News

Midwest region ripe for franchise growth

Fast casuals are looking toward the international market for franchise growth, but Penn Station East Coast Subs is taking a more domestic approach.

April 5, 2007

While an increasing number of fast-casual brands are relying on international markets for franchise expansion, Penn Station East Coast Subs continues to look at the domestic market for growth.

Headquartered in Cincinnati, Penn Station has set its sights on the Midwest and Southeast regions with the promise of new locations in markets such as Charlotte and Raleigh, N.C.; and Nashville and Knoxville, Tenn.

"We'll go into new markets and we target new markets, but I think our primary focus needs to be to develop the markets that we're in," said Craig Dunaway, Penn Station president.

The company's plans continue to include strategic growth, but each new location will remain within a six- to eight-hour drive from company headquarters.

Dunaway said there are several reasons for the approach: "One, we need to make sure we can give corporate assistance and oversight; two is so we can protect the integrity of the brand by ensuring operations and the logistics of getting the food there," he said. "And three is for brand recognition. The further we get from Cincinnati, the less brand recognition we have."

Franchisee Jeff Surbey and his partner Greg Bennett are helping the company extend its brand.The duo recently opened a new Penn Station in Franklin, Ind., and currently operates seven throughout the Indianapolis and Indiana region.

Jeff, who has been in the restaurant industry since 1985, joined the Penn Station system in 2004; Greg had been with company since 1997.

"It was a good concept to get a handle on," said Surbey. "One of the things I really liked was the quality of the food."

Seasoned growth and training

One plus to the Penn Station system, both for franchisees and the company, has been its methodical growth plan. Surbey said the time between opening one location and another has enabled the proper training of store managers, many of whom become general managers at other locations.

"We get our people trained and get people staffed to make that store successful," he said. "We don't want to get too thin or too stretched out."

Market oversaturation also is something both Penn Station and Surbey are trying to avoid, which is why they each have their sights set on outerlying Midwest and Southeast cities.

Surbey said the next areas for the chain's growth are the Tennessee and Carolinas regions, along with portions of Indiana. "As you go one market at a time that really helps with recognition," he said.

Dunaway said when franchisees first opened in the Louisville, Ky., market, the company had little to no brand recognition. But now, he says, 12 stores have been developed in the region.

"I'm excited about the possibilities of where we're going," Dunaway said. "Every market we've gone into we've been so well received by the customer base."