Intalytics Analysis – Back to School? Restaurant Operator College Exposure

Back to college

With the fall semester on the immediate horizon, administrators at schools and post-secondary institutions across the U.S. face mounting pressure to finalize accommodative and safe reopening plans.  This is no easy task.  A recent New York Times article reports on the prevalence of coronavirus cases already linked to college campuses nationwide, making “as soon as it’s safe” a difficult target to achieve.

Meanwhile, students and their families are making decisions that will shape how they learn and socialize this coming school year – or for some college students, whether this will be a coronavirus gap year.  And with high unemployment rates holding, it is likely there are yet others who will choose to go back to school to shore up their future job & earnings prospects.

Regardless of the net change to college & university enrollments this fall, a reduced in-person presence is a highly likely outcome.  Beyond the immediate impacts to college budgets (and by extension, their support staff and non-tenured educators), a cascading impact will likely be felt by all those businesses that serve the needs of a student base, including restaurants located on or adjacent to college campuses.

To better understand this college exposure in restaurant operator portfolios, Intalytics compiled location data for over 250 quick service and fast-casual restaurant chains across the U.S.  Their nearly 160,000 locations were then evaluated to determine the proximity of each one to the nearly 200 colleges and universities with enrollment of over 15,000 students.  Those locations that are located on campus or within a short walking distance were classified as “college-dependent”.

What we found is summarized in the table below:

Back To School

  • While a not-insignificant count of over 2,400 restaurants in our sample were found to be college-dependent based on location alone, this still represents a relatively small proportion of the portfolio of the chains studied (1.5%).
  • In our sample, Fast Casual restaurant chains have more college exposure than Quick Service restaurant chains (3.2% vs 1.3%).

Further exploring this data by brand, the top 20 chains based on potential college exposure are listed in the following table:

Back To School-2

Some noteworthy observations:

  • Four chains have over 10% of their respective restaurant portfolios located in college-dependent areas. Common among these four: relatively healthier offerings.
  • Several of these chains have their roots in college towns. To name a few: Cottage Inn Pizza started in Ann Arbor, Michigan (University of Michigan), Erbert & Gerbert in Eau Claire, Wisconsin (University of Wisconsin – Eau Claire), and Pieology in Fullerton, California (California State University – Fullerton).
  • Chick-Fil-A is the largest chain to make this list, and its inclusion is likely due to the brand’s significant in-cafeteria presence across college campuses.

So what does this mean for near-campus operators preparing for the fall semester?  Thankfully, signs are currently looking somewhat optimistic for strong enrollment numbers. We asked Jeff Rous, Associate Professor of Economics at the University of North Texas, for his thoughts:

“Early predictions were for Fall 2020 enrollments at four-year colleges to be down 5%-20% compared to 2019. However, enrollments at major research universities seem to be similar to 2019 and at regional public universities enrollments are looking to be down only 2%-5%. It may well be that off-campus dining, especially curb-side pickup and carry out, will see less of a decline in demand than they may have expected several months ago.”

To learn more about how Intalytics helps restaurant operators quantify the factors that drive business and lead to successful locations, please contact us.

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