Natural Popcorn Seller Finds a Niche Spot with Mall Stores and KiosksOct 17, 2011
Most people associate fresh popcorn with movie theaters. But a new franchise chain making its way across the country in malls, stadiums, arenas and airports might do a lot to elevate popcorn’s status.
Three things distinguish Doc Popcorn, a Boulder, Colo.-based retailer, from many other popcorn sellers. The first is its emphasis on natural flavors, according to Rob Israel, the chain’s founder and CEO. The second is the company’s wide variety of offerings, which range from all-natural “better butter” to “hoppin’ jalapeno” to “sinfully cinnamon.” And the third is its rather upscale feel, more reminiscent of a bakery than a popcorn store, according to Israel.
“Most of our [mall] neighbors love us, including retailers like J.Crew, Coach and Zales, because we drive traffic,” he says. “We’ve designed the business so we are not just emitting the popcorn aroma; we are also emitting cinnamon and vanilla. And it has to do with the way we design our stores and the types of folks who run our stores, which are very high-caliber businesspeople.”
The Doc Popcorn concept was launched in 2003, and Israel and his wife initially operated about 15 Doc Popcorn locations in his home state of Colorado. Eventually, however, he wanted to expand into other states, a goal that was best achieved through franchising rather than by continuing to operate more and more locations on a corporate level.
By 2009, Israel felt he had created a smoothly run model for Doc Popcorn stores and kiosks and began signing agreements with franchisees. The timing proved fortuitous both because many experienced businesspeople were freshly out of jobs and looking to start their own businesses and because popcorn seemed like an affordable treat at a time when many Americans were tightening their purse strings. (Online, a 3.5-gallon two-flavor tin of the chain’s popcorn sells for $40.00.)
In qualifying its franchise operators, Doc Popcorn looks for people with $250,000 to $450,000 in net worth and $60,000 to $150,000 in liquid capital. Since the chain’s operations are very streamlined, it asks for no previous retail or restaurant experience in its franchisees, but Israel does want to see business savvy.
“We educate [our franchisees] and we feel that because of the efficiency of the model, the learning curve is very reasonable,” he notes.
By the end of 2011, Doc Popcorn will have signed 50 franchisees, with 180 stores/kiosks in development. By the end of 2012, Israel hopes to operate 100 stores/kiosks. Eventually, there could be up to 1,000 Doc Popcorn stores in U.S. malls, and the company might also operate as many as 5,000 mobile kiosks.
What has served Doc Popcorn well at regional malls is its flexibility and willingness to go into spaces vacated by other food vendors such as coffee shops, according to Israel. In many states, the company also requires no on-site plumbing because, unlike many prepared foods, popcorn doesn’t need water. Since the chain sells snacks, it avoids going into mall food courts and also stays away from movie theaters to avoid the competition. Instead, Doc Popcorn prefers large department stores and children’s concepts like Build-a-Bear as co-tenants. Its main requirement for new mall locations is lots of foot traffic and a spot that will guarantee that it’s the only food vendor within the given area of a mall.
“We want to be in our own little corridor,” Israel says.
Doc Popcorn’s inline stores range from 150 square feet to 500 square feet. Currently, the chain is also opening up a lot of mall kiosks, which range from 100 square feet to 300 square feet. In the past, some regional mall owners have stayed away from kiosks because they felt they cluttered common areas, but the attitude has been changing recently.
“I think what’s happening is that everybody in America today is looking to create revenue sources without a great deal of expense,” Israel notes. “And I think some of the larger mall properties have taken a closer look at their common areas and are [more open] to kiosks if it’s an appropriate model.”
Doc Popcorn works with two outside brokerage firms to source appropriate locations in areas where it would like to expand and negotiate deals. Then Israel, as head of real estate for the company, reviews the locations with the franchisees before committing to the space, usually through five-year deals. Israel likes to see videos of the locations and traffic counts when he is deciding whether or not to sign a lease.
“The negotiations are never simple, but the mall owners are showing a bit of flexibility because we are a unique model,” he says. “Everyone is looking to have customers want to be in their mall longer and we add entertainment, we have a place where people can go while [the rest of their family] shops. Today, people are looking for a 10-minute vacation and that’s what we offer.”
In fact, Israel boasts that Doc Popcorn has been the only successful popcorn store at the Mall of America, the country’s largest regional mall located in Bloomington, Minn. A letter from Heather Brechbill, a leasing director at the property, notes the Mall of America “is very selective as to which concepts we do deals with… Doc Popcorn and their chosen franchisee for Mall of America, Bill Bentz, have not let us down and are a welcome addition to the property.”
In fact, Doc Popcorn and Mall of America’s management are currently in negotiations for a second location at the property. The retailer will also soon open at the Garden State Plaza mall in Paramus, N.J., at the Palisades Mall in West Nyack, N.Y., and possibly at the Manhattan Mall in the heart of New York City.
Most of Doc Popcorn’s expansion strategy is opportunity driven, according to Israel.
“It depends on what’s available at the mall at any given time, and it depends on the lease rates,” he says. “It’s very important for us to create a win-win formula with our malls. Those are the parameters we look for.”