A View From The Top

Why franchisors must look 'under the rainbow'

John Ramsay, VP of Franchise Sales, Noodles & Co., discusses how recent migration of Midwesterners to the Southeast is creating an opportunity for growth in the U.S.

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August 30, 2023 | By John Ramsay, VP of Franchise Sales, Noodles & Co.

For any franchise concept, there comes a point in your operations where the best next step for the business is to expand to ensure the longevity and viability of the overall brand. However, setting a strong foundation for your brand's growth through a franchise growth strategy is key.

When creating a franchise growth strategy, franchisors must determine the geographical area in which the brand will grow, and how the brand will travel in new markets. Once you identify your target regions for expansion, you can create trade areas based on key drivers for your business, such as suburban vs. urban areas, daily needs, and lifestyle or entertainment centers that will cater to a new audience. At Noodles & Co., when creating our growth strategy, we have been fortunate to not have experienced regional barriers, as Noodles' fast casual offerings appeal across demographics and psychographics.

According to the United States Postal Service, large numbers of residents from Midwestern states are moving to Southeastern states. As the Vice President of Franchise Sales at Noodles & Company, I've seen how this migration has created an opportunity for successful growth in franchising "under the rainbow," a term we use at Noodles & Company to describe our latest franchising strategy.

We use this term because our footprint ranges from coast to coast, creating a rainbow figure across the U.S. map, with a large percentage of our restaurants in the upper Midwest. Within the last few years, we took notice of the downward migration to the Southeast and how it could be beneficial for fast casual franchising opportunities. The growth taking place in this region allows franchise concepts to capture new audiences while resonating with an existing consumer base that recognizes its brand.

A common phenomenon that takes place when people relocate to a new city is a longing for and homesickness for their favorite local eateries or familiar fast casual restaurants. What was once the restaurant down the street is now hundreds of miles away. This desire to bring your favorite restaurants to a new city sets the stage for fast casual franchises to grow in new markets. All of these factors have helped us at Noodles & Company to identify that downward migration "under the rainbow."

New opportunities in the Southeast
Relocation from the Midwest to the Southeast started during the onset of the pandemic and has significantly grown over the last three years. As Forbes has highlighted, change-of-address data from the United States Postal Service suggests people are leaving colder climates for warmer weather. With Illinois, Indiana, Michigan, and Wisconsin being among the top ten states people are leaving and Texas, Florida, South Carolina, and Georgia being among the top ten state destinations, this trend cannot be ignored, especially when we consider franchising opportunities.

With this trend showing no signs of slowing down, franchisors have a unique opportunity to capture a new audience in this growing region and engage a new pool of entrepreneurs seeking franchising opportunities. The Southeast region has a diverse and growing population with a strong appreciation for good food and dining experiences. Fast casual restaurants, which offer a balance between quick-service and high-quality menu options, align with the preferences of modern consumers seeking convenience without compromising on taste and value. This growing market is an opportunity for franchisees who are just starting out and seek to engulf themselves in all the restaurant franchise industry has to offer.

Real estate for franchises
The Southeast is also a favorable region for prospective franchisees because the commercial real estate market in this area has a competitive advantage compared to other regions throughout the country. There are more opportunities in growth areas in cities like Atlanta, Houston and Tampa because these cities are currently growing. In the Southern region of the country, construction costs are lower and there are more options for sites. The advantages in this region allow for construction timelines to be expedited, saving time and money for the franchisee and franchisor.

Untapped workforce
According to the United States Chamber of Commerce, much of the Southeastern United States has a labor force participation rate below 62.6% and less workforce participation than before the pandemic. This creates an opportunity for franchisees to find and hire team members who are ready to work and do not need to resign from their former jobs. By engaging with the local workforce, franchisees are directly contributing to the region's economic growth and stability. Additionally, franchisees can further grow their presence in a particular area by participating in community engagement initiatives, which can help garner support from key community members and residents, building a life-long consumer base.

I've witnessed how Southeastern cities like Houston, Tampa and Atlanta are growing and how Midwesterners in these cities are craving their hometown favorites — like Noodles & Company. Entrepreneurs have an opportunity to seize this moment of growth and pursue ownership with a fast casual franchise restaurant.