How to crack the tourist trap code
Photo by Nicholas Upton
Tourist towns are an entirely different offshoot of the non-traditional real estate game, and choosing the right location is like prospecting for oil—time-consuming during front-end research, costly and disappointing if you make a mistake, but a gusher of cash if you’ve successfully drilled down into a prosperous deposit.
Small-town shopping districts that go quiet during the off-season spring to life during the high season in tourist towns and resort districts—and it’s a beautiful sight to behold. Luxury SUVs flash their hazards jockeying for curbside parking, shopping bags stack up on the braceleted arms of well heeled window shoppers, sights and scents spill out onto the bustling sidewalks and, of course, weary locals count the days to school starting when the crowds recede.
Profiting from this intricate human migration takes skill, and might be the ultimate excuse to write off a fact-finding family vacation. Aside from the obvious concerns about seasonality, doing business in tourist destinations brings new opportunities, strategies and risks compared with traditional suburban power centers.
With the enviable demographics, the potential rewards can be worth the time, research and premium rents required to bring your brand into areas bustling with cash-heavy tourists looking to spend.
I interviewed Frank Weiss, vice president of real estate at Philly Pretzel Factory, while he was standing on the boardwalk of Seaside Heights in New Jersey. Governor Christie and his posse were nowhere in sight, but he said there were throngs of tourists as far as the eye could see during the last blast of the summer vacation season.
The Spice & Tea Exchange location in St. Augustine, Florida, located in an old jail.
While many of Philly Pretzel’s 170 units are traditional, larger-format stores from 1,200 to 2,000 square feet fulfilling a lot of big wholesale and catering orders, a quarter of its most recent units are much smaller and aimed squarely at tourists and walk-up business.
“We found a way to make the concept work in 125 to 300 square feet, so that’s opened up a lot of doors for us to look at some of these high foot traffic areas that we avoided for a while,” Weiss said. The key to the smaller stores, he said, is relying exclusively on foot traffic, not catering, which means site selection is even more important than it is with larger, more typical locations.
“If location, location, location wasn’t important enough in a traditional spot, you might have to add a fourth ‘location’ to that just to make sure, because you only get one opportunity here,” he said. “It’s a short season, and you’ve got to make sure you’ve picked the right spot.”
Add in complicating factors like bad weather, which can slash foot traffic in vacation zones. Tourists tend to be even pickier about what parts of town they’ll visit, even down to what sides of the street they will walk.
“The location has really got to be Broad Street or Main Street—you’ve got to be right where the people are,” Weiss added. “The rent’s going to be more expensive anyway, so don’t worry about overpaying. Make sure you’re in the right spot so everybody walking by has accessibility to you … and get them back to what they were doing.”
The Philly Pretzel corporation works with franchisees to select new sites, and Weiss said his team tries to find multiple potential locations, since real estate is so competitive in high-traffic towns.
Before visiting a location in person, he uses Google Earth to do as much virtual scouting as possible, looking for pedestrian patterns, local landmarks and nearby businesses and destinations that might be compatible with grabbing a pretzel to go.
As opposed to its large-format stores, the smaller pretzel shops are primarily “four wall marketing” that relies on an attractive storefront, strong signage, bright product displays and activating people’s senses to get them to drop in off the sidewalk or boardwalk, as it were. Weiss also recommends pounding the pavement to talk with nearby vendors and landlords, as well as city’s building officials, the local board of health and other municipal departments that might reduce surprises or spoil a promising location.
Aesthetics and sensory attractions are the key for The Spice & Tea Exchange locations, which are designed to evoke 18th century trading posts and pull pedestrians in from the sidewalk.
Beyond four walls
The Spice & Tea Exchange is a 12-year-old retail franchise based in Palm Harbor, Florida, whose stores are intended to resemble 18th century trading posts—you know, a place you bring all your surplus pelts. Out of its stable of 58 stores, 50 are located in tourist areas from downtown Disney all the way to Pier 39 in San Francisco.
Curious noses seduce tourists into the front door, following fragrances of Tiki Punch herbal tea, crushed Aleppo pepper, cloves, cardamom and chamomile. The high-vis stores have helped boost the young brand’s visibility as it works to scale up.
Upon opening, most Spice & Tea franchisees see an 80/20 ratio of tourists to local shoppers. Scents and a pleasing storefront are the keys to generating immediate foot traffic, as local clientele is more of a slow build.
“Our main product is a $5 bag of spice, and you’ve got to sell a lot of bags of spice to cover some of these high-end rents that we are in, so it’s volume,” said CEO and co-founder Amy Freeman.
Having tried out a handful of corporate stores in unsuccessful locations, she underscored the critical importance of the perfect location in destination towns, which often means on-the-ground research including actually watching pedestrian traffic flow.
“We tested out a store in Newport, Rhode Island, and it was in the heart of the busiest portion of town and we did a store upstairs,” she said, noting the second-floor level was an ill-fated attempt to save on rent. “We would offer … piggyback rides up the stairs, and people would not do it. It was great information for us.” Later, “we put the store right below, downstairs, and quadrupled our business immediately—you have to watch the habits of the consumer in order to select the most viable space.”
With years of experience, the brand now seeks to place new stores “where the foodies are” rather than focusing solely on foot or auto traffic. Green flags include food trucks, popular restaurants and a nearby farmer’s market.
Chief Operating Officer Penny Rehling said the brand works closely with franchisees to manage off-season strategies, including discounts aimed at local residents, as well as partnerships with local restaurants, bakeries and craft breweries for tea classes, salt schools, wine-and-dine events or becoming part of their supply chain.
“We know our product is superior” to a national distributor,” Rehling said. “During those off-seasons is really where we try to expand outside of those four walls to the local communities.”
Researching the environment
Fondly remembering my all-time favorite childhood camping trip, I was excited to ask Yogi Bear’s Jellystone Park for some tourist-trap strategies. Jim Westover, vice president of operations for the Ohio-based campground franchise, said the company has begun to attract the attention of commercial real estate investors looking for new opportunities as the retail market has stagnated.
More complex than just identifying bustling shopping districts, Jellystone focuses on key demographics: a high number of 35-40 year olds with solid incomes, beautiful natural scenery within an hour and a half of a major metro, and proximity to family-friendly attractions like national parks and theme parks.
While proximity to KOA-branded campgrounds—its primary competitor—is a helpful indicator for prospective franchisees, Jellystone itself is a family destination, so it encourages franchisees to invest in offseason attractions like haunted corn mazes and wagon rides in the fall, as well as Ninja Warrior-style obstacle courses.
Given that a new campground can be a multimillion-dollar investment, Westover said research is the key, as well as the confidence to take the plunge with a “build-it-and-they-will-come” mentality. For Jellystone, that includes a deep dive into the commercial real estate market, traffic pattern studies, and knowing how to lure families off an interstate or main highway.
“There is something to being somewhere first,” he said. “If you can see the progression or development of the next place is going to be, it puts you in a great spot … and there are ways to identify those things if you’re in tune with what’s going on around you in your environment.”
Tom Kaiser, pictured on opposite page, is associate editor of Franchise Times and writes about urban tales in franchising in each issue. Send story ideas to email@example.com