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New restaurants and stores target Colorado Springs for expansion as the city grows

June 7, 2018 Updated: June 10, 2018 at 11:15 am
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Customers watch as their donuts are being handmade on National Donut Day at Hurts Donut Company in Colorado Springs on Friday, June 1, 2018. (Photo by Kelsey Brunner, The Gazette)

They're not new names, but they're new to Colorado Springs.

Hurts Donut Co., LongHorn Steakhouse and Duluth Trading Co. have opened their doors. In-N-Out Burger, Anthony's Pizza and Chuy's are among the many that are coming.

As Colorado Springs' economy booms and its population grows, a wave of new-to-market restaurant, retail and entertainment concepts is washing over the city.

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National and regional chains that years ago bypassed Colorado Springs because it was too small or didn't have Denver's reputation as a city on-the-rise now are targeting the Pikes Peak region. And Colorado Springs-area consumers who complained that their favorite stores and restaurants were nowhere to be found now are more likely to ask when they will arrive.

"Colorado Springs is on the map now, for good or bad," said John Egan, a retail specialist with Colorado Springs commercial brokerage NAI Highland. "The restaurant concepts are very strong right now ... They're coming from Denver and there's concepts that are actually coming into this market regardless if they're from Denver or not."

Over three to five years, and especially during the last 12 to 18 months, nearly three dozen sit-down and fast casual restaurant, retail and entertainment chains have either opened or said they're expanding to Colorado Springs, according to Gazette research. The actual number might be higher; some make formal announcements and stage customer-friendly grand openings, but others arrive with little fanfare.

In any case, they're coming, in large part, because of Colorado Springs' surging economy. The area's unemployment rate stood at a minuscule 3.2 percent in March, while employers added more than 7,000 jobs in the previous 12 months; local wages last year rose at their fastest clip in a decade; and homes were built in 2017 at a pace not seen in just over a decade.

Connor Frohman, 4, middle, looks at his brother Cole, 6, as he eats his donut and their eldest brother Caleb takes a bite out of his on National Donut Day at Hurts Donut Company in Colorado Springs on Friday, June 1, 2018. (Photo by Kelsey Brunner, The Gazette)  

"The Springs is clearly thriving," said Max Gansline, a senior leasing representative with The Staenberg Group of St. Louis that's developed the northeast side Powers Pointe retail center. "The community is growing and it's healthy. Not everywhere in the country is that way. When operators look for new locations, those are the types of communities that they hone in on. As a result of the strong demographics, the growth, the availability of opportunity, Colorado Springs hits the map for a lot of these groups."

Colorado Springs' demographics, however, aren't its only appeal. Increasingly, some businesses see an up-and-coming city that's no longer just Denver's smaller, politically conservative neighbor to the south, said Dan Rodriguez, a retail specialist with the Springs office of national real estate firm CBRE.

In addition to its growth and economy, Rodriguez said, Colorado Springs' campaign to brand itself as Olympic City USA is catching on. The Springs is home to the U.S. Olympic Committee headquarters, an Olympic Training Center and the Olympic Museum that's under construction.

Its quality of life also has gotten noticed. U.S. News & World Report this year named Colorado Springs as the No. 2 best place to live and a year ago, U.S. News readers named the Springs as their second most desirable community.

"Even as I'm talking to other national retailers and restaurants, just people throughout other parts of the country, to hear their thoughts and ideas about Colorado Springs is different and better now than it was five years ago," Rodriguez said. "For a long time, Colorado Springs had the reputation of being kind of a closed and cloistered and conservative small hamlet south of Denver. But there's such a phenomenal story to tell in Colorado today and it's an even better story in Colorado Springs.

"In the last handful of years," he added, "we've done such a better job of branding Colorado Springs for what it is and what we want it to be and how we want it to be perceived."

Denver's red-hot economy also has had spinoff benefits for the Springs.

Average housing prices in metro Denver topped $518,000 in April, according to a Colorado Association of Realtors report. Average prices in Colorado Springs - while at record highs - remain more than $160,000 cheaper. That's prompted many Denver residents with jobs to buy homes in northern Colorado Springs and El Paso County and commute, which makes those areas attractive to new businesses.

"As Denver continues to grow, our north side is just going crazy," Rodriguez said. "The north side of Colorado Springs is only about 45 minutes from the (Denver) Tech Center. More and more, there's a much greater drive or reason for people who can live on the north end of Colorado Springs to commute to Denver. I think it all is just coming downhill. Anything that's good for Colorado and Denver has been very good for Colorado Springs."

In fact, some retailers and restaurants first will establish themselves in Denver before they trek south. Not only do they test their brand and build a following, but setting up in Denver allows them to create a warehouse and distribution network in preparation for southerly expansion. Likewise, their advertising and marketing campaigns will cover a broader reach than Denver, Gansline said.

"When you look at groups that enter a market like a Denver, and they do five or 10 stores, and then they've got advertising statewide and marketing statewide, it only makes sense to continue to develop in that state because they're paying for advertising infrastructure, websites, those types of things," Gansline said. "Once they got a foothold, they can make those expansion decisions because they've got the costs in place to do that marketing, advertising, warehousing, distribution, what have you."

For some developers, snagging new-to-market concepts is part of their marketing strategies. Powers Pointe, the Colorado Springs retail center, was built by The Staenberg Group with the goal of attracting newcomers, Gansline said. In addition to LongHorn Steakhouse and Zoes Kitchen, Powers Pointe has brought Blaze Pizza to town. The Staenberg Group hopes to announce two more new-to-market restaurants this summer, Gansline said.

"When people can come in and they can go to places that they're familiar with, and that they trust, and that they're comfortable with, and they see those located next to best-in-class, new-to-market restaurants like a Zoes or like a Blaze, that gives a level of credibility or a level of comfort that these are proprietors and businesses that are worth trying," Gansline said.

Adding new-to-market concepts ultimately is a big plus for consumers, said Fred Veitch, a vice president with Nor'wood Development Group, the Springs company that's developed the First & Main Town Center, InterQuest Marketplace and other retail centers in town.

"Competition is a good thing," Veitch said. "It gives everybody more choice and forces existing businesses to sharpen their offerings. Everybody wins."

But even as shoppers and diners have more choices, new-to-market concepts aren't guaranteed of success.

A franchisee who opened two Pie Five Pizza locations in Colorado Springs closed them in 2017 after a little more than a year. Not enough revenue and not enough customers, the franchisee said. Taco Bueno, the Texas-based Tex-Mex chain, closed its five Springs locations in January - just 2 1/2 years after it came to town and built five drive-thru restaurants. Colorado "basically rejected" Taco Bueno, one restaurant manager said as the chain closed.

"You've got brand dominance in a market already, and you've got newcomers coming in, and it's hard to come in here and break the brand loyalty," said Egan, of NAI Highland.

To guard against failure, both tenants and landlords must perform their due diligence on whether a new market is the right fit. Are there enough rooftops within a given trade area? Will household incomes support the business? Does a location within a new market have access, visibility and traffic flow? Can a newcomer overcome the competition of longtime favorites?

For restaurants and retailers, success in another market doesn't mean it will translate to the next town. A quality product, fair pricing, good customer service and attractive surroundings all play a part. The newness and novelty of the concept will only last so long.

"Can a market, any market, support eight pizza restaurant concepts where three or four of them are almost identical except for the way they package it and send it the customer?" Egan said. "Everybody has to put their best product out there to survive and the customer will be the defining vote on what they want, what works and what doesn't work."

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Contact the reporter: 636-0228

Twitter: @richladen

Facebook: Rich Laden

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