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Retailers Still Expanding ... But at Manageable Rates

CoStar Interviews Retailers and Retail Experts About Companies Doing Well and Expanding
February 13, 2008
In last week's CoStar Advisor story, "Retailers Taking Their Medicine and Turning Cautious Over Growth," CoStar listed the mass of significant store closing announcements made over the last couple months. Experts interviewed said that most retailers closing underperforming stores and pulling back on expansion plans right now are "smart" and "ahead of the curve", stressing how important it is for retailers to dump those stores that are hurting the bottom line.

Also in the story, one expert went so far as to say he doesn't think any retailers should be opening stores right now, and should instead be "retrenching." However, many retailers obviously disagree as there is also a mass of retailers expanding at a steady pace this year and into next; but little attention has been paid to those as media has been so focused on store closings and retailer cutbacks.

To make a point about the relative significance of store closing announcements of late, Naveen Jaggi, senior managing director of CB Richard Ellis' Retail Services - Occupier Practices segment for the Eastern Region said, "In 2005 and 2006 retailers were taking the surf as far as the could take it; and in many cases they were expanding too fast - but that's the nature of Wall Street. The closings retailers are announcing are generally a smart move. If you think about the big picture of the 50+ billion square feet of retail we have in this country, we're probably only seeing 1% of that in terms of closed stores -- it's really not that big a deal." Jaggi added that retailers are curbing their expansion plans to a "manageable" growth rate of 2% to 3% relative to sales.

Through this story and other recent CoStar Advisor interviews, retail industry experts have identified some retail categories and specific retailers expected to perform well (or even outperform) and continue to add a significant mass of stores in 2008 - 2009.

The very high-end luxury retailers and restaurants are expected to be generally insulated from the current economy and continue to grow during this economic downtime. However, retailers on the other end of the price spectrum -- discount chains and quick service restaurants -- are also expected to fare well as middle market shoppers with less dollars trade down and all shoppers are looking for a good deal. And then there are the international retailers, either breaking into the U.S. or forging ahead with U.S. expansion plans, showing economic concern that doesn't seem to match Americans' generally glum opinion.


Do you have an opinion to share on retailers expanding or closing stores or the CoStar Advisor newsletter? Relevant comments emailed to Senior Editor Sasha Pardy at spardy@CoStar.com will be added as updates to this story.


INTERNATIONAL



Faith Hope Consolo, chairman of the Retail Leasing and Sales Division of Prudential Douglas Elliman, advises top domestic and international retailers either launching concepts in the U.S. or pursuing expansion plans across the nation out of her New York City office.

When asked if the international retailers she's talked to of late seem un-phased or little concerned about launching or expanding in the U.S. this year, despite awareness of our economic downturn, she responded, "Not at all concerned. Foreign retailers seem to understand our current economy better and still see the U.S. as the safest place and best place for long term investment. While Americans have been spoiled with such a strong economy for a long time now, foreigners have experienced tremendous economic highs and lows that are more dramatic and come more often than the U.S. has seen," said Consolo.

"I find that international retailers want to lock themselves into deals now, because they've seen the escalation of rents in the past and want to take advantage of stagnant rents now, to hedge against a missed opportunity for the perfect space that may cost more next year," added Consolo. She used Manhattan as an example, saying that rents have skyrocketed over the past few years; but now they've stalled, which is seen by many as an opportunity.

"Well underwritten, strong international retailers see America as a great opportunity. Foreign currency, their buying power, is as strong as it has every been." Jaggi added that in light of all the closure announcements, there is a lot of excess space available in multi-market portfolios that he thinks some successful overseas retailers could use to enter the U.S. with a group of stores procured at market or below market values.

Jaggi qualifies the latter statement, however by saying that landlords often take back space in a disposition portfolio if its an A location because "there's still plenty of retailers to lease that space. Today, there may be five retailers that go out, but one will take the space over. Occupancy is at 88% right now nationally - that's strong - we're bordering on 90%. "However, Jaggi does say "For the last six years its been a landlord's market. The consensus today is it’s a tenant market. The smart tenant is taking full advantage of this marketplace right now to get better deals and to be aggressive with landlord negotiations."

Red Mango
Red Mango is South Korea's largest natural frozen yogurt retailer. Dan Kim, the company's president and CEO told CoStar that when Red Mango opened its first store in Korea in 2003, it quickly grew to a fleet of 180 stores, which turned out to be too many as competitors came out with similar concepts taking some market share, so he says "now we've scaled down to 130 locations there."

With that experience, Red Mango's entry into the U.S. has been more carefully planned. Kim says the U.S. is an "untapped market" for a premium frozen yogurt experience with its only direct competitor being Pinkberry, which opened its first store in 2005 and now has 30 stores in the L.A. and New York areas.

The first Red Mango opened summer of last year in Westwood Village by UCLA and the retailer now has 17 stores open in the areas of Los Angeles, San Diego, Chicago, Las Vegas, New York City, Long Island, Portland, and Seattle. By the middle of 2008 (summer is prime for frozen yogurt), Kim plans to have 40 stores open and by the end of the year he says he'd "love to have 50 stores" open; and in the 12 to 18 months following that, 50 more. Nearly all U.S. stores will be company owned. He says, "it sounds like a lot, but when you target five different cities and are opening three to four stores in each, it makes sense, especially considering we've got a really good real estate and architectural teams that can deliver stores quickly."

So why is this time period a good time for Red Mango to be breaking into the U.S. and opening new stores? "Our belief in the food business, especially the snack segment, is that the impact of a recession doesn't hit us as hard as full service retailers, so because our product is affordable and especially the increasing awareness of healthier eating and demand for convenience, we're seeing the opposite impact even though the economy is heading recession," says Kim. He adds that traffic at 25% of its stores is above expectations, while the rest are performing to expectations "but sales are rising week after week", he says explaining they are pleased, considering most stores opened this winter.

"We've entered the market carefully, picking the right locations and making sure the demographics are right," says Kim. Red Mango is intended to be a premium experience, with each 700- to 1,200-square-foot store costing $300,000 to $400,000 to bring to life a "coffee-house inspired" atmosphere beckoning customers to "hang out and relax" after a night out at the movies, a show, dinner, etc.

Kim describes Red Mango's site criteria, "Our number one criteria is the demographics - a customer base that is health conscious and higher income. We've experimented with several store types, but we're really looking for high foot traffic destinations, like lifestyle centers or malls or outdoor locales with really good restaurant and/or entertainment anchors geared towards an evening crowd. We'll do urban street locales if the rents make sense and we've been lucky with a few. We avoid centers that are tenanted with morning, daytime, everyday needs or lunch crowd tenants. At first we were avoiding the northeast because of cold weather, but results in New York have been positive, so that's not a real concern anymore." And the company is working on alternative store types, including store-within-store concepts, kiosks, co-branding options, etc.

Kim adds that Red Mango is being careful not to enter markets "that we feel may be more affected by a recession tightening consumer spending." He didn't identify specific locales, but says they generally avoid lower income areas.

Commenting on the company's experience in securing real estate, Kim said, "Last year, the real estate market was very competitive and we found our top competitor going after the same spaces we were but in our opinion, they were willing to overpay to get that space and we weren't. Last year we had a negative experience in regards to real estate, but as the year turned, we've found that we're in a position to negotiate better lease terms, better lease rates, better build out period, tenant allowances, etc. We feel that our leverage now with landlords has increased tremendously."

Tesco's Fresh & Easy
U.K. grocery magnate, Tesco PLC, made its U.S. debut in the Southwest last year with Fresh & Easy Neighborhood Market. The retailer has been the subject of much debate, as the grocery industry questions if Fresh & Easy's 10,000-square-foot, convenience-oriented format should be replicated across other major grocery brands.

During 2007, Fresh & Easy had announced 122 store locations and by the end of the year, had 30 stores open in Southern California, Phoenix and Las Vegas. The retailer now has at least 43 stores open and just announced another 18 stores will be opening in the San Francisco bay area.

H&M
Swedish retailer Hennes & Mauritz, known as H&M, has been open on high streets and in U.S. malls (primarily on the east coast) since 2000 and has held the title of the world's leading retailer of "cheap-chic" apparel for quite some time; but now that other overseas retailers Topshop, Mango and Zara are making their way in this country with similar wares, the retailer needs to step up its plan, and is continuing to expanding with special effort placed on the Southeast and West Coast. H&M opened net 170 international stores in 2007, bringing its store count to more than 1,500 worldwide. Several stores opened in California, as well as stores in Indianapolis and Las Vegas in 2007 and recently announced stores include a two-story flagship on Market Street in Atlanta, a 16,000-square-foot Seattle store, and more.

Topshop
Established in 1964 in a U.K. department store, women's affordable fashion retailer, Topshop, broke into the U.S. summer 2006 by selling its trademark Baxter jeans at Barneys New York flagship stores across the country. It also operates a men's clothing unit, dubbed "Topman."

Topshop has been open about plans to expand internationally, but the most recent development has it executing a lease for a three-level, flagship, Topshop/ Topman store at 478 Broadway in New York City's SoHo District, taking over the space currently occupied by Yellow Rat Bastard. Topshop's doors should open in September 2008. The store, including basement, ground floor, and third floor levels amounts to at least 40,000 square feet, all of which TopShop plans to use.

Expect the retailer to proceed with opening several 20,000-square-foot stores at hot shopping spots across America. Topshop reportedly has its eyes on two additional sites in Manhattan, as well as sites in Miami, Boston, Las Vegas, and major cities on the West Coast.

Mango
Barcelona-based, Mango, selling "fashion for the young, urban woman", has amassed a portfolio of more than 1,000 stores in 89 countries. The retailer debuted in the U.S. last year with stores branded "MNG by Mango", starting with an 8,000-square-foot store on Broadway in Manhattan's SoHo district. Its latest store openings were on Market Street in San Francisco and Collins Avenue in Miami. With sales growth in the high single digits and international openings of more than 100 stores annually, Mango stated about the U.S., "The store in New York is the first step in the firm's plan for establishing itself in one of the most competitive markets in the world." Consolo says we can expect the retailer to continue opening stores on high streets in major U.S. cities.

Zara
Zara is the flagship chain store of the Spanish Inditex Group. Known for quickly delivering their interpretations of runway fashions at affordable prices, Zara has grown to have approximately 1,100 stores in 68 countries, and now has 30 U.S. stores open, primarily in traditional mall settings; but Consolo says the company has refocused to opening on Main Streets and Zara is also seen making tenant lists of some high profile lifestyle centers under construction. Recently announced stores include the takeover of a former 30,000-square-foot Talbots store on Chicago's Magnificent Mile opening in 2009, the takeover of the former Filene's Basement in Boston's Downtown Crossing, a three-story store on Newbury Street opening this year, and more.

Others
Consolo's other examples of international retailers with expansion plans for major U.S. cities include:

  • Anichini Linens: An Italian fashion linens retailer with stores in New York and Los Angeles

  • Boccini: Has a store on West Broadway in New York City

  • Ports 1961: - A Canadian urban fashion apparel retailer

  • Emma Hope: An English fashion Shoe wear retailer whose first store is opening in East Hampton, NY with more stores to follow in NY, NJ and CT.

  • Carat: An Asian fine jewelry chain that is opening a store on Madison Ave in New York City, as well as Tampa, Atlantic City, Las Vegas, Los Angeles and San Francisco.

  • Jacadi: A Parisian fine childrenswear retailer with 400 stores 42 countries; including 27 U.S. stores in New York City, Miami, Houston, Scottsdale, Atlanta, Chicago, Long Island, Boston, and San Jose.

  • Mauboussin: Parisian artist jewelry brand opening their first U.S. store on Madison Ave and 63rd Street in New York City.

  • Buccellati: A Milan fine jewelry retailer with stores on Fifth Ave in New York and Rodeo Drive in Beverly Hills; is expanding into Chicago and other major markets

  • Muji: Consolo calls Muji the "Japanese version of Crate & Barrel's CB2 concept". The retailer opened its first store in SoHo last November and followed with a store in Times Square.




Do you have an opinion to share on retailers expanding or closing stores or the CoStar Advisor newsletter? Relevant comments emailed to Senior Editor Sasha Pardy at spardy@CoStar.com will be added as updates to this story.


DOMESTIC



LUXURY


Jaggi says it’s the high end luxury retailers that won't really feel this economic pinch, "At that very high strata they feel no recession at all, but lets face it, that a very small percentage of the industry." He adds a few luxury brands with strong expansion plans for 2008 - 2009: Tiffany's, Luis Vuitton, Bulgari. He also gave examples of luxury retailers outside of the fashion category, saying that Pioneer electronics has been "floored by the success" of a recently opened flagship store in Southern California and that Garmin (GPS units) has been "very pleased" with the sales of its flagship store recently opened on Michigan Ave in Chicago.

Jaggi made a point about luxury shopper behavior with an anecdote on that Pioneer flagship store, "Best buy is within 10 miles of 70% of the US population. At this Pioneer store in Southern California, over 50% of their customers are driving a minimum of 30 minutes to get to the store, which means they could be driving past two to four Best Buy and Circuit City stores combined along the way. This shows that shoppers at the luxury level are willing to go out of their way for quality service, and they're willing to pay more for it."

Consolo says "Luxury is leading the way." Her examples of luxury retailers expanding include:

  • Ralph Lauren "Rugby": Launched in Fall 2004, Ralph Lauren now has 10 Rugby stores in Seattle, Dallas, New York, Boston, Chicago, Georgetown, Greenwich, San Francisco, and more. Store locations target areas concentrated with students with money to spend.

  • Coach "Legacy": The handbag brand opened its first Legacy Boutique in a 1,200-square-foot space on Bleecker Street in New York, designed to give customers the first look at a special collection bringing together Coach's traditional bags with modern touches. Consolo sees Legacy as the future of the brand.

  • Crate & Barrel CB2: A slow test for Crate & Barrel, the company opened its third CB2 store last November in SoHo, joining stores two existing stores in Chicago. With furniture and home accessories designed to cater to the loft-living, chic, young, urban crowd, CB2 will now start opening more stores; locations in Boston, L.A., D.C., and Miami are expected.

  • Catherine Malandrino: This popular fashion designer now has stores in New York City's Meatpacking District and SoHo, as well as East Hampton and Manhasset; but also has stores in Los Angeles and one coming soon in Las Vegas.

  • Calypso Christian Celle: An eclectic fashion and accessories retailer that opened its first store in St. Barth's and now has 17 stores in Long Island and New York City, as well as stores in four in California, three in Florida, and one in Chicago, Boston, Dallas, Austin and Phoenix. In September 2007, Calypso sold a majority stake to private equity firm Solera Capital. Stores are likely on the way in Atlanta, Las Vegas and Hawaii.

  • Diesel: With over 300 locations worldwide, Diesel continues to expand; its latest store going in the space of a former Gucci on Fifth Ave in New York.

  • Juicy Couture: One of Liz Claiborne's better performing brands, expect to see the retailer take over stores closed amongst its other brands, in addition to opening new stores. In its fourth quarter report today, Liz Claiborne said Juicy Couture "is on a rapidly expanding trajectory."

  • Intermix: A designer fashions retailer, Intermix has been in expansion mode and now has stores in New York City, Los Angeles, Miami, Chicago, Boston, Atlanta, Las Vegas, Dallas, Austin and Washington D.C.

  • Scoop: Competing in the same fashion space as Intermix, the two often locate in walking distance of one another and share customers. Scoop now has stores in Greenwich, Miami, Chicago, Las Vegas, Atlantic City, Dallas, and five in New York.




Do you have an opinion to share on retailers expanding or closing stores or the CoStar Advisor newsletter? Relevant comments emailed to Senior Editor Sasha Pardy at spardy@CoStar.com will be added as updates to this story.


DISCOUNT


Vaughn Miller, president of the retail division for Henry S. Miller Commercial said in a CoStar Advisor interview last week, "the lower end price point, very value-oriented retailer is definitely succeeding right now. They are the ones that know how to keep occupancy costs low and how to run a tight ship and don't overpay for their real estate; which can be hard for a landlord or developer - but they're a good retailer and a good merchant to have when you need them."

And Jaggi holds the same position on discounters, too. "People are looking to save money on large shopping trips." He goes on to say that people are trading down from JC Penney, Kohl's and Macy's to Wal-Mart, Target, Ross and TJ Maxx.

Andy Graiser, president of national retail disposition firm, DJM Realty, added, "Where before the landlord (of a Class A center) wouldn't really talk to discount operators, all of sudden now these landlords are knocking on their door to take over space, so its kind of an indication of where the market has gone."

And for some of the largest savings on a single shopping trip, Jaggi points to wholesale clubs, with Costco being the biggest outperformer. However, as a whole including BJ's and Sam's Club, the category is outperforming all others by a fairly large margin in terms of sales growth. Costco plans on opening 30 stores in 2008, BJ's plans on 8 stores, and Sam's Club will continue to add 25 stores per year.

A few of the favorite discount operators positioned for expansion mentioned by those I interviewed include Target (added about 100 stores in the last 12-month period, but has yet to reveal 2008 plans), Wal-Mart (launching 20,000-sf Marketside concept and opening a reduced # of supercenters -- 170 in 2008 and 140 in 2009), TJX Companies' TJ Maxx and Marshalls brands (the company has added 26 TJ Maxx and 28 Marshalls over the last 12 months, 2008 plans are yet to be announced), Ross Dress for Less (planning 65 to 70 new Ross stores and 5 DD's Discount stores in 2008), Dollar General, Dollar Tree (opened 240 stores in 2007, 2008 plans soon to be released), Family Dollar (opening 300 stores in fiscal 2008), and Hobby Lobby.


Do you have an opinion to share on retailers expanding or closing stores or the CoStar Advisor newsletter? Relevant comments emailed to Senior Editor Sasha Pardy at spardy@CoStar.com will be added as updates to this story.


CHILDREN to TEENS


Jaggi pointed to a few retailers in the children's (ex., Children's Place and Gymboree as examples) and Tween categories (ex., Libby Lu and Limited Too), that are exceeding their own, as well as Wall Street's sales expectations of late; saying that in the current economy consumers are skipping themselves, but haven't stopped buying for their kids.

J. Crew's Crewcuts for Kids
A concept first tested within J. Crew's stores since 2006, the company now has four standalone crewcuts stores open.

Gymboree
San Francisco-based Gymboree (Nasdaq: GYMB), children's apparel retailer with 786 stores under brands Gymboree, Janie and Jack, and the new Crazy 8, last week reported fourth quarter results. The retailer's sales were better than most, showing a 16% increase in net sales and 10% increase in comparable store sales over fourth quarter 2006.

For 2008, Gymboree will carry out continued aggressive expansion by adding 100 stores: 20 Gymboree stores; 40 Gymboree Outlet stores, 20 Janie and Jack stores, and 20 Crazy 8 stores. Seeing as the company's first Crazy 8 store, a more moderately priced children's apparel brand that will compete more closely with Children's place, opened last summer and now has 14 stores, the rollout of the concept is rather aggressive.

Club Libby Lu
A specialty girls entertainment services and retail store, Club Libby Lu is owned by Saks Inc. and operates at least 87 mall stores nationwide.

Children's Place
The Children's Place Retail Stores, Inc. (Nasdaq:PLCE), specialty retailer of children's apparel and merchandise, operates 912 Children's Place and 337 Disney Stores in North America. By the end of fiscal 2007, the company will have opened 58 Children's Place and 15 Disney Stores over the year. Despite being the subject of much scrutiny due to slip-ups with its Disney Store license and undergoing a strategic review, Children's Place is adding stores in 2008, specifically 30 new Children's Place and 14 new Disney Stores. The latest news is a possible acquisition by private equity firm Golden Gate Capital.

Tween Brands
Held under Tween Brands, are Limited Too and Justice, the latter of which is a lower-price alternative and proving to be the cash cow for the company. In its latest report showing record Holiday 2007 sales results, Tween said it operates 594 Limited Too stores (up 20 stores over last year) and 257 Justice stores (up nearly 100 stores over last year). The company is busy remodeling Limited Too stores, which are located in regional malls in upper income areas, to a "girls world" format. Justice stores average 4,200 square feet and are located in power centers or lifestyle centers; 100 more stores will be added through 2012. The company is also planning a new concept that will likely be a Justice superstore offering space to host parties in the store.


Do you have an opinion to share on retailers expanding or closing stores or the CoStar Advisor newsletter? Relevant comments emailed to Senior Editor Sasha Pardy at spardy@CoStar.com will be added as updates to this story.


MOBILE PHONE


"Using the iPhone success, AT&T has a robust growth plan for 2008 involving 350+ brand new stores," says Jaggi adding that Sprint/Nextel's recent announcement regarding closed stores and distribution points and a drop off in users shows that the cell phone industry is now a "two-man race" between AT&T and Verizon.


QUICK SERVICE / FAST CASUAL RESTAURANTS


Miller identified the quick service restaurant category, which includes a large range of operators from Chick-Fil-A to Robeks to Au Bon Pain, as a retail category that generally does well in a "depressed economy", that he expects to see continued expansion from. Again, the middle market is left behind, as diners trade down to QSRs from casual dining restaurants they would frequent before, such as Applebees, Pizzeria Uno, TGI Friday's, etc.

"Absolutely QSRs / Fast Casuals tend to do well in a depressed economy. QSRs as a line of business will show positive growth in the sales of their brands, but the industry also has a lot of bad operators, so you'll likely see a consolidation in terms of space because we don't need four sandwich operators on one corner. So the good operators will do great and will continue to grow" said Jaggi, using Chipotle, Panera and Café Express as examples of "good operators". He added that in this economy, the traditional convenience stores, as well as QSR /gas /convenience cooperative stores, will generally see positive growth rates.

Robeks
For a user's perspective, CoStar interviewed Sheri Miksa, president, CEO and board member at Manhattan Beach, CA-based Robeks Corporation. Robeks is a fruit smoothie and "healthy eats" franchisor (many stores also offer sandwiches and salads as well as nutritional supplements) that has nearly doubled its size since 2006 to now have 140 stores in 16 states. In a recent statement, Miksa said, "We see robust opportunities for Robeks in 2008, as we forge ahead with our rapid growth plan, which aims for 500 stores in the next four years." For Robeks, that would mean the addition of an average of 65 units per year through 2012.

Miksa's justification for Robek's growth in 2008, despite a somewhat depressed economy, is similar to Red Mango's -- the trends of consumers increasingly seeking out healthier dining options and more convenient dining options, as well as the effect of trading down to a lower-priced meal. "People continue looking for alternative options when eating out, regardless of the economy," says Miksa.

Miksa says Robeks is a lifestyle brand, with a large percentage of loyal customers, which has buoyed store traffic, "Customers are committed to our brand, we've been happy with the traffic we're seeing." Miksa adds, "We've also found that the success of our concept is not season specific or region specific," explaining that the company has been "delighted" with its performance in the northeast, as well as the markets of Columbus and Cleveland, where the economy is lacking more than other regions.

Commenting on the effect of real estate on Robeks' business, Miksa said, "Because we're an all-franchised concept, the occupancy factor and costs are a really critical part, so we're going to be looking for the very best deal as franchisees are generally signing a ten-year commitment." She added that Robeks has experienced increased developer and landlord interest in the brand as its footprint has expanded.

Robeks is targeting more stores in California, specifcally Ventura, the Inland Empire and north. She identified Washington D.C. as a strong market and said Robeks wants to build a presence in similar markets. Other areas identified include Long Island, Boston, Connecticut, North Carolina and Arizona; but the company is open to franchises in any state, although it requires area development agreements.

Robeks' site criteria is very flexible, with locations ranging from 200 to 1,500 square feet; but the average store size ranging 800 to 1,000 square feet. "Because we don't have full kitchen or high electrical needs, we represent a great opportunity to take space others might not be able to," says Miksa. Site locations range from urban street locales to daily needs strip centers. Preferred, but not required co-tenants include fitness centers, whole foods market, big box destination stores, and other fast casual players like Panera, Chipotle, Cold Stone Creamery, Starbucks, etc.

Jamba Juice
Emeryville, CA-based Jamba Juice, quick service restaurant operator in the smoothie category celebrated the opening of its 700th location in Portland, OR on Dec. 20, 2007 and the opening of its 500th company-operated restaurant in Tacoma, WA on Dec. 27, 2007. In 2007, the company opened more than 100 new units in the U.S., with a heavy concentration in the Northwest. Expect 55 to 65 company-operated stores to open in 2008, plus several franchise units as the company continues with its nationwide expansion plan with a particular focus on adding units in airports and college campuses. According to CoStar Tenant, the average Jamba Juice is 1,500 square feet.

Au Bon Pain
Au Bon Pain, operator of 226 bakery cafés around the world, is undergoing a management buyout in cooperation with LNK Partners, a private equity firm focused on the retail sector. Under terms of the agreement, management and LNK will invest more than $100 million of equity to recapitalize the company in support of an expansion strategy. The company has nearly doubled its size since early 2006, primarily through franchisees.

Its urban café format is designed to cater to the hurried customer and at 2,500 to 3,500 square feet is typically located in large office towers or on urban street locales with a number of office workers. The Bistro, Au Bon Pain is designed for suburban locations with more attention paid to seating areas and comfortable design; at 4,000 square feet the company prefers locations in regional lifestyle and fashion anchored centers. For a lease term, Au Bon Pain asks for 10 years with four consecutive five-year options to renew at a predetermined rent.

The company also has formats for non-traditional situations, such as airports, hospitals, universities, and more. Markets currently targeted include Greater New York City; Plattsburgh, NY; Albany, NY; York, PA; Pittsburgh, PA; Baltimore, MD; Toledo, OH; Milwaukee; and Dallas. To date, Au Bon Pain limits itself to the Eastern, Southeastern and Midwestern areas of the country.

Panera Bread
St. Louis, MO-based Panera Bread (Nasdaq: PNRA), recently reported fourth quarter results that included a 29% increase in revenues over the previous year. The company opened 169 new bakery-cafes during fiscal 2007, to bring its fleet to 1,169 units. Average unit size is 4,200 to 5,000 square feet and the company is very flexible in location type, as long as the center or street locale has strong visibility and traffic.

Chipotle
Formerly a McDonalds company, Chipotle Mexican Grill (NYSE: CMG) added approximately 140 restaurants during 2007 to bring its fleet to 670 units. Although the operator admitted a fall-off in third quarter comps, sales growth is still in the double digits. In 2008, it plans to add another 130 to 140 new restaurants.

Café Express
Schiller Del Grande restaurant group, which operates brands Rio Ranch, The Grove, Café Annie, and Taco Milagro; recently bought itself back from Wendy's Corporation with a plan to expand the company. A fast-casual take on its more full service Café Annie brand, Café Express has 12 locations in Houston and five in Dallas. It plans to continue opening units in Texas throughout 2008 and then will branch out from there.

Cici's Pizza
Coppell, TX-based CiCi's Enterprises, operator of more than 600 CiCi's pizza buffet restaurants in 29 states, is planning to expand in California, New York, Delaware, and New Jersey. The plan is part an overall aggressive initiative to add 185 restaurants over the next two years, which also includes expansion in the southeast and Midwest where the company's brand is concentrated. With the growth primarily fueled by franchisees, it helps that CiCi's recently developed a less expensive concept, CiCi's To Go, which is only 800 to 1,000 square feet in comparison to its typical buffet restaurants, which average 4,200 square feet.

Sagittarius Brands
Lake Forest, CA-based Sagittarius Brands, parent company of the Captain D's and Del Taco restaurant chains, added 37 new restaurants in 2007, including its 500th Del Taco restaurant. As of the close of the year, the company has deals signed for 91 new restaurants to open over the next several years. The typical Del Taco is a 2,260-square-foot building with drive-thru on a half acre outparcel. The typical Captain D's is a 2,700-square-foot building with drive-thru on a three-quarter-acre outparcel.

Chick Fil A
This quick serve fried and grilled chicken operator recently celebrated its 40th anniversary, which included 40 consecutive years of positive sales. During 2007, it opened a record 80 locations. For 2008, Chick-Fil-A plans 88 locations, including 70 stand-alone units, five mall locations, and 13 licensed operations.


(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@CoStar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.




COMMENTS FROM READERS:
"My input to the article as it relates to my experience with international retailers:...With the euro and pound so strong vs. the dollar, European retailers look at the U.S. market as an opportunity vs. entering markets with less favorable exchange rates. The economic slowdown in the U.S. is generally viewed as a short term cyclical situation. Its also viewed as an opportunity to secure more favorable rental rates." - Lary P. Hanshaw, President & CEO, Metropolis Retail, Inc.

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