Sunday, June 14, 2009
Retailers interested in Roanoke play the waiting game
Bringing bagels, gourmet bread, wood-fired pizza and chocolate fondue to the Roanoke Valley is taking longer than some national food chains expected.
Last year, several retailers announced with glowing language that they were seeking franchisees to expand in the Roanoke Valley and in parts of Southwest Virginia.
Their well-intentioned plans fell through with the nation's financial meltdown and a tightened credit market that has made it nearly impossible for new entrepreneurs to get a loan. These restaurant companies say they're still interested in the Roanoke market, but they're playing a waiting game. Some are no longer heavily seeking area franchisees -- for now.
Here's the story of four companies that haven't yet found local investors.
Brixx Wood Fired Pizza
This Charlotte, N.C.-based pizza restaurant company decided in early 2008 to add franchises to its mix of 10 company-owned eateries in North Carolina and South Carolina.
The company put Southwest and central Virginia on its radar screen, and in particular, targeted the Roanoke Valley.
Brixx Wood did find a central Virginia location. The chain plans to open a restaurant in Charlottesville at the Barracks Road Shopping Center this fall.
The pizza chain hasn't yet found a franchisee closer to the Roanoke Valley.
Neil Newcomb, president of franchise systems for Brixx Wood, said economic challenges, such as finding investment money, are holding back would-be franchisees.
It takes at least $750,000 upfront to open a Brixx Wood restaurant, he said.
Melting Pot
Last year, the Melting Pot, an upscale fondue restaurant chain, began talking with franchisees who were considering opening a Roanoke Valley eatery. But as economic struggles built up, the Melting Pot took the Roanoke region off its immediate franchise plans.
"Obviously, we're a little more cautious about developing in smaller markets," said Dan Stone, director of franchise sales for the Melting Pot, based in Florida.
A Melting Pot franchisee typically invests between $325,000 and $400,000 to get the restaurant up and running.
"Lenders are wanting franchises to put more cash into the deal," Stone said. "It's harder to get financing right now."
The Melting Pot would consider the Roanoke Valley for expansion if the right opportunity arises, but it's not spending money to advertise for franchisees in the area, he said.
Einstein Bros. Bagels
A well-known national bagel company began its search for a Southwest Virginia franchisee at a bad time. In August, Einstein Noah Restaurant Group said it wanted to open at least one Einstein Bros. Bagels franchise shop in the Roanoke Valley.
The restaurants serve breakfast and lunch, with an assortment of bagels, salads, coffee and baked goods on the menu.
A month later, the nation's financial crisis hit.
"The bottom fell out," said Kevin Kruse, vice president for franchise development with Einstein. "We continued speaking with people [potential franchisees], but absolutely no one was making a move."
The Colorado-based chain is trying to make up for its nationwide franchise lapse. No new franchisees joined the company in the fourth quarter of 2008.
Lately, Kruse said he's on the phone most days talking with lenders to negotiate payment terms for franchise investments.
A franchisee must invest about $500,000 to $600,000 to open an Einstein shop.
It's not all doom and gloom. The poor economy actually has opened up better possibilities for franchisees.
There are more choices in empty store spaces, because of some retailers that have closed, Kruse said. Also, there is less competition for landing high profile sites, and landlords are more flexible in negotiations.
Great Harvest Bread Co.
In April 2008, this Montana gourmet bread baker put a target on the Roanoke Valley as a worthy spot for a franchise bakery, which serve breads made from whole wheat.
But Great Harvest Bread Co. is not any closer to opening its doors in Southwest Virginia than it was a year ago. Potential franchisees haven't shown an interest in opening a Roanoke-area bakery.
Perhaps people aren't familiar with Great Harvest because it doesn't have a location close to the Roanoke Valley, said Debbie Huber, director of development for the company. The nearest Great Harvests are in Williamsburg and Northern Virginia.
Also, "There is a lot of fear and uncertainty out there," Huber said, referring to the economy and people feeling anxious about starting a new career.
The poor economy actually has created new opportunities for Great Harvest business owners in other parts of the country, including those who have lost their jobs because of downsizing, Huber said.
Great Harvest has 220 bakeries nationwide. The average franchise startup cost is $250,000.




