Restaurant chains are growing at ‘unprecedented’ rates in the Bay Area because of pandemic conditions

It was a strikingly optimistic announcement for the food industry, which saw an estimated 90,000 restaurants close nationwide during the pandemic. But with landlords seeking known brands for open spaces and the strong appeal of fast-casual spots like Starbird, restaurant chains and franchises are now faring better and in some cases seeing sales even higher than pre-pandemic.

San Jose-born Nick the Greek has 39 franchises in the works. Starbird is opening two Bay Area restaurants this year and has at least four leases signed in Southern California. Curry Up Now, a fast-casual Indian chain that started as a Bay Area food truck in 2009, plans to open 11 more restaurants, including in Texas and Georgia. Paris Baguette, a Korean chain that runs 4,000 bakeries globally, is planning 12 new franchises in the Bay Area and signed over 100 franchise agreements overall last year. Even Grégoire, a tiny, 20-year-old French restaurant in Berkeley, is planning to franchise.

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

Starbird Chicken on S. Brokaw Road in San Jose. The company is gearing up to franchise.

Yalonda M. James/The Chronicle

Though plenty of chains had high-profile struggles over the last two years, this new planned growth appears to be proving a pandemic prediction that many shuttered independent restaurants would be replaced by chains.

Chains are often associated with the idea of mass-produced, commodity fast food, and a rise in such fare may be one impact of this new growth. But there’s a potential silver lining: Some businesses, like Curry Up Now, hope it will be an opportunity to bring lesser-known food to the American mainstream — a future in which diners order chicken tikka masala burritos in drive-thrus just like a burger and fries.

Dan Rowe, CEO of national franchise development company Fransmart, said the current rate of growth is “unprecedented” unlike anything he’s seen in two decades in the industry.

“You’ve got this supply and demand balance back in the favor of the restaurants that are still standing,” said Rowe, whose company works with Bay Area restaurants including Curry Up Now and Ike’s Love Sandwiches. “Good concepts that have money are actually out attacking right now. The opportunities right now are just nuts.”


 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

Khim Pun (left) and Sajjan Bohora, make the restaurant’s namesake dish inside the original Pav Bhaji Hut truck in Sunnyvale.

Yalonda M. James/The Chronicle

With a third of U.S. restaurants closed during the pandemic, there’s real estate available and landlords are eager to cut deals, even in the pricey Bay Area, Rowe and restaurateurs said. Landlords who suffered financial losses during the pandemic are keen on renting spaces to businesses with deeper pockets.

“Landlords are skittish right now,” said Starbird’s Noveshen. “As sites come up, who’s got more money in the bank and who’s a safer person to rent to?”

After a recent trip to downtown San Francisco, Rowe said, “You just salivate looking at these (vacant) spaces.” It’s become a “tenant’s market,” he said. “Where three years ago you couldn’t find or afford real estate, landlords are throwing keys at you.”

The chains that are expanding have something else in common: Many don’t have table service and depend less on indoor dining. They can move into spaces with smaller footprints, or open as ghost kitchens in neighborhoods that don’t see a lot of foot traffic. Most were geared toward takeout and delivery before the pandemic, including with drive-thrus.

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

General manager Francisco Garcia (left) brings out a food order at Starbird Chicken in San Jose. The company is planning new locations throughout Northern and Southern California and is also gearing up to franchise.

Yalonda M. James/The Chronicle

Pete Knight, a franchisee of the American diner chain AW, said overall sales are up as much as 30% at his restaurants in Lodi and St. Helena, and their business is mostly drive-thru. Curry Up Now owner Akash Kapoor is looking for drive-thru spaces for the first time and is encouraging his franchisees across the country to do the same.

Curry Up Now has also been opening smaller spaces on college campuses, including Stanford University. Starbird Chicken, meanwhile, operates four virtual brands, from wings to plant-based chicken sandwiches. Its San Francisco ghost kitchen, which houses the virtual spin-offs, is seeing double the sales of Starbird’s brick-and-mortar restaurants, according to Noveshen.

Starbird Chicken also has its own app, ordering kiosks and a digital system for managing everything from production to inventory. Paris Baguette built food lockers where customers scan their phones to access pickup orders of cakes and pastries — no human interaction required.

While Nick the Greek’s Bay Area restaurants saw dine-in business drop in spring 2020, delivery sales rose by as much as 20%, and have stayed up. The company expanded last year, adding five franchises that serve its gyro wraps and bowls.

“We’ll lose seats before we make our kitchen smaller” and compromise on to-go demand, said Rob Crider, Nick the Greek’s director of franchising.

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

The food menu is posted on the Pav Bhaji Hut food truck at 1201 Lawrence Station Road on Tuesday, January 11, 2022, in Sunnyvale, Calif. The brick and mortar restaurant, located at 679 Tasman Drive, opened on December 20, 2021.


Yalonda M. James / The Chronicle

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

Khim Pun butters bread inside the Pav Bhaji Hut food truck at 1201 Lawrence Station Road on Tuesday, January 11, 2022, in Sunnyvale, Calif. The brick and mortar restaurant, located at 679 Tasman Drive, opened on December 20, 2021.


Yalonda M. James/The Chronicle

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

Food orders ready for pickup are placed on a shelf at Starbird Chicken, located at 1088 S. Brokaw Road #10, on Tuesday, January 11, 2022, in San Jose, Calif. Starbird Chicken just raised $12 million in capital, is up in sales over 2020 despite the pandemic, is planning new locations throughout Northern and Southern California and is also gearing up to franchise. They’ve incorporated technology into their restaurants (ordering kiosks, delivery, etc.), which they say made it easier for them to do well during the pandemic.


Yalonda M. James/The Chronicle

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

A sticker inside Starbird Chicken, located at 1088 S. Brokaw Road #10, includes a QR code for customers to download their mobile app and order food on Tuesday, January 11, 2022, in San Jose, Calif. Starbird Chicken just raised $12 million in capital, is up in sales over 2020 despite the pandemic, is planning new locations throughout Northern and Southern California and is also gearing up to franchise. They’ve incorporated technology into their restaurants (ordering kiosks, delivery, etc.), which they say made it easier for them to do well during the pandemic.


Yalonda M. James/The Chronicle


Whether all these new locations will actually open, or survive long-term, remains to be seen. Despite the current boom, large restaurant companies were not left unscathed by the pandemic. Numerous chains and franchisees declared bankruptcy in 2020, from California Pizza Kitchen to the U.S. arm of Le Pain Quotidien. Subway closed an estimated 2,200 to 2,400 locations, though some closures were temporary, according to Restaurant Business.

Peter Lagarias, a longtime franchise attorney in San Rafael, said the industry offers plenty of cautionary tales, and that excited press releases about ambitious expansions should be taken with a grain of salt.

There’s a phenomenon in the franchise world called SNO, or “sold not open”: promises of future franchises that have been sold, but never come to fruition. Sometimes it’s due to a challenging real estate market, as in the Bay Area, while other times it’s because of an overly ambitious agreement, Lagarias said. The collapse of Quizno’s is a classic example: The fast-food sandwich company at one point sold over 500,000 franchises, but shrank to fewer than 400 locations by 2017, according to media reports.

In franchising, the original owner licenses their food and brand to franchisees in exchange for a portion of sales. Nick the Greek, for example, asks for an initial $35,000 franchise fee and then charges a royalty fee equal to 6% of gross sales. Franchisors often try to sell more restaurants by offering deals, such as reducing the initial franchise fee if a franchisee agrees to open multiple locations. But franchisees are not always able to open two or three restaurants.

“Keep that in mind when people are saying that there’s an explosion of new franchises,” Lagarias said.

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

Marc Cabalu and Ni-a Reyes order lunch from a kiosk at Starbird Chicken in San Jose, a fast-casual chicken restaurant that’s growing rapidly.

Yalonda M. James/The Chronicle

For instance, AW, which sells burgers and root beer floats at hundreds of locations across the country, announced in November that the chain wants to open 12 new restaurants in the Bay Area. The announcement championed the company’s “ninth straight year of positive growth, surging 9.7% — despite the global pandemic.” Yet when The Chronicle asked about new outposts, John Palumbo, AW’s senior director of franchise development, said in a statement: “we don’t have any immediate plans to grow, but we are looking for qualified candidates to join our brand in the future.”

Plus, larger chains, while often better equipped to weather the COVID-19 storm, are not immune to the labor and supply-chain challenges facing restaurants. Rowe of Fransmart says his company can help restaurants hire when others can’t by using its national database of staffers and access to national recruiting firms. Other owners have said that positive work culture and competitive pay will enable them to hire when they open dozens of new locations.

But the reality won’t become clear until the restaurants are up and running. Many fast-food restaurants struggled to attract workers during the pandemic despite raising wages. According to the National Restaurant Association, the restaurant industry lost 2.5 million workers during the pandemic.

Andrew Freeman, founder of restaurant consulting firm AFCo and co-founder of brand communications agency Carbonate, is confident chains won’t wipe out independent restaurants, especially in the Bay Area. Local diners are generally prone to support independent makers, he said. Antichain sentiment also intensified during the pandemic, with calls to support mom-and-pop restaurants over chains. Many diners also seem to appreciate that a corporate chain is not the same as a locally born one, said Freeman, such as Gott’s Roadside, which was once a single Saint Helena restaurant but now has eight locations.

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

Pav Bhaji Hut’s first franchise opened in Sunnyvale in December.

Yalonda M. James/The Chronicle

That said, opening a chain location or franchise through a company already well-versed in technology and social media savvy has real appeal, Freeman said.

“That’s why the cost of doing a chain opening or a franchise opening is definitely less,” he said. “It’s that cookie-cutter model that you can plug in.”

Resistance to chains is something Kapoor of Curry Up Now understands. When he and his wife, Rana, started the business, he never wanted to franchise due to the stigma. “Everyone talks very negatively about it, even today,” he said. “There are a lot of brands that want to franchise but don’t because they feel their brand is going to lose their charm or their soul.”

But Kapoor has a bigger dream: to expose more of America to Indian cuisine through dishes such as paneer-topped fries and chicken biryani. Without serious capital, he wouldn’t be able to open new restaurants at the same rate as he can by franchising. With this model, he can bring Indian fast food to cities in Georgia, Indiana and Texas, which he has targeted based on demographics and tech growth that echo the Bay Area.

A similar vision drove Umesh Patel of Pav Bhaji Hut to expand through franchising: He sees a future where pav bhaji, a regional Indian street food dish, is a fast-food staple in major U.S. cities. The restaurant, which started as a food truck in a Sunnyvale parking lot in 2018, serves only its namesake dish, a famed Maharashtrian stew that’s not as well-known to Americans.

 Restaurant chains are growing at unprecedented rates in the Bay Area because of pandemic conditions

Franchisee Pramoda Ramachandra, left, and owner Umesh Patel sit in front of photos of family, friends and customers inside Pav Bhaji Hut’s first franchise in Sunnyvale.

Yalonda M. James/The Chronicle

Pav Bhaji Hut just opened its first franchise location, also in Sunnyvale, and Patel is in talks to open franchises in Seattle, Arizona and on the East Coast.

The first franchisee, Pramoda Ramachandra, is a former dietician and hospital director who’s never run a restaurant but fell in love with Pav Bhaji’s food and mission. “A lot of times the Indian food we eat (in the U.S.) is so diluted or mainstream. It tasted like how it tasted back in India,” she said.

She’s passionate about Patel’s vision of bringing pav bhaji to a wider swath of diners. So far, it appears to be working: The new franchise has sold out by 8 p.m. most days since it opened in late December. Many customers are people who are trying pav bhaji for the first time.


Elena Kadvany is a San Francisco Chronicle staff writer. Email: elena.kadvany@sfchronicle.com Twitter: @ekadvany

Article source: https://www.sfchronicle.com/food/article/chain-restaurant-franchise-sf-bay-area-16770940.php

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Median San Francisco Home Price Down Recently, But Up Compared to Last Year

The median price of a home for sale in San Francisco has dropped recently, but it’s up compared to this time last year, according to real estate analyst firm Redfin.

Redfin said the San Francisco median price is $1.488 million, a decline of more than 5% from November to December.

Redfin chief economist Daryl Fairweather said the holidays slow down buying and selling, adding long-term perspective is important.

“I wouldn’t read too much into the monthly decline,” Fairweather said. “I think the important thing is that home prices are up 10% from this time last year. That’s the measure that I think reflects how the market is heating up a bit.”

Redfin said, depending on how mortgage interest rates go, it expects that heat to keep going up.


41c77 AP 22014768700389 Median San Francisco Home Price Down Recently, But Up Compared to Last Year


 Median San Francisco Home Price Down Recently, But Up Compared to Last Year

Article source: https://www.nbcbayarea.com/news/local/median-san-francisco-home-price-down-recently-but-up-compared-to-last-year/2778761/

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SF’s “worst house on the best block” sells for $2M

What can I do to prevent this in the future?

If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware.

If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.

Article source: https://therealdeal.com/sanfrancisco/2022/01/12/sfs-worst-house-on-the-best-block-sells-for-2m/

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Sleepy Menlo Park is getting an influx of hit Bay Area restaurants like Che Fico and Burma Love

It’s major news for Menlo Park, a quiet Peninsula town not known for its food scene. The developers behind the project decided early on they wanted Springline to be a dining hub and specifically targeted Bay Area businesses they thought would fill gaps in the area, said Cyrus Sanandaji, managing director of Presidio Bay Ventures. The San Francisco real estate investment firm took over the massive development from Greenheart Land Co. in 2020.

“A project like this really ought to be a destination,” Sanandaji said.

The restaurants will be open to the public, but they’re also intended to draw people to live and work at Springline, like a mini city within a city. There are nearly 200 apartments with high-end amenities including a pool, pet spa and indoor golf simulator. Some of Springline’s 200,000-square-foot office space has been claimed by tenants such as major Silicon Valley venture capital firm Menlo Ventures, trendy San Francisco co-working company Canopy and international law firm Kilpatrick Townsend Stockton. Springline is also a short walk from the Menlo Park Caltrain station and close to Highway 101.

 Sleepy Menlo Park is getting an influx of hit Bay Area restaurants like Che Fico and Burma Love

A rendering of the El Camino Real space where Che Fico’s new Menlo Park restaurant will be located.

Provided by Presidio Bay Ventures

The goal is to create “Sand Hill 2.0,” said Sanandaji, a better and more convenient version of the iconic Menlo Park road filled with venture capital firms. Sand Hill Road is primarily occupied by office buildings, yet to have lunch or grab a coffee, employees and investors have to drive elsewhere.

“It’s just not the same as being able to be in a true high-density, downtown-type of environment,” Sanandaji said. “Even in downtown Palo Alto you’re able to walk down University (Avenue) or other streets and have a variety of options. We needed to create that.”

For restaurateurs, the Menlo Park project was appealing for several reasons. Chief among them, especially during the pandemic and in the Bay Area’s intensely competitive real estate market: Presidio Bay Ventures is overseeing and funding the design and build-out of each restaurant space. A dedicated team is handling permit applications for owners.

Presidio Bay Ventures approached lease agreements as more of a long-term partnership than an adversarial relationship, owners said, though they declined to discuss specifics. This is allowing several San Francisco businesses to expand to the Peninsula for the first time.

“We feel like the Peninsula is a goldmine, honestly. It’s just a hugely underserved market,” said Barebottle co-founder Michael Seitz, who was also drawn in by the lineup of businesses opening at Springline.

The previous developer, Greenheart Land Co., broke ground on the mixed-use project in 2017, then called Station 1300. Presidio Bay Ventures had been in talks with them before the pandemic, Sanandaji said, and ended up taking over the development in 2020.

The restaurants will open throughout 2022. Read on for more on each project, listed alphabetically.

Andytown Coffee Roasters

 Sleepy Menlo Park is getting an influx of hit Bay Area restaurants like Che Fico and Burma Love

Jon Macemore pours foam into a drink at Andytown Coffee’s Salesforce Park cafe in S.F. in 2019. The coffee shop is expanding to Menlo Park.

Josie Norris/The Chronicle 2019.

This will be Andytown’s first cafe outside of San Francisco. Andytown roasts its own coffee beans and is known for its top-notch espresso drinks. The same menu will be served in Menlo Park, including Andytown’s popular creation, the Snowy Plover — a shot of espresso mixed with bubbly soda water and topped with a dollop of fresh whipped cream. For food, Andytown also makes pastries, bread, jam and butter. Look for Irish soda bread served with that fresh butter and filling breakfast sandwiches on thick pan de mie bread. Owners Lauren Crabbe and Michael McCrory, both baristas, opened the first Andytown in the Outer Sunset in 2014 and now run three cafes.

Projected opening: late summer 2022

Barebottle Brewing Co.

Barebottle Brewing will bring a 3,600-square-foot taproom to Menlo Park, a city that has no brewery to visit. The Springline taproom will pour the same beers available at the original San Francisco Barebottle, which changes often but includes hazy IPAs, sours and pilsners. Barebottle’s own natural wine and beer slushies will also be on the menu. As in San Francisco, this will be a family- and pet-friendly space with games and communal tables. Unique to Menlo Park, however, will be a retro beer van — a vintage 1964 truck from France that’s been retrofitted to serve tap beers in a large outdoor plaza in the center of the development.

Seitz, who started Barebottle with co-owners and avid home brewers Lester Koga and Ben Sterling, knows Menlo Park well from his time as a Stanford University undergraduate. The social scene in the area, he said, “left something to be desired.” That, paired with the loss of longtime local watering holes like the Oasis in Menlo Park and Antonio’s Nut House in Palo Alto, made opening there seem like a fit for Barebottle. This will be the company’s third location and second on the Peninsula, following a Santa Clara taproom that opened in 2020.

Projected opening: late summer 2022

Burma Love

When it opens, Burma Love will be Menlo Park’s only Burmese restaurant. Run by the owners of San Francisco’s famed Burma Superstar, spin-off Burma Love is known for the same tea leaf salad, curries and flaky platha that people line up for at the original. Owner Desmond Tan, who opened Burma Superstar almost 30 years ago, said this location will serve the restaurant’s best hits, but also might adjust and add dishes based on customer feedback. Studio KDA, the architecture firm behind hit restaurants like Flour + Water Pizzeria in San Francisco and Comal in Berkeley, is designing the newest Burma Love.

Projected opening: fall 2022

Canteen

 Sleepy Menlo Park is getting an influx of hit Bay Area restaurants like Che Fico and Burma Love

A rendering of the outdoor dining area at Canteen, the second restaurant from the team behind Menlo Park restaurant Camper.

Provided by Presidio Bay Ventures

The second restaurant from the team behind Camper, Canteen will be a more casual, all-day affair that won’t take reservations. It will operate two spaces at Springline: a cafe with Sightglass Coffee and grab-and-go food like sandwiches and salads on El Camino Real, and a separate restaurant and wine bar on Oak Grove Avenue. The restaurant, Canteen Next Door, will be geared toward dropping in for a bite and a glass of wine or a cocktail.

The menu will have “more of a grazing, wine bar mentality,” chef and owner Greg Kuzia-Carmel said. Dishes aren’t nailed down yet but think chickpea fries with a seasonal dipping sauce, oysters and fresh uni. Drinks will include small California and international wine producers (including some natural wines), local beers and an “arsenal” of nonalcoholic options, he said. Kuzia-Carmel, a former Quince and Per Se chef, has drawn a following in Menlo Park for his seasonal California cooking and Camper’s approachable, family-friendly vibe.

Projected opening: April/May

Che Fico

 Sleepy Menlo Park is getting an influx of hit Bay Area restaurants like Che Fico and Burma Love

Orecchiette with fennel sausage and broccoli rabe at Che Fico in San Francisco in 2018. Che Fico’s new Menlo Park restaurant will also serve fresh pasta.

John Storey/The Chronicle 2018

Che Fico, which opened to much hype in San Francisco in 2018, is described as Springline’s anchor tenant. The development will get the team’s newest Italian restaurant, a to-be-named spot with plenty of outdoor seating. Chef and co-owner David Nayfeld said it will be a “a casual, market-driven Italian restaurant” with the same fresh pasta and blistered pizzas that put Che Fico on the map. A significant portion of the 8,600-square-foot restaurant will be devoted to private dining; Nayfeld said Che Fico gets frequent requests to cater private events in the area. Jon de la Cruz, who designed the original Che Fico, is working on the Menlo Park restaurant.

Here’s something Menlo Park will have that San Francisco doesn’t: a Che Fico market with local produce selected by the restaurant’s chefs, plus prepared foods, wines, meats and cheeses. A butcher counter will break down whole animals, and the store will sell seafood. Customers will also be able to buy Che Fico’s own products, like a spicy Calabrian chile bomba sauce and pomodoro sauce, and get scoops or pints of fresh-spun gelato.

“It will definitely be Italian-leaning, but it will be a place where you’re able to get all of your needs in one place: your produce, your meat, your fish, your groceries — and get a pack of diapers,” Nayfeld said of the market.

Projected opening: late summer 2022

Elena Kadvany is a San Francisco Chronicle staff writer. Email: elena.kadvany@sfchronicle.com Twitter: @ekadvany

 

Article source: https://www.sfchronicle.com/food/article/Sleepy-Menlo-Park-is-getting-an-influx-of-hit-Bay-16789361.php

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Restaurant chains are growing at ‘unprecedented’ rates in the Bay Area due to pandemic conditions

It was a strikingly optimistic announcement for the food industry, which saw an estimated 90,000 restaurants close nationwide during the pandemic. But with landlords seeking known brands for open spaces and the strong appeal of fast-casual spots like Starbird, restaurant chains and franchises are now faring better and in some cases seeing sales even higher than pre-pandemic.

San Jose-born Nick the Greek has 39 franchises in the works. Starbird is opening two Bay Area restaurants this year and has at least four leases signed in Southern California. Curry Up Now, a fast-casual Indian chain that started as a Bay Area food truck in 2009, plans to open 11 more restaurants, including in Texas and Georgia. Paris Baguette, a Korean chain that runs 4,000 bakeries globally, is planning 12 new franchises in the Bay Area and signed over 100 franchise agreements overall last year. Even Grégoire, a tiny, 20-year-old French restaurant in Berkeley, is planning to franchise.

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

Starbird Chicken on S. Brokaw Road in San Jose. The company is gearing up to franchise.

Yalonda M. James/The Chronicle

Though plenty of chains had high-profile struggles over the last two years, this new planned growth appears to be proving a pandemic prediction that many shuttered independent restaurants would be replaced by chains.

Chains are often associated with the idea of mass-produced, commodity fast food, and a rise in such fare may be one impact of this new growth. But there’s a potential silver lining: Some businesses, like Curry Up Now, hope it will be an opportunity to bring lesser-known food to the American mainstream — a future in which diners order chicken tikka masala burritos in drive-thrus just like a burger and fries.

Dan Rowe, CEO of national franchise development company Fransmart, said the current rate of growth is “unprecedented” unlike anything he’s seen in two decades in the industry.

“You’ve got this supply and demand balance back in the favor of the restaurants that are still standing,” said Rowe, whose company works with Bay Area restaurants including Curry Up Now and Ike’s Love Sandwiches. “Good concepts that have money are actually out attacking right now. The opportunities right now are just nuts.”


 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

Khim Pun (left) and Sajjan Bohora, make the restaurant’s namesake dish inside the original Pav Bhaji Hut truck in Sunnyvale.

Yalonda M. James/The Chronicle

With a third of U.S. restaurants closed during the pandemic, there’s real estate available and landlords are eager to cut deals, even in the pricey Bay Area, Rowe and restaurateurs said. Landlords who suffered financial losses during the pandemic are keen on renting spaces to businesses with deeper pockets.

“Landlords are skittish right now,” said Starbird’s Noveshen. “As sites come up, who’s got more money in the bank and who’s a safer person to rent to?”

After a recent trip to downtown San Francisco, Rowe said, “You just salivate looking at these (vacant) spaces.” It’s become a “tenant’s market,” he said. “Where three years ago you couldn’t find or afford real estate, landlords are throwing keys at you.”

The chains that are expanding have something else in common: Many don’t have table service and depend less on indoor dining. They can move into spaces with smaller footprints, or open as ghost kitchens in neighborhoods that don’t see a lot of foot traffic. Most were geared toward takeout and delivery before the pandemic, including with drive-thrus.

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

General manager Francisco Garcia (left) brings out a food order at Starbird Chicken in San Jose. The company is planning new locations throughout Northern and Southern California and is also gearing up to franchise.

Yalonda M. James/The Chronicle

Pete Knight, a franchisee of the American diner chain AW, said overall sales are up as much as 30% at his restaurants in Lodi and St. Helena, and their business is mostly drive-thru. Curry Up Now owner Akash Kapoor is looking for drive-thru spaces for the first time and is encouraging his franchisees across the country to do the same.

Curry Up Now has also been opening smaller spaces on college campuses, including Stanford University. Starbird Chicken, meanwhile, operates four virtual brands, from wings to plant-based chicken sandwiches. Its San Francisco ghost kitchen, which houses the virtual spin-offs, is seeing double the sales of Starbird’s brick-and-mortar restaurants, according to Noveshen.

Starbird Chicken also has its own app, ordering kiosks and a digital system for managing everything from production to inventory. Paris Baguette built food lockers where customers scan their phones to access pickup orders of cakes and pastries — no human interaction required.

While Nick the Greek’s Bay Area restaurants saw dine-in business drop in spring 2020, delivery sales rose by as much as 20%, and have stayed up. The company expanded last year, adding five franchises that serve its gyro wraps and bowls.

“We’ll lose seats before we make our kitchen smaller” and compromise on to-go demand, said Rob Crider, Nick the Greek’s director of franchising.

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

The food menu is posted on the Pav Bhaji Hut food truck at 1201 Lawrence Station Road on Tuesday, January 11, 2022, in Sunnyvale, Calif. The brick and mortar restaurant, located at 679 Tasman Drive, opened on December 20, 2021.


Yalonda M. James / The Chronicle

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

Khim Pun butters bread inside the Pav Bhaji Hut food truck at 1201 Lawrence Station Road on Tuesday, January 11, 2022, in Sunnyvale, Calif. The brick and mortar restaurant, located at 679 Tasman Drive, opened on December 20, 2021.


Yalonda M. James/The Chronicle

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

Food orders ready for pickup are placed on a shelf at Starbird Chicken, located at 1088 S. Brokaw Road #10, on Tuesday, January 11, 2022, in San Jose, Calif. Starbird Chicken just raised $12 million in capital, is up in sales over 2020 despite the pandemic, is planning new locations throughout Northern and Southern California and is also gearing up to franchise. They’ve incorporated technology into their restaurants (ordering kiosks, delivery, etc.), which they say made it easier for them to do well during the pandemic.


Yalonda M. James/The Chronicle

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

A sticker inside Starbird Chicken, located at 1088 S. Brokaw Road #10, includes a QR code for customers to download their mobile app and order food on Tuesday, January 11, 2022, in San Jose, Calif. Starbird Chicken just raised $12 million in capital, is up in sales over 2020 despite the pandemic, is planning new locations throughout Northern and Southern California and is also gearing up to franchise. They’ve incorporated technology into their restaurants (ordering kiosks, delivery, etc.), which they say made it easier for them to do well during the pandemic.


Yalonda M. James/The Chronicle


Whether all these new locations will actually open, or survive long-term, remains to be seen. Despite the current boom, large restaurant companies were not left unscathed by the pandemic. Numerous chains and franchisees declared bankruptcy in 2020, from California Pizza Kitchen to the U.S. arm of Le Pain Quotidien. Subway closed an estimated 2,200 to 2,400 locations, though some closures were temporary, according to Restaurant Business.

Peter Lagarias, a longtime franchise attorney in San Rafael, said the industry offers plenty of cautionary tales, and that excited press releases about ambitious expansions should be taken with a grain of salt.

There’s a phenomenon in the franchise world called SNO, or “sold not open”: promises of future franchises that have been sold, but never come to fruition. Sometimes it’s due to a challenging real estate market, as in the Bay Area, while other times it’s because of an overly ambitious agreement, Lagarias said. The collapse of Quizno’s is a classic example: The fast-food sandwich company at one point sold over 500,000 franchises, but shrank to fewer than 400 locations by 2017, according to media reports.

In franchising, the original owner licenses their food and brand to franchisees in exchange for a portion of sales. Nick the Greek, for example, asks for an initial $35,000 franchise fee and then charges a royalty fee equal to 6% of gross sales. Franchisors often try to sell more restaurants by offering deals, such as reducing the initial franchise fee if a franchisee agrees to open multiple locations. But franchisees are not always able to open two or three restaurants.

“Keep that in mind when people are saying that there’s an explosion of new franchises,” Lagarias said.

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

Marc Cabalu and Ni-a Reyes order lunch from a kiosk at Starbird Chicken in San Jose, a fast-casual chicken restaurant that’s growing rapidly.

Yalonda M. James/The Chronicle

For instance, AW, which sells burgers and root beer floats at hundreds of locations across the country, announced in November that the chain wants to open 12 new restaurants in the Bay Area. The announcement championed the company’s “ninth straight year of positive growth, surging 9.7% — despite the global pandemic.” Yet when The Chronicle asked about new outposts, John Palumbo, AW’s senior director of franchise development, said in a statement: “we don’t have any immediate plans to grow, but we are looking for qualified candidates to join our brand in the future.”

Plus, larger chains, while often better equipped to weather the COVID-19 storm, are not immune to the labor and supply-chain challenges facing restaurants. Rowe of Fransmart says his company can help restaurants hire when others can’t by using its national database of staffers and access to national recruiting firms. Other owners have said that positive work culture and competitive pay will enable them to hire when they open dozens of new locations.

But the reality won’t become clear until the restaurants are up and running. Many fast-food restaurants struggled to attract workers during the pandemic despite raising wages. According to the National Restaurant Association, the restaurant industry lost 2.5 million workers during the pandemic.

Andrew Freeman, founder of restaurant consulting firm AFCo. and co-founder of brand communications agency Carbonate, is confident chains won’t wipe out independent restaurants, especially in the Bay Area. Local diners are generally prone to support independent makers, he said. Antichain sentiment also intensified during the pandemic, with calls to support mom-and-pop restaurants over chains. Many diners also seem to appreciate that a corporate chain is not the same as a locally born one, said Freeman, such as Gott’s Roadside, which was once a single Saint Helena restaurant but now has eight locations.

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

Pav Bhaji Hut’s first franchise opened in Sunnyvale in December.

Yalonda M. James/The Chronicle

That said, opening a chain location or franchise through a company already well-versed in technology and social media savvy has real appeal, Freeman said.

“That’s why the cost of doing a chain opening or a franchise opening is definitely less,” he said. “It’s that cookie-cutter model that you can plug in.”

Resistance to chains is something Kapoor of Curry Up Now understands. When he and his wife, Rana, started the business, he never wanted to franchise due to the stigma. “Everyone talks very negatively about it, even today,” he said. “There are a lot of brands that want to franchise but don’t because they feel their brand is going to lose their charm or their soul.”

But Kapoor has a bigger dream: to expose more of America to Indian cuisine through dishes such as paneer-topped fries and chicken biryani. Without serious capital, he wouldn’t be able to open new restaurants at the same rate as he can by franchising. With this model, he can bring Indian fast food to cities in Georgia, Indiana and Texas, which he has targeted based on demographics and tech growth that echo the Bay Area.

A similar vision drove Umesh Patel of Pav Bhaji Hut to expand through franchising: He sees a future where pav bhaji, a regional Indian street food dish, is a fast-food staple in major U.S. cities. The restaurant, which started as a food truck in a Sunnyvale parking lot in 2018, serves only its namesake dish, a famed Maharashtrian stew that’s not as well-known to Americans.

 Restaurant chains are growing at unprecedented rates in the Bay Area due to pandemic conditions

Franchisee Pramoda Ramachandra, left, and owner Umesh Patel sit in front of photos of family, friends and customers inside Pav Bhaji Hut’s first franchise in Sunnyvale.

Yalonda M. James/The Chronicle

Pav Bhaji Hut just opened its first franchise location, also in Sunnyvale, and Patel is in talks to open franchises in Seattle, Arizona and on the East Coast.

The first franchisee, Pramoda Ramachandra, is a former dietician and hospital director who’s never run a restaurant but fell in love with Pav Bhaji’s food and mission. “A lot of times the Indian food we eat (in the U.S.) is so diluted or mainstream. It tasted like how it tasted back in India,” she said.

She’s passionate about Patel’s vision of bringing pav bhaji to a wider swath of diners. So far, it appears to be working: The new franchise has sold out by 8 p.m. most days since it opened in late December. Many customers are people who are trying pav bhaji for the first time.


Elena Kadvany is a San Francisco Chronicle staff writer. Email: elena.kadvany@sfchronicle.com Twitter: @ekadvany

Article source: https://www.sfchronicle.com/food/article/chain-restaurant-franchise-sf-bay-area-16770940.php

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