Friday, June 22, 2018

Tijuana Flats hones growth strategy

It takes me nearly 20 minutes to get from my house in Tampa to the nearest Tijuana Flats in Carrollwood, which explains why I don't go very often. Same goes for Burger 21 and Brass Tap.

If it's not in my back yard, I'm hard-pressed to try it or, even less, become a regular.

That's the challenge facing owners of smaller chain restaurants aggressively trying to expand. When blanketing a market, how do you find suitable locations that maximize your reach?

Matthew Livingston, real estate manager for Tijuana Flats, had an interesting take last week at the International Council of Shopping Center's regional conference in Tampa. The Tex-Mex restaurant based outside Orlando is opening its 100th location in March and plans to add about 15 restaurants a year, all of them corporate owned.

When scouting sites, Livingston said nine out of 10 deals involve new construction versus moving into an existing shopping center. The chain gets more tenant improvement money from the landlord to build out the space and can choose the best configuration for the electrical and A/C systems. Forget about having to move outlets and sinks or making due with someone else's old rest rooms.

That says a lot about why Tijuana Flats — and possibly other small restaurant chains — has a location in Wesley Chapel but not South Tampa. (A franchise location along Platt Street closed in 2011.) New, suburban Wesley Chapel is a blank canvas for commercial space compared with nearly built-out South Tampa. The dirt is cheaper and more widely available.

Part of it is a numbers game. A chain like Tijuana Flats is under pressure to expand and often has an annual quota for adding new stores, Livingston said. Waiting for the perfect site in downtown St. Pete is fine, so long as the real estate team secures sites elsewhere.

Look at how long Trader Joe's scouted the market before picking spots in Tampa and St. Petersburg. Years.

New construction isn't without pitfalls, Livingston said. Depending on the location, it can cost more than existing space and take longer from start to finish. If there's a delay or the project falls through, a restaurant could be left without a home, hindering expansion plans. And what happens if a center isn't as successful as envisioned?

Ideally, Tijuana Flats likes to do deals with shopping center owners and developers who have multiple properties. If a restaurant works well in one center, it can quickly be duplicated in another.

Founded in 1995 by a University of Central Florida graduate, Tijuana Flats goes after end spot in highly visible shopping centers with good parking, signage and outdoor seating, the trend among fast-casual restaurants. Most locations are about 2,400-square-feet and cost $420,000 to $475,000 to build.

On average, the restaurants do about $1.2 million to $1.4 million a year in sales, with the Tampa Bay locations generally at the higher end of the range. The Fourth Street store in St. Pete is one of the busiest in the chain.

Tampa-based Little Greek restaurant is also on an expansion boom. Its 18th location is scheduled to open next month in Trinity, and its St. Pete location recently started testing home delivery.

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