Patty Balster spent 30 years in the dental field, and her BFF Jill Tullemans forged a career in marketing. Both were looking for a change in their professional lives, so they decided to buy into a Bundt cake franchise.
Last fall, Nothing Bundt Cakes opened its first Minnesota store in Eden Prairie. Since then, it’s been “gangbusters,” Balster said. “There are millions of reasons to eat cake.” (It helps that the Bundt cake was invented here.)
The duo’s narrative embraces a timeworn mantra of retailing — it continually evolves. Yesterday’s cupcake craze has morphed into Bundt cakes, upscale burger chains have given way to build-your-own pizza joints, and big-boxes hawking home improvement goods and electronics have spawned superstores selling wine or affordable organic produce.
Last week, leasing experts at the Bloomington-based real estate firm Cushman & Wakefield/NorthMarq released a curated selection of budding retailers in the Twin Cities called the “Top 12 Retailers to Watch in 2014.” Some concepts on their list are new to the market, others are locally based success stories with a hankering to grow — but all are a good indicator of the area’s vox populi.
“Folks get an idea, and off they go,” said Deb Carlson, president of the Minnesota Shopping Center Association. Some of these ideas are homegrown, while others are honed elsewhere before coming to the Twin Cities. Franchising or starting a new business “is a way for folks to get out of the corporate world. This is absolutely due to the state of the economy.”
A few appeal to aging baby boomers, including affordable chiropractic, massage and spa services. Many capitalize on the booming “fast-casual” segment of food retailing, which offers affordable food that isn’t fast food, but doesn’t require waitstaff or tipping. New concepts locally in this genre include those offering comfort foods such as Philly cheesesteaks, coney dogs and pizza, while others capitalize on healthy offerings including salad, smoothies and protein bowls.
“There’s a certain percentage of people looking for healthy food, but most consumers don’t want to pay a premium for it,” said restaurant consultant Dennis Lombardi of Ohio-based WD Partners.
Some traditional fast-food offerings that have expanded or plan to expand in the Twin Cities include Dunkin’ Donuts, which is returning after a 10-year hiatus. The nation’s largest doughnut-and-coffee chain plans up to 50 stores, with the first outlets opening in 12 to 18 months. And, Chick-fil-A, the fast-growing chicken chain with a cultlike following, has opened four outlets in the metro.
No matter what the new retail concept may be, many are finding it difficult to locate suitable space in the Twin Cities’ most desirable suburbs, including Edina, Bloomington, Eden Prairie, Roseville and Maple Grove. “That’s not a bad thing,” said Tricia Pitchford, senior director at Cushman & Wakefield/NorthMarq. “That will create demand for new construction that we haven’t had for maybe six years, since the downturn.”
Although the Twin Cities is seen as a desirable secondary market — beyond the coasts — “it’s tough right now [for newcomers],” said Matt Friday, first vice president of CBRE Group. “There’s not a lot of quality real estate left to develop.”
Most retailers looking to expand seek population density — resulting in both day and night traffic. But dense sites tend to be closer to the urban core, where “land is at a premium or is used as something else,” Friday said.
Upstarts and stalwarts
The report carves out several “homegrown” winners, including two upstarts and two stalwarts.
Agra Culture is a new “fast-casual” concept developed by spouses Andrea and Aaron Switz, owners of the Yogurt Lab. The couple plans to open two outlets, one in Uptown and another near 50th and France. Entrepreneur Paul Harmon has opened two outlets of Streetz American Grill — in Bloomington and Hopkins — because of his desire to bring “authentic street food to the masses. We do it fresh and do it well.”
Harmon hopes to open up to six locations in the Twin Cities in the next five years.
Two existing Twin Cities- based retailers also are growing. Punch Neapolitan Pizza, with eight locations in the metro, recently attracted a shout-out from President Obama during his State of the Union speech for raising wages above the minimum level. And Hot Mama, a women’s clothing chain, has grown to close to 50 nationwide with plans of reaching 100 stores by 2016, the report says.
The new category killers
Also highlighted: the new category killers — low-price competitors that tend to focus on a single product category. One is PizzaRev, a California made-to-order chain that has attracted a minority investment from Golden Valley-based Buffalo Wild Wings. The chain has been dubbed the “Chipotle of Pizza,” because diners pick out their own toppings for pizza, which is made from homemade dough. The price point is about $8, and the first outlet in the Twin Cities is planned for Knollwood Crossings in Hopkins. A second is in the works, too.
Although the Texas-based supermarket chain Whole Foods continues to expand locally, co-ops such as the Wedge, a produce-oriented start-up out of Chicago, plan to come here, as well. Fresh Thyme Farmer’s Market will open a store near Interstates 494 and 35W in the Penn & American development in Bloomington. The grocer focuses on fresh, healthy food at affordable prices and is looking to open 50 stores in the Midwest over the next six years.
Total Wine & More, a liquor superstore based in Maryland that boasts of Costco-like prices, will open in Roseville and also has set its sights on Bloomington, although city officials there delayed a vote on a liquor license as it explores the chain’s legal history.
Hobby Lobby already has close to 600 stores in 46 states, but now it has entered Minnesota in a big way. The Oklahoma-based arts-and-crafts chain will open a store in Woodbury in the former Sportsman’s Warehouse building, joining existing sites in Duluth, Mankato and Rochester. According to the company’s website, the family-owned business said its mission involves “honoring the Lord in all we do by operating the company in a manner consistent with biblical principles.”
The report also culls a few “fascinating franchises,” including Orangetheory Fitness, a Florida chain that provides a “plateau-busting workout” with an emphasis on personal training. A fourth location is planned for Apple Valley.
The Joint, which “brings affordable chiropractic services to locally owned and operated clinics,” plans an eighth location in Minnetonka. And Massage Retreat & Spa focuses on affordable massage, waxing, facials and other pampering services. Seven locations are sprinkled throughout the Twin Cities; more are planned.