dkSez : : : : : : Don Kahle's blog

Little noticed in a business article published in this newspaper last week was this startling news: a nationwide chain of hamburger restaurants plans to open their second area location near downtown Eugene. The article heralded the first location, opening in the Gateway area of Springfield, but there’s nothing startling about that news. Franchises long have favored that hot spot off I-5. But downtown Eugene?

The recipe that drives franchised restaurant growth has very little to do with the food they serve. Their first formula has everything to do with real estate negotiations.

Ray Kroc knew something that the McDonald brothers did not. Ray Kroc sold a lot of hamburgers in his day, but that’s only the tip of the McIceberg. Kroc knew how to identify prime real estate opportunities. Franchisors haven’t tampered with that “secret sauce” since the 1950s.

Steve Master will be the first to admit that Fred Meyer is attracted to the location where Civic Stadium now sits because of the area’s traffic counts, the demographics of the neighborhood, and the locations of its nearest competitors. When you’re siting hundreds of stores, you want to keep the variables to a minimum when comparing opportunities.

So when a franchisor based in Arlington, Virginia with 750 stores under its care is looking to break into a new market, you can be certain the locations are carefully considered.

Gateway was an easy choice. Just count the similar franchises in the same neighborhood. But near downtown Eugene? Startling. Or let’s lose the “l” in the middle of that word and believe that something different for downtown Eugene is definitely starting.

When was the last time a franchised restaurant signed a lease anywhere near downtown Eugene? Taco Time was local and they dragged A & W into a co-branded location. Arby’s , IHOP, and Dunkin’ Donuts were nearby, but they’ve all left. Starbucks has several locations, but they’re not primarily selling meals. Several of our own successful restaurateurs have done well downtown, but they know things that won’t fit on an out-of-towner’s spreadsheet.

I called a couple commercial realtors to ask if their memory is better than mine. I learned that the location under consideration by Five Guys Burgers and Fries is not on 10th, as reported, but on 7th near the Washington-Jefferson Street bridge. That makes more sense, and so a true downtown franchised burger joint hasn’t quite arrived, but we’re getting closer.

I’m not hoping that downtown becomes a new Mecca for franchises. If I want that, I can make the trip to Gateway. But we should all be tickled if franchisors begin inquiring about locations in downtown Eugene. And chances are good that they will. One of the easiest shortcuts to finding good locations is asking where the nearest competition has sited. I hope instead that our local landlords grant an unspoken “home court advantage” to local entrepreneurs who step up to ride the wave of downtown’s resurgence.

Once every downtown storefront is filled with solid, interesting and wonderfully varied businesses, let’s bask for a moment. (We don’t bask as well as we should.) And then, let’s immediately begin planning for the next downturn.

A decade ago I proposed a vacancy tax to address downtown blight. Landlords and business owners claimed it would be punitive, and of course they were right. They didn’t argue it would be unfair in concept, since we could all see that it was the emptiness of downtown that was attracting hoodlums and the city’s hoodlum-controlling costs.

Now that downtown is promising to fill up, we may not need something as draconian as a vacancy tax. We can start with something more modest, by no longer subsidizing landlords whose downtown storefronts remain vacant.

As things are currently designed, “contributions” to the business improvement district are waived for any vacant spaces. Since empty space needs as much or more attention from the street than leased space, this formula has the landlords who diligently fill their downtown storefronts paying more than their fair share of the cost.

If we can’t tax downtown vacancy, we can certainly stop incentivizing it. Very soon would be a good time to make that change — after a little basking.

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Don Kahle (fridays@dksez.com) writes a weekly column for The Register-Guard and blogs.

Tags:   Civic Stadium · Don Kahle · Eugene Oregon · Franchising · Fred Meyer Inc. · McDonald's · Ray Kroc · Starbucks Corporation · Steve MasterNo Comments