By NOLA L. SARKISIAN
Call it McJerry's.
This spring, Jerry's Famous Deli Inc. plans to open a takeout-only outlet at Universal CityWalk, the latest effort by regional sit-down chains to capture today's on-the-go diner.
The smaller outlets typically offer little or no seating, are a fraction of the size of the sit-down restaurants, feature pared-down menus, and are being opened in food courts and airport terminals.
"Customers are looking for speed and quality, and not a whole lot more," said Michelle Martineau Green, senior vice president of strategic planning for Host Marriott Services, a major airport food services operator. "If you're a Starbucks, you're probably not going to sell a coffeemaker in the airport, because your patrons will not be making coffee on the plane."
The scaled-down eateries can generate far greater sales per square foot than the larger sit-down restaurants. Their smaller size also translates to lower real estate overhead.
"We're seeing a blending of the lines between casual dining and quick service, as restaurants leverage a brand to reach a wider audience," said Lea David Paul, editor in chief of QSR, a trade magazine. "You want to (introduce your chain to new customers) by taking the brand to where the people are."
Besides Studio City-based Jerry's Famous Deli, other chains venturing into scaled-down operations include Beverly Hills-based California Pizza Kitchen and Dick Clark Restaurants Inc., a subsidiary of Dick Clark Productions Inc. of Burbank.
Jerry's, which operates 10 sit-down restaurants, wants to expand its takeout-only concept to additional mall locations and airports if its CityWalk outlet proves as successful as anticipated.
California Pizza Kitchen, which already operates 14 takeout locations in airports (under the name ASAP), is negotiating leases to open sites in Northern California shopping malls next year. (It also has been operating one ASAP outlet at a mall in Thousand Oaks since 1997.)
Dick Clark Restaurants, which operates a chain of sit-down eateries in Texas and the Midwest, plans to open its first scaled-down outlet in December at Indianapolis International Airport. The airport outlets, which are being licensed and developed by Host Marriott, will have 2,000 square feet of space, one-fifth the size of the chain's typical units.
"By working with Host and using their development arm, we can build quicker and smarter, something that our shareholders look favorably on," said Art Carlson, vice president of development for Dick Clark Restaurants.
Jerry's Famous Deli is also eager to placate shareholders, who have seen the value of their stock plunge from $10 a share in August 1996 to 94 cents as of late last week.
"We do this all to increase shareholder value," said Isaac Starkman, company founder and chairman. "This really presents an opportunity for us to expand our operation without creating huge restaurants, which we usually build at 10,000 square feet."
The Jerry's venue at CityWalk will be housed in just 1,300 square feet of space and offer only 30 of the 700 items on the sit-down restaurants' menu.
The outlet will have no shortage of possible patrons: some 10 million people stroll down CityWalk each year.
Food courts are often the most lucrative part of malls, often generating nearly $600 per square foot in annual sales. That's more than twice the national average of $291 a foot for malls overall.
With malls and especially airports having a captive audience, food retailers can often get away with charging higher prices in those locations than they can at street locations.
"Consumers realize pricing will be higher and they justify the price for the familiarity and convenience of their brand," said Bob Sandelman, president of Brea-based market research firm Sandelman & Associates.
Annual revenues at each of California Pizza Kitchen's 15 ASAP airport locations range from $600,000 to $2 million, compared with the average $2.6 million average gross of a sit-down CPK outlet.
The biggest challenge is to meet customers' pressing time constraints without sacrificing food quality. "We've learned to work with their needs by assessing traffic patterns and flight schedules," said CPK spokeswoman Sarah Goldsmith. "We prepare pizzas in advance and nothing sits longer than a few minutes. Also, we know our barbecue pizza is our most popular, so we will have more of those."
But not all high-traffic areas are right for quick-service food. Just a few years ago, there were a number of attempts by restaurants to infiltrate supermarkets, which failed because of infrequent shopping patterns.
"The key to venue success is really traffic driven, and there's typically no traffic in markets on Mondays, Tuesdays and Wednesdays," said Ron Paul, president of Technomic Inc., a restaurant consulting firm in Chicago. "People won't make these locations a destination for eating, so it's mandatory to find a constant flux of customers."
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