COVER STORY, OCTOBER 2009

EXPANSION IN A RECESSION
A RETAIL CASE STUDY

Tasti D-Lite

Nikki Sells, vice president of franchise development for Tasti D-Lite, comments on the restaurant chain’s impending expansion into the West — 22 units in Arizona and the potential for more than 100 units in Southern California. The company currently has 55 locations across seven states. Using the same “area developer model” as in Arizona, Tasti D-Lite will also be opening 40 units in South Texas.

WREB: What specifically attracted Tasti D-Lite to these new, western markets?

NS: Tasti D-Lite did an extensive study covering demographics, lifestyles and consumer habits related to healthy living. Of the 331 market areas surveyed, all of the key Arizona and South Texas markets fell into the top 20 percent. Of course, it’s always easier to open where the brand has name recognition, and we are finding that Tasti D-Lite’s brand recognition spans across the country. That’s partly attributed to the fact that people today travel coast to coast on a regular basis, and Tasti is so well known and beloved in New York City, where it’s been an institution for more than 20 years. A lot of people who live on the West Coast know about Tasti D-Lite and want it in their markets.
WREB: Why expand now?

NS: Under new ownership in 2007, Tasti D-Lite made the decision to expand its New York phenomenon across the U.S. and around the world through the franchising model. The reason is very simple: people today are more conscious than ever of what they eat, both at mealtime and for snacks, and are striving to live more healthfully overall, both for themselves and their families. But they still want to enjoy life and enjoy what they eat.

In terms of timing, South Texas has units already open, Scottsdale will open its first in early autumn, and California in early 2010. But we will also be opening in other western states in the next 2 years.
WREB: How is your company’s real estate approach successful?

NS: We’ve worked very hard to develop a turnkey process. We work with a real estate partner that identifies locations in markets that we are about to award. Speed to market is important to us, and as we all know, it’s about location, location, location. We have complete construction docs for local architects to work from in fitting our brand design into individual and unique spaces, which also speeds up the process. Our center design is managed by an experienced professional on our team and is shipped ready to install. Local construction crews are hired by the franchisee with our guidance.
 WREB: To Tasti D-Lite's Arizona “area developer” Jonathan Kaufman —

What’s most unique about Tasti D-Lite’s real estate approach given the backdrop of expansion in a down market?

JK: The product has an international fan base, which grew out of its popularity in New York City. Those lyrics “if you can make it here, you can make it anywhere” have never been more true about a single brand. You don’t pay the highest rents, among the stiffest competition, with some of the most severe historical economic conditions, and then wonder if you have a viable business. Instead, you look back on over 20 years of delivering the best and tastiest healthier ice cream alternative to consumers in Manhattan with tremendous confidence to grow and move forward. The timing of this expansion could not be better, and the aspects of this down market are all advantages to Tasti D-Lite. It’s an opportunity to get into cheaper leases and great terms on A and B-level properties. What makes all of [the restaurant’s cost- and health-conscious appeal] relevant to expansion in a down real estate market is opportunity. From a business perspective, Tasti is great for prospective franchisees and for real estate owners and brokers who are willing to be aggressive for long-term tenants. Long-term may be laid out in the form of optional extensions, but there can be confidence that Tasti will create a huge draw to their properties and will do so for many years to come.

©2009 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.