Why fast casuals seem to be investing in more college locations

When Modern Market opened its first college location at the University of Notre Dame in South Bend, Ind., CEO Rob McColgan had no idea how the fast casual would do miles away from its home base of Denver.

But he saw the opportunity as “fantastic exposure” for the growing concept, getting it on the radar of college students who can become loyal customers down the road.

The college demographic is an attractive one for McColgan and other fast-casual operators. Recently, Jersey Mike’s, Playa Bowls, Cornerstone Restaurant Group, PITA Mediterranean Street Food and Playa Bowls have opened or plan to open locations at colleges.

Indian fast casual Curry Up Now is the latest to go in, with leases signed for units in the student unions of Stanford University and the University of California at San Diego.

But building brand loyalty is not the only perk of moving onto college campuses. “We discovered that the cost of operations is much lower at these types of locations and there is a huge benefit to the daily traffic that these locations bring,” says Nour Rabai, CEO of PITA Mediterranean Street Food. “The cost of opening in these nontraditional venues can be 25% lower than it would be to open a brick-and-mortar restaurant.”

The smaller footprint is also a draw. As Akash Kapoor, founder and CEO of Curry Up Now, points out, he can easily convert existing restaurant spaces and operate out of an area as small as 300 square feet. “It shows how dynamic our brand is from a consumer interest and unit economics perspective,” he said in a statement.

Related:Modern Market’s success at Notre Dame paves the way for more nontraditional locations

Shared kitchen space and a smaller labor force also play into favorable unit economics. Most of these college setups are in student unions, food courts or similar venues where many concepts share kitchen equipment and front-of-house staff. Plus, they usually offer pared-down menus geared to college students’ tastes, meaning less prep in the back of house. And the university does the marketing.

Packaged together, these benefits are especially attractive to franchisees. Rabai is encouraging PITA’s franchisees to open on campus, and one has already signed a deal at six schools in the Southeast, covering Georgia, North and South Carolina, Florida and Alabama. The launches are scheduled for mid-2022, Rabai says.

Although branded concepts are nothing new on college campuses, the idea seems to be gaining momentum since the pandemic.

Danny McGowan, COO of Cornerstone Restaurant Group, is opening five chef-inspired fast casual concepts at Purdue University, partnering with Aramark, the college’s foodservice provider. With the current challenges the industry is facing, he admits “it would be difficult to set up the infrastructure and bite off this commitment both financially and emotionally without a partner.”

Related:5 Chicago restaurant concepts are coming to Purdue University

In the simplest terms, the partnership is a licensing deal. Aramark will operate the kiosks—not Purdue—paying Cornerstone a licensing fee for its brands plus a percentage. 

College campuses are not the only venues that present appealing expansion opportunities for franchisees and operators. Playa Bowls has a “funky location” at a health club/gym in a luxury apartment building in Manhattan, says CEO Rob Guiliani, noting that “our New York City franchisee runs it and is crushing it.” And stadiums and airports have long been popular locales for restaurant brands.

In fact, Modern Market patterned its Notre Dame location after its kiosk in the Denver airport. “It provided great learning for us,” says McColgan.

Flip’d, the fast-casual spinoff of IHOP, is planning a unit in an EG America convenience store.

The small size of Flip’d lends itself to nontraditional locations, IHOP president Jay Johns said.  That outlet will feature a pickup window, one of the features added to the design because of IHOP’s experiences during the pandemic.  

Related:PITA Mediterranean Street Food eyes college campuses to power its growth

None of these operators are abandoning traditional brick-and-mortar stores in suburban strip malls and city blocks. But they are broadening their horizons as they expand.

Modern Market’s McColgan, for one, is bullish on expanding to more colleges and “is hard at work to get onto more campuses,” he says.

Plus, as Cornerstone’s McGowan adds, “it keeps us young to have 18-to 22-year-olds as customers.”