the DRH’s multiple developments in West Michigan, the company is also in the process of building out its new corporate headquarters in Detroit and plans several more restaurants in Southeast Michigan.

The Grand Rapids Bagger Dave’s location is expected to add around 50 full-time and part-time jobs when it is scheduled to open this spring, McClintock said.

Read 11868 times Last modified on Sunday, 09 December 2012 14:22
Elijah Brumback

Staff Writer

ebrumback@mibiz.com

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