Starbucks Heritage Square

Improvements for a new Starbucks have started within the west endcap suite of the former Doctor’s Express Suite at Heritage Square.  The expectation is for the cafe to open within the next 90 days.  The building faces the highly trafficked Cleveland Rd and the Starbucks suite will feature a drive-thru window.  There is already a Starbucks within the Martin’s Side Door Deli at Heritage Square, and that will remain in place.

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Heavenly Goat-Heritage Square

A peak in the window on the construction of the latest craft brewer in the South Bend/Mishawaka area.  The Heavenly Goat Brewing Company will be opening in the former Gino’s Pizza in Heritage Square.  This will be an excellent location and a highly anticipated opening.  Good luck to Greg and Joel, we can’t wait!

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Why do so many restaurants fail?

It is a well known idea that restaurant businesses are notorious for starting up and failing within the first few years of business.  Eye-popping statistics are thrown out like, “90% of all restaurant start ups fail within the first three years.”  Researchers from Ohio State University, interested in the validity of this type of statistic, studied 2,500 restaurants in the Columbus area and found that only 25% of restaurants turned over ownership in the first year and 60% turned over after 3 years.  This rate is still high, though not nearly as high as some anecdotes or even lenders would suggest.  Of this 60%, many restaurants have not failed, they have simply been sold by their owners even though they are making money.

So what is the reason for the 60% rate of ownership change?  H.G. Parsa, the professor at Ohio State University that headed up the study, concluded that most restaurants failed because of owners’ willingness to put sufficient attention on the business itself.  Life often gets in the way, i.e. divorce, illness, children, etc.  Those that have worked in the restaurant business know the hours are brutal and sacrifices of personal and family life are necessary to make a restaurant or bar successful.  This can be very draining on an owner and many find that after a couple years they are no longer willing to give up family and personal time for the business.  They may either choose to sell the business or simply devote less time into it and watch the business start to degrade.

This time and attention to the business can be the contributing factor to many of the more obvious restaurant failure reasons:  Poor customer service, inconsistent quality, poor money management, insufficient marketing and lack of investment in quality people.  These are all manageable issues.  Quality restaurant employees are hard to find and while many staff are good people, they simply will not be as dedicated as the owner.  That is a reality that owners need to be aware of.  Owners need to be willing to sacrifice much of their time and energy for the business, create a well thought out business plan and execute the plan and adapt throughout the life of the business.  The restaurant business can be rewarding and profitable but need to have the right kind of owners.

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Elkhart Bar for sale

Elkhart Shoppes on Six

 

Today I attended the official ground breaking for the Shoppes on Six retail development, located at the corner of County Rd 6 and State Rd 19 in Elkhart Indiana.  The ground breaking was for Phase 2 of the retail center by developer Thompson Thrift.  Phase 1 of the project includes the 3000sf Verizon Wireless store and the small shop building which currently has Dunkin Donuts, Great Clips and Penn Station as tenants.  Soon to come just west of the Verizon store will be an Old National Bank branch.

Phase 2 of the development will begin with a 70,000sf multitenant retail building on the south end of the lot anchored by Ross Dress for Less.  There are also plans for a Petsmart and Shoe Carnival in the building and there are currently discussions with other potential tenants.  The developer is hoping to anchor the corner of the development with a full service restaurant.

This development has been in the works for several years.  The site was identified by the City as a blighted property, as it sat with old vacant buildings for several years.  This corner will connect the retail development along County Rd 6 from the Walmart to the west and SR 19 to the east.  The entire project was made possible with assistance from the City of Elkhart including Economic Development Director Barkley Garrett, public works, the county commissions and the Mayor’s office.  Mayor Dick Moore praised the development for turning blight into positive development, adding jobs and retail options for the area without using any money from the City’s general fund.

When completed, the project will certainly make the connection to SR 19 and give the retail area some added and much needed density.  Elkhart has long had a mix of retail and industrial overlapping use with old and new buildings side by side.  This completes a larger plan of new centralized retail use.

For the local residents, what restaurant would you like to see at the corner?  How about a Buffalo Wild Wings?

Shoppes on 6 Site Plan

Cupcake Bubble??

The South Bend/Mishawaka market received its first gourmet specialty cupcake shop in late 2013 with Gigi’s cupcakes on Cleveland Rd. Mid 2014 saw the opening of Yummy Cupcakes in downtown South Bend. These local store openings are following a gourmet cupcake craze that started in early 2000.
The Cupcake craze is said to have began in 2000 when in an episode of Sex in the City, characters ate a cupcake from Magnolia’s Bakery’s West Village location. Fan’s and tourist began to flock to the bakery and the craze was born. One of the first to capitalize on the cupcake craze was Crumbs Bake Shop, which opened in 2003 on the upper west side of Manhattan. Crumbs made and sold a variety of pastries, but created the Crumbs Signature size cupcakes. Customers lined up for the $4.50 cupcakes and the bakery sold out daily. Crumbs began an aggressive expansion and had opened hundreds of stores by 2011 and went public in June of 2011.
Other small shops and franchises began to open up. The Yummy Cupcake business started in 2003, opening its first store in 2004 in Burbank California. A relatively small organization, Yummy has 4 California Locations, one in Istanbul, Turkey, recently Bloomfield, MI and now South Bend, IN (interesting location list). Gigi’s Cupcakes began by another entrepreneur in Nashville TN and has expanded to 84 stores in 23 states.
Numerous other cupcake stores cropped up in the past decade and many analysts warned of a cupcake bubble. Sure enough in 2011 after going public, Crumbs sales began to decline. By 2013, Crumbs reported $15.3 million in losses and started closing stores. Even at $4.50 a cupcake, Crumbs would need to sell millions of additional cupcakes just to break even. The rapid expansion by the company and the increased competition are cited as reasons for the business struggles. Crumbs plans to continue to close stores and diversify its menu in order to become profitable, but meanwhile original owners have moved on to start other business ventures.
The idea of consuming a large or gourmet cupcakes is a unique and fun thought. I am more than willing to indulge in such an activity, but how frequently?? Certainly not daily, not weekly and unlikely monthly. When Starbucks first brought the gourmet coffee shop and the $4 coffee to the United States, many said Americans would not spend that amount of money on a coffee that was previously under a dollar. Now Starbucks and the like are a culture and one of the more ubiquitous icons in the country. Neither Gigi’s or Yummy’s websites list the calories or fat content of their confections, and probably with good reason. Even with the gluten free, sugar free and vegan cupcake options how many cupcakes can one expect to eat in a year. For the health of an already obese country, let’s hope there is not a cupcake culture brewing. I love the idea of ordering cupcakes for birthdays and special occasions. No cutting and serving necessary, just set out the box and let guests make their choices. So has the cupcake bubble already burst? It appears it has but the hope is with limited shops in our Michiana market, the uniqueness and profitability of our local stores will remain and these businesses will remain.

Business Insider, June 5, 2014
Gigiscupcakesusa.com
Yummycupcakes.com

What’s the big deal about Costco?

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Ever since the announcement of Costco coming to University Drive in Mishawaka, the area has been a buzz about the store opening.  There have been several mentions of the store in the South Bend Tribune as well as the Market Basket online chats and the topic comes up frequently in conversations.  Mishawaka already has one bulk product membership store in Sam’s Club, so why is Costco creating a stir?

The most notable impact of Costco is the construction of the Capital/Fir Rd connection project.  Costco typically draws shoppers from a 50+ mile radius, making convenient access from the interstate crucial.  The Capital connector will provide a more direct route from I80/90 to University Dr.  The increase traffic flow on these routes will encourage additional retail development.  City Plaza on University Dr has seen moderate success with many tenants opening and closing a relatively short time later.  A new Costco location will not only draw shoppers from the Toll Rd to the east but will also bring shoppers further from the west, shoppers who previously traveled no further than the Super Target.  We should see in the next year or two, an increase in the occupancy of City Plaza and new developments along the corridor.

The question still remains, what makes Costco different from Sam’s Club?  Shoppers new to Costco will find many items in the store packed in the Costco private label, Kirkland’s.  The Kirkland’s label is known for its low price and high quality.  Costco will often change the product supplier under this label if suppliers do not meet Costco’s quality and price standards as demanded by its members.  Shoppers that know this product label and its quality have shown great loyalty toward it.  Costco leverages this loyalty, packing many items under it and keeping the quality consistent.  It has been many years since I shopped at a Costco in Olympia Washington, but I still remember the Kirkland’s fruit and snack mix and look forward to buying it again.  Whenever I travel back to Washington, I always see the label in my sister’s cupboard and am reminded of how I enjoyed shopping at Costco.

It the last year, Sam’s Club has had financial losses and laid off employees while Costco has done quite well.  The difference may be, as pointed out Jillian Berman in the Huffington Post (05/16/2014 8:25 am EDT ), is that Sam’s Club intentionally targets the low income shopper while Costco targets a more affluent clientele.  The Costco shopper is better equipped to weather an economic downturn than those of Sam’s Club.  The Costco membership fee is $55 compared to $45 of Sam’s.  Costco’s are typically located in higher income earning areas, their stores are welcoming and their employees appear happy.  Deserving or not, Walmart has received some bad press in recent years concerning price tactics with their vendors and wages paid to its employees.  Costco has avoided this type of bad publicity and it could be argued has a better brand image in the market place.

All the buzz about Costco coming to Mishawaka is well deserved.  It will not only add jobs and spur retail development in the nearby area, bringing in shoppers from all over Michiana, but it will also provide shoppers and small businesses with new alternatives.  I look forward to having the Kirkland’s dried snack mix in my pantry and enjoying the $1.50 Costco hot dog and pop!