Le Duff America Ignores the Slow Recovery
Chain Store Age asked Paul Carolan, chief development officer for Dallas-based Le Duff America, about the bakery-café company’s aggressive growth plan in the United States.
The North American subsidiary of Paris-based Groupe Le Duff SA, Le Duff America now manages four brands in the United States: Bruegger’s Bagels, la Madeleine Country French Café, Brioche Dorée and Mimi’s Café, which was acquired in March.
This year, the 300-unit Bruegger’s will add eight to 10 franchises and seven corporate units. With just over 60 units, la Madeleine will open seven corporate restaurants, one franchise and three licensed units. Brioche Dorée is adding two units to its existing U.S. roster of 33 units. Mimi’s is getting prepped for growth.
Seems brave in this economy.
How can you have confidence in such aggressive expansion plans in this economy?
Many restaurants are battling economic headwinds. We don’t feel those headwinds. We really don’t discuss the economy. We talk about food, customers and site selection. As a privately held company, we can take a long-term view of development. Public brands must focus on shorter-term development strategies. Of course, we have headwinds of our own.
We face two major challenges: finding franchisees and sites. Franchisees must be great restaurateurs and capitalized well enough to build at least five units. For instance, a la Madeleine costs $1.2 million to build out, an investment that typically produces an annual unit volume of $2.1 million.
Our biggest challenge is site selection. All of our brands have specific siting needs. Bruegger’s Bagels, for instance, needs a 2,000-sq.-ft. to 2,400-sq.-ft. endcap space, great co-tenancy and visibility. We look for these sites in areas with dense retail. Of course, it has to be in a center that is close to Bruegger’s customers.
Describe your customers.
All of our brands focus on customers with similar demographics and psychographics. Our customers are 25 to 44 years old, well educated and highly compensated. The bakery café segment has a strong lunch business. So we need sites in communities with high daytime populations. That’s another site selection challenge.
Doesn’t la Madeleine have strong breakfasts and dinners, as well as lunch?
Yes, our breakfasts and dinners are strong. Our menu is deeper than most bakery-cafés. We bake breads and make sandwiches, but we also offer plated French specialties, such as Chicken la Madeleine.
What are you doing that’s new?
Brioche Dorée has developed a prototype for street-front units in North America. Traditionally, Brioche has gone into non-traditional locations in hospitals, airports and hotels. Now, we’re taking to the streets.
What about Mimi’s strategy?
Strategy development goes to Le Duff’s core and applies to all of our brands. We’re all about the food. We invite you into our home, talk with you about the food and your choices, and take pleasure in serving you. And we want you to come back. We’re working through these ideas from Mimi’s point of view.
It’s Your Destiny
Billed as the largest LEED Gold-certified retail commercial building in the world, Destiny USA is more than an environmental leader. It is a shopping and entertainment mecca.
The 2.4 million-sq.-ft. tourist destination in Syracuse, N.Y., is an unexpected blend of luxury outlet tenants with restaurants and big entertainment names in a high-impact setting that includes a sweeping, three-story atrium, a replica of an upside-down city destroyed, and a suspended-rope adventure for the kids.
But it hasn’t always had this kind of magnetism. Prior to the construction of the circa 1990 property — originally coined Carousel Center — the central New York State site was an unsightly scrap yard, landfill and oil tank farm spanning a multi-block area called Oil City. Locally based Pyramid Management Group founder and chairman Robert Congel had a far different vision for the area, spearheading a mammoth, three-year environmental cleanup and redevelopment effort that culminated in the October 1990 opening of the 1 million-sq.-ft. Carousel Center.
Twenty years ago, that was a hot shopping mall. Charter anchors included J.C. Penney and now-extinct banners such as Hills, Lechmere and the last Bonwit Teller ever built. Lord & Taylor arrived in 1994. Not resting on its laurels, Pyramid planned a bigger, better, hotter iteration it internally labeled Destiny USA, but the plans remained tucked away until 2007, when the first phase got under way.
Over the next few years, Destiny USA took shape, as big tenant names committed and expansion square footage added a full level of entertainment, sit-down dining and an indoor outlet component. In 2011, retail openings included Lenox, Michael Kors, Saks Fifth Avenue OFF 5th, BCBG MaxAzria, Dick’s Sporting Goods, Cantina Laredo and The Melting Pot. The entire facility celebrated its official rebranding to Destiny USA in August 2012, and this year will see the addition of T.J. Maxx, Fossil Outlet, Johnston & Murphy, and Regal’s IMAX and RPX screens.
Developer Pyramid, however, is as proud of its environmental undertakings as the retail and entertainment offerings.
"It was a proud moment to achieve LEED Gold certification and become the largest LEED Gold-certified commercial building in the world," said David Aitken, Destiny USA spokesman. "The team at Destiny USA dedicated years to developing an environmentally friendly facility to coincide with the beliefs of the company and its founder and chairman Robert Congel."
In fact, Pyramid had announced in late 2011 that it would seek a LEED Gold certification for the expansion portion of the project, a move that would involve a host of cutting-edge sustainable features, including a solar reflective roof, renewable flooring, a comprehensive rainwater harvesting system — and all 100 new tenants within the expansion to obtain LEED certification.
"The green aspects of the facility paired with the dynamic offering of shopping, dining, entertainment and outlets have helped draw more than 23 million visits in 2012, with visitors from across the country, Canada, China and Europe," said Aitken. "It’s been a great draw for the community, and we will continue to work hard to drive unique tenants and events to the region."
Location: Syracuse, N.Y.
Developer: Pyramid Management Group
Size: 2.4 million sq. ft.
Components: 200-plus dining, entertainment, shopping and outlet venues
Major tenants: Sephora, Coach, Michael Kors, Saks Fifth Avenue OFF 5th, True Religion Brand Jeans, Brooks Brothers Factory Store, WonderWorks, Pole Position Raceway, Regal IMAX and RPX
Status: Opened in 1990 as Carousel Center, and rebranded to Destiny USA in August 2012
Finding a New Normal
Bucksbaum Retail Properties opened for business in April 2012. The Chicago-based company has already opened one project and is working on four more.
The 53,000-sq.-ft. Kingsbury Center near North Chicago has opened with four tenants: Buy Buy Baby, PetSmart, Road Runner Sports and Jimmy Johns. It is a joint venture with Chicago-based Structured Development.
Set to open in the fall of next year, Mariano’s Fresh Market will occupy a 66,000-sq.-ft. space in Chicago’s South Loop. The market is a joint venture with Outlook Development of Milwaukee and Simon Konover Cos., based in Hartford, Conn.
Three developments will break ground soon: The Maxwell will provide 230,000 sq. ft. of retail, serving more than 15 Chicago neighborhoods around the South Loop. Chicago-based Bond Cos. is the joint-venture partner.
New City, a 500,000-sq.-ft. mixed-use retail and residential development, will rise in Chicago’s Clybourn Corridor. Structured Development is the joint-venture partner.
And, the mixed-use Liberty Center in North Cincinnati will encompass 835,000 sq. ft. of retail, 100,000 sq. ft. of office, 155 residential units and 135 hotel rooms. The project is a joint venture with Steiner + Associates of Columbus, Ohio.
Chain Store Age asked Bucksbaum Retail Properties’ CEO John Bucksbaum about the new realities driving retail shopping center development in the post-recession world.
Where are the development opportunities today?
I believe that more retail development opportunities exist in the urban core. These opportunities don’t look like the traditional, safe opportunities we’ve seen in the suburbs. City projects typically will be smaller. They may involve re-using facilities or building near mass transit stations, and cities will likely offer more mixed-use opportunities.
None of this rules out suburban development. Right now, for instance, we’re planning a major mixed-use project in suburban North Cincinnati.
How has retail development changed since the recession?
Development has changed dramatically. Suburban opportunities are more limited. Generally, existing retail properties already accommodate retail demand in the suburbs.
As I mentioned earlier, more opportunities exist in the urban core. Young workers enjoy the 24/7 lifestyle that cities offer, and they want to live in the city. In response, companies are moving downtown, in search of workers. Look at Google, Motorola and Kraft — all are taking large urban locations in Chicago.
Retailers understand the growing demand in the city and the flattening demand in the suburbs. Those that want to grow by opening new stores must consider city locations.
Compared with other countries, the United States seems to be dramatically overstored. What does that mean to future retail development?
While we aren’t necessarily over-developed, we are certainly under-demolished. Underperforming centers, particularly underperforming malls, have been slow to die. It will be interesting to see what happens to these properties going forward.
Do you think the rise of online retail will accelerate the decline of struggling properties?
Electronic retail will certainly play a larger and more important role in retail. Brick-and-mortar stores need to find ways to work with electronic retail and not compete against it.
Let’s summarize: Suburban markets are declining. Future retail development opportunities lie in the city.
That’s not true of productive suburban centers. Good properties will continue to grow stronger in the suburbs. The unproductive properties are in trouble. Suburban centers must deal with that dynamic.
Going forward, however, urban as well as suburban development will demand creativity, new ideas and experimentation.