S.A. proves to have drawing power on retail-franchise front

Tricia Lynn Silva

Reporter – San Antonio Business Journal

The country’s uncertain business climate isn’t slowing the pace of retail franchise growth in the Alamo City, as evidenced by the continuing flow of new concepts entering the market.

Some of the latest arrivals include clothing stores like Plato’s Closet and Once Upon a Child.

The city is also seeing a growing menu of new food-entertainment concepts. One of the most recent entries: New Orleans-based Copeland’s of New Orleans, an upscale restaurant working to bring the flavor and hospitality of the Big Easy to the Alamo City.

Copeland’s joins an ever-growing list of restaurants opening their doors in San Antonio; others include Beef ‘O’ Brady’s, Wing Zone, Urban Taco and Corner Bakery.

Some familiar names also have sought out San Antonio for their latest evolutions. Case in point is Austin-based Schlotzsky’s, which will be rolling out a new tri-brand store — bringing the sandwich shop, Carvel Ice Cream and Cinnabon under one roof.

“We want to make our business model as efficient as we can,” explains Schlotzsky’s president Kelly Roddy of the tri-branded stores. With its ability to target different tastes on different occasions “it makes for a really profitable franchise model.”

Schlotzsky’s plans to open upward of 10 new stores in the San Antonio area over the next three to five years.

While these businesses have brought some new concepts to local consumers, these franchises also offer budding entrepreneurs a chance to control their own destiny — at a time when that control has been hard to find in the job market.

“A significant number of people — whether it was their dream to open a business or not — are finding themselves unemployed,” says Bob Tierno, the Texas area developer for The Entrepreneur’s Source, a consulting firm that has worked with several franchise businesses over the last 25 years. “Now, they figure it’s time to take charge of their own destiny.”

Texas’ business-friendly environment has made it a hub for new companies. As for the attraction of San Antonio, Tierno says that the city’s diverse and growing population, makes it a hot spot for these franchises.

And given the latest national statistics, San Antonio could remain a key market for franchises for a while.

In its 2011 Economic Outlook, theInternational Franchise Association   reports that in 2010, there were more than 760,000 franchised businesses in the U.S. By the end of 2011, that number is expected to grow to more than 780,000, according to IFA — which uses data compiled by Pricewaterhouse Coopers LLP.

In 2010, the franchise industry generated about $706 billion in revenue. That number is expected to grow to $740 billion by the end of this year, IFA reports.

Infrastructure

The franchise model also offers the support system that can be crucial to new small-business owners like Melanie VanDyke, a former teacher and now the owner of two clothing stores here under the Plato’s Closet brand banner.

Van Dyke opened San Antonio’s first Plato’s Closet — one of four bargain-based lines owned by Minneapolis-based Winmark    . Her store was until recently located at 754 NW Loop 410 — at North Central Side retail center Park North.

Plato’s Closet buys and sells gently used clothes geared to the teen and 20-something shopper, says Van Dyke, who recently signed an agreement with Winmark to bring the Plato’s Closet concept to the Northwest Side. The actual site for that planned outlet is still being determined, she says.

Van Dyke has also moved her original store at Park North to a nearby shopping center at 603 NW Loop 410. She more than doubled her space in the process — going from a space of 3,000 square feet to a site spanning 8,000 square feet.

“We spent money to market ourselves, but the customers did a better job than we did,” says Van Dyke of the success of Plato’s Closet.

She also gives much credit to Winmark.

“Winmark does a fantastic job of setting you up to be a successful business owner,” Van Dyke says. “They provide you with the support that you need.”

That support, of course, is not free. Total development costs for a Plato’s Closet store, for example, range from $180,000 to $354,000, according to Steve Murphy, president of franchising for Winmark. Included in that estimate is the initial $50,000 worth of merchandise that a franchisee needs to open a store, the franchise fee, and other expenses associated with operating a store — including lease agreements and interior finish-out costs for a space.

Learning from mistakes

What franchisees can get for their investment, however, is a market-tested product.

“You can learn from someone else’s mistakes,” says Wayne Brewer, a franchisee for Schlotzsky’s.

Working in partnership with his wife, Brewer is one of several franchisees rolling out a new tri-brand model in the San Antonio area.

By the time Brewer and his wife opted to get into the Schlotzsky’s business, they had seen the company go through “the good, the bad and the ugly,” says Brewer.

That history includes the chain’s modest beginnings in Austin in 1971, bankruptcy reorganization in 2004 and its re-birth, courtesy of FOCUS Brands, franchisor of such concepts as Moe’s Southwest Grill, Auntie Anne’s pretzels, and of course, Carvel and Cinnabon. “We followed them through that period, and now, we’re ready,” says Wayne Brewer.

San Antonio has seen a lot of growth and “there are several new restaurants coming in,” says Roddy, who plans to make Schlotzsky’s a well-branded name among the new entrants.

Source: San Antonio Business Journal