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Unlikely Couples

Traditional stand-alone franchises are sharing space.

Starbucks and Subway are courting each other. At least they are each other's customers in Dallas.

In the Preston Alpha Shopping Center, at the crossroads of what some say is the city's busiest intersection, Alpha and Preston Roads, the ubiquitous coffee and sandwich chains came together to share customers and retail space.

As competition heats up between retailers trying to secure the best sites, traditional stand-alone stores are sharing space.

“It's making sure we're in a location where the people are,” says Kevin Kane, public relations manager for Subway.

At the 1,200-square-foot combination Starbucks/Subway, the sandwich maker draws on the coffee chain's morning traffic, who can purchase lunch to eat later in the day. In the evening, Starbucks benefits from Subway's patrons, offering up a signature beverage to accompany their meals.

Kane called Subway's strategy of sharing space with other entities co-branding. Some of Subway's co-branding arrangements include a Wal-Mart and a hospital, a church and a Harley-Davidson dealership. Of Subway's 19,000 U.S. locations, 6,000 are co-branded.

In some cases, it's been the entrepreneurial efforts of a Subway franchisee that owns another franchise and brings the two chains together under one roof.

“It allows both to go into a site by lowering the cost,” says Michael Dee, senior vice president, national director of retail for Grubb & Ellis. “Sometimes a developer needs more than one tenant to make a space work.”

TAGS: News Retail
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