Quick-serve chains expanding rapidly
Quick-serve chains expanding rapidly
By KATHERINE YUNG
Detroit Free Press Business Writer
Last June, Maysser Mikhail opened a Subway sandwich shop inside his MetroPCS store on Detroit’s east side.
In a neighborhood with few fresh food options, there’s no shortage of residents with a hankering for a steak and cheese sub or a chicken flatbread sandwich.
To staff his new carry-out restaurant, the 34-year-old small-business owner hired seven workers who live in the area, ranging in age from 18 to 35. “I love the food,” said Mikhail, who yearns to open a second Subway. “It’s an easy operating business.”
In a state desperate to put people to work, franchised, quick-serve restaurant chains like Subway are fast becoming a major generator of low-skill, low-wage jobs.
Mikhail’s Detroit store is one of 30 Subway stores that opened in Michigan last year. But it’s not the only chain finding fertile ground in the state.
Tim Hortons has added about 20 locations in Michigan during the past two years, with many others to come. Biggby Coffee is also racing ahead, with its franchisees launching 20 stores in the state in 2009 and 2010 and planning dozens more. And Olga’s Kitchen is preparing to franchise 28 restaurants in Michigan over the next five years.
These and other expansions are expected to create hundreds of new jobs.
“We have a decade of growth here for sure,” said Michael McFall, president of Biggby, which has 97 coffee shops serving Michiganders and aims to triple or quadruple that number. “Our focus the next couple years is to dominate Michigan as best as we possibly can.”
Several quick-serve chains are leaders in expanding their operations in state
Half a dozen quick-serve restaurant chains have developed a strong appetite for Michigan, providing new opportunities for those in search of entry-level jobs.
Despite its weak economy, Michigan still ranks as the eighth most-populous state in the country, with 9.9 million mouths to feed.
To capitalize on this demand, a number of franchised restaurant chains plan to dramatically increase their presence in the state, with some already doing so. They will need thousands of new food-service workers over the next few years.
The growth is being led by several companies:
- Olga’s Kitchen: The 41-year-old chain known for its beef and lamb sandwiches is selling franchises for the first time. It anticipates opening 28 restaurants in Michigan over the next five years. Each new Olga’s restaurant creates 50 jobs, said Matt Carpenter, Olga’s CEO and president. For Michigan, that means employment for 1,400 people.
- Biggby Coffee: The java juggernaut already envisions the day when Michiganders will flock to 300 to 400 Biggby stores around the state, up from 97 today. A Biggby coffee shop usually employs 12 to 15 people.
- Tim Hortons: Between 2010 and 2013, the Canadian company aims to launch more than 300 new restaurants in the U.S., mostly in Michigan, Ohio and New York.
A Tim Hortons employs from 20 to 40 workers, said David Clanachan, Tim Hortons’ chief operations officer for the U.S.
- Jimmy John’s: The sandwich chain won’t reveal its growth plans in Michigan but during the last two years, it opened 22 stores in the state, generating 550 jobs.
- Dunkin’ Donuts: The Massachusetts-based chain has signed franchise agreements for seven new doughnut shops in metro Detroit over the next few years and has made commitments for at least 20 more. “It’s really just the start for us,” said Grant Benson, Dunkin’s vice president of franchising and market planning. On average, Dunkin employs 20 to 25 people per store.
- Subway: Last year saw the opening of 30 Subways in Michigan, which created about 300 jobs. The company says another 30 restaurants will be added across the state in 2011.
The surge in franchise activity is helping people like 19-year-old John-na Haley, who works 30 hours a week at a Detroit Subway store owned by franchisee Maysser Mikhail. Haley had been working at another Subway since she was 15. “It keeps me focused,” said the Detroit resident, who has mastered the art of patiently asking customers, “What kind of cheese would you like?”
Haley is one of 423,000 Michiganders employed in the state’s $10-billion restaurant industry. Andy Deloney, a spokesman for the Michigan Restaurant Association, said chains like Subway have fared well during the recession because they offer value, convenience and quality.
Quick-serve restaurants tend to be a lot simpler to operate than other kinds of franchised businesses, said Mark Cory, a franchise consultant in Grosse Pointe. In addition, they usually don’t require as much capital investment.
In Michigan, the growth of quick-serve restaurants is also being driven by an increase in the number of people interested in franchising. Many of these newcomers had lost their jobs or taken buyouts.
Others, like Michael Ayoub of Shelby Township, are entering the market to take advantage of low real estate prices, discounts on franchisee fees and other deals.
In November, the 36-year-old mortgage company owner took over a Dunkin’ Donuts in Madison Heights that his father used to operate several years ago.
Ayoub added a Baskin-Robbins ice cream store and hired seven employees, who joined the 10 already working for him. Ayoub is now planning to install a drive-through, which could lead to additional hiring. “Buying restaurants is cheaper than ever before,” he said. “I could never have this opportunity in a peak market.”