08 May Mouths to feed: Population growth, restaurant density could attract new restaurants to east Idaho
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QSR Magazine, a food industry publication that focuses on quick-service dining, recently ranked Idaho Falls-Pocatello in the top 10 of its Growth 40 rankings, a list of U.S. cities and/or regions that have the most potential for growth in the quick-service dining industry.
Quick-service restaurants are those with limited service, including fast food, fast-casual dining and anything from coffee to concessions to convenience stores. Basically, you don’t have to sit down, order food and wait for a check at the end of the meal.
Examples of quick-service dining restaurants include some of America’s most recognizable fast food brands such as McDonald’s or Chick-fil-A. They also can be coffee shops or fast-casual restaurants, for example, Starbucks and Panera Bread. But they don’t have to be national brands; they can be locally owned restaurants like Franklin’s Famous Cheesesteak Company and Scotty’s Drive-in.
The QSR Magazine rankings show that Idaho Falls-Pocatello has the perfect blend of population growth, market size and quick-service restaurant density to be an attractive option for restaurant brands, whether they’re local brands thinking about opening a second location or national brands looking for a fresh market.
Idaho Falls-Pocatello was ranked ninth in the QSR Growth 40, which is based on food service consumer data, restaurant market density and population forecasts.
Kneaders Bakery and Cafe is a bakery and deli, headquartered in Orem, Utah, with a location in Ammon, that serves sandwiches, salads, soups and pastries. With an average meal costing about $12 and the average time spent in the restaurant being about 20 minutes, Kneaders isn’t quite fast food and it’s not a traditional sit-down restaurant.
Kneaders store operator Jace Wright said he considers the restaurant to be fast-casual.
“We do provide quick service but the quality of the food is what makes us a fast-casual environment,” Wright said.
Kneaders, which also has locations in Nevada, Arizona, Texas, Colorado, Kansas and Missouri, began looking at eastern Idaho in 2014, Wright said. The Ammon location opened in September 2016. Wright, who has worked with Kneaders since the Ammon location opened, said QSR Magazine’s data lines up with what he’s seen, living in eastern Idaho and working in the restaurant industry.
“The competition to feeding all those people is growing, so I would agree with it,” he said. “I’m glad we got in when we did because we’ve seen growth as well.”
QSR Magazine found that the 375 quick-service restaurants (as of March 31) in Idaho Falls and Pocatello — which make up a combined metropolitan area with a current population of 394,648 and a 7 percent projected growth rate — should experience a 16 percent customer traffic increase by 2023.
According to Nick Powills, publisher of the 1851 Franchise, a Chicago-based franchise marketing firm, eastern Idaho cities could host 40 to 50 additional quick-service restaurants.
So, why would restaurants come here?
Before moving into a new market, a restaurant franchise will look at the sort of data compiled by QSR, Powills said. It gives the company a direction. Executives will ask, “‘How many QSR’s are open (currently)?’ and ‘What is the potential growth?’’’ he said.
QSR Magazine estimates that the Idaho Falls and Pocatello combined market area should have a population of more than 420,000 by 2023.
After finding agreeable density and population growth, a franchise will ensure a market can meet its food distribution needs. Is it possible to ship food there while remaining profitable?
With more than 350 quick-service restaurants already in the region, distribution shouldn’t be a concern for a franchise considering moving here, Powills said.
“Based on that number alone, Idaho Falls-Pocatello does not have a distribution challenge,” he said.
So, what kind of restaurants will come to eastern Idaho?
Eastern Idahoans might have their owns ideas about what new restaurants they’d like to see. Chipotle? Pita Pit? Will In-N-Out Burger finally move in after seeing these rankings? It has locations in Nevada, Oregon and Utah.
Franchises are looking for favorable demographics, for a customer base that’s proven to enjoy a restaurant’s style and flavor, so that opening at least three locations (typical of quick-service restaurant moving into a new market) isn’t a huge risk.
Two relatively new franchises told the Post Register they have their eye on eastern Idaho, after seeing the QSR Growth 40. Both executives of the franchises said they like the population growth, the quick-service density and that Idaho is a business-friendly state.
While fast food restaurants dominate QSR’s list of top 50 brands (nine of the top 10 are fast food chains — and the 10th is Starbucks), fast-casual dining with healthier options is growing in popularity among younger generations, according to Mark Ramage, vice president of franchise development at Coolgreens, a down-the-line, fresh soup, salad and sandwich restaurant based in Oklahoma City.
Ramage said Coolgreens looks mainly at demographics when the franchise is considering expanding. He said the company’s market research has found that most consumers will choose a healthier option for fast casual food, if given the opportunity. That’s why Coolgreens makes fresh food and serves it down-the-line, buffet-style (think Chipotle).
“Millennials and Gen Z, they love to see their food,” Ramage said. “They want to see it made.”
Ramage said health-conscious restaurants like Coolgreens run in packs. Where one opens up and proves successful, another is sure to follow, especially in city centers, like downtown Idaho Falls.
Coolgreens, which is now expanding from Oklahoma City to the Dallas-Fort Worth area, would initially plan for three locations, if company executives decided to move to Idaho, Ramage said.
“We’re interested in Idaho Falls,” he said. “Idaho’s an open state. Texas, Colorado, these states make it easier for franchise owners to come in and expand their business. Looking at Idaho Falls from an investor standpoint, I’ll definitely be talking to somebody from there to look at the multi-store development.”
Micha Magid, co-founder of the 6-year-old New York-based franchise Mighty Quinn’s BBQ, said his company isn’t necessarily targeting Idaho Falls-Pocatello, but the data is promising.
He said one factor Mighty Quinn’s watches closely is population shifts from high-cost to low-cost areas, a trend common in eastern Idaho, as tech workers often move here from areas with higher costs-of-living such as California or Washington.
And population growth is especially important, as Mighty Quinn’s — which is growing in the New York City area (and is now an official concession in Yankee Stadium) — hopes to have a sustained presence, wherever it opens new locations.
“If we pick an area to start up in we’re there for the long run,” Magid said.
There’s definitely room for new franchises in eastern Idaho, but what does that mean for the quick-service dining restaurants already here?
Powills said there’s good news and bad news on that front.
Good news: this data shows it could be a good time to open a second location. As long as the first location is profitable, the market is ripe for a second, he said.
Bad news: more restaurants obviously mean more competition, Powills said.
“That local one unit might actually have to spend more money to make the same,” he said. “The cost of doing business increases.”
And it’s not just new restaurants that local owners have to worry about; delivery services are going to put eastern Idaho on their radar, as well, thanks to these rankings.
“Any tech company that is in the business of delivering food will see this data point as an opportunity to jump into the marketplace,” Powills said. “The competition isn’t just brands, it’s the evolution of technology.”