Chain restaurants grow on the Strip

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California Pizza Kitchen is among the chain restaurants in MGM’s the Park, near the T-Mobile Arena.
California Pizza Kitchen is among the chain restaurants in MGM’s the Park, near the T-Mobile Arena.

Everyone knows the Las Vegas Strip as an entertainment capital, but if the current trend continues it might also soon become the worldwide epicenter of chain restaurants.

In the last few years, several chains have been introduced to Las Vegas and more specifically set up shop on the Strip, with more on the way. White Castle, Shake Shack and Cracker Barrel all opened their first Las Vegas restaurants during the last two years. While In-N-Out Burger has a Las Vegas location, it recently announced plans for a restaurant at the Linq, which also is home to popular chains the Yard House and Sprinkles. Taco Bell is on its way to the Strip, and Chick-fil-A is also moving into the market.

When White Castle opened up in the heart of the Strip in January 2015, the line stretched out the door and the restaurant had to close for two hours in the middle of the day to restock and regroup after the flood of customers.

"The beauty of the industry is it's very competitive, and the success of other brands coming to Vegas makes others see that they can do something similar," said Rob Green, executive director of the National Council of Chain Restaurants. "There are enough customers for everyone in Vegas, and with early adopters having success, that provided some motivation for other brands."

A Taco Bell Cantina will open on the Strip by the end of the year across from the CityCenter.
A Taco Bell Cantina will open on the Strip by the end of the year across from the CityCenter.

Taco Bell announced earlier this year that it will bring a special Taco Bell Cantina, its only restaurants that serve alcohol, to the Strip in late 2016.

"Expansion into urban markets is a key focus for us, both this year and over the course of the next several years," Brian Niccol, CEO of Taco Bell Corp., said announcing the new restaurant. "When we talked about where to establish a flagship store, it didn't take long to realize that having a presence in the heart of Vegas would undoubtedly create a unique, distinctive and fun destination and experience for Taco Bell fans."

Jeremy Aguero, principal analyst at Las Vegas-based Applied Analysis, said chain retail in general has seen success on the Strip for years, and now more national brands are exploring the market. Walgreens has been very successful with its stores on the Strip, and several of the casinos have included Starbucks and McDonald's in their food courts.

In 2012, McDonald's opened its first Metro McDonald's across the street from the Aria, tricked out with digital menus, graffiti murals and WiFi.

"Las Vegas is such a national destination, it's great for a flagship location. It's a great place to convey what you're doing in terms of food and entertainment," Green said. "It's a perfect fit. Everything in Vegas is so big and over the top, it gives the brands a chance to get creative and make an impression. They have more creative license with how they are built."

Sprinkles established a Las Vegas store at the Linq Promenade.
Sprinkles established a Las Vegas store at the Linq Promenade.

Brand exposure

With the local economy on the upswing, visitation numbers are creeping toward 44 million annually and 98% of the visitors eat out for every meal, Aguero said the market is ripe for the entry of these brand names. "Where hotel and casino revenue has increased most significantly, food and beverage is at the top of the list," Aguero said. "That includes establishments operated by the casinos and space they lease out."

Additionally, for many restaurants setting up on the Strip is seen as a way to expose customers to the brand.

"No doubt about it whatsoever, the Las Vegas Strip ranks among the most visible areas in the entire world," Aguero said. "It's the equivalent of being in Times Square."

In-N-Out already had a location just west of the Strip on Tropicana Avenue, not far from the New York-New York Hotel and Casino. But a true Strip location has become too enticing to pass up, hence its plans to open a location in the Linq complex later this year.

While Taco Bell and White Castle have set up in the middle of the action on the Strip, some chains have so far been content with locations on the fringes of the entertainment corridor. Cracker Barrel opened its first Las Vegas restaurant this year just south of the Strip. Chick-fil-A also has plans to open on the outskirts of the Strip in addition to a number of locations outside of town.

More than food

New York-New York welcomed the first West Coast installment of Shake Shack in December 2014, and the restaurant that debuted a decade ago in New York's Madison Square Park is seen as one of the anchors of MGM's the Park, the new outdoor shopping and dining space that includes T-Mobile Arena.

"We knew we wanted to build a park that spoke to the community and was friendly to the community. Shake Shack fit that mold and is a company that has built an incredible fan base for obvious reasons," said Ari Kastrati, senior vice president of food and beverage strategy for MGM Resorts International. "The product is spectacular, they care about service and consistency in their product and it's become a destination quick-service restaurant with a loyal fan base."

Shake Shack opened its first West Coast restaurant in the New York-New York hotel in December 2014.
Shake Shack opened its first West Coast restaurant in the New York-New York hotel in December 2014.

MGM Resorts created Beerhaus, its own pub and eatery, for the Park, but the company also focused on partnering with brand-name restaurants that would offer variety.

"Food and beverage is not just an amenity, it's a driving force behind how the customer spend happens in the building," Kastrati said. "Our customer is very knowledgeable in the decision-making process, and technology plays a big part in that. Food is entertainment these days, and it's not just food; they want social experiences and variety. They don't want just five restaurants, they want a lot more choices."

California Pizza Kitchen, which already had a branch on the Strip, also moved into the Park, opening up its largest restaurant ever, complete with an expansive indoor-outdoor bar.

There are differences for brand-name restaurants when moving onto the Strip, including catering to the more entertainment-focused atmosphere and the dynamic nature of the customer base. Many of the chains that set up on the Strip tend to offer alcohol where their other locations do not, and some, such as Shake Shack, have expanded their drink menus.

"Our partners are very much open-minded about the evolution of their concepts when it comes to Las Vegas," Kastrati said. "At a store in Chicago, they may get the same customer multiple times a week. In our space, maybe they get the same customer twice a year. So the concepts would have to evolve slightly as they are getting exposed to a much broader audience."

The Las Vegas metro area is home to more than 2 million people, and with visitor numbers increasing year over year, the Strip has become an ideal location for chain restaurants to introduce the brand to a new market and a continuous stream of both foreign and domestic travelers.

"Chains want to come where they have potential consumers, and Las Vegas is a natural fit," Green said. "It's the new frontier for chain restaurant brands. It's a great place to build a restaurant that appeals to a wide variety of consumers, and that dovetails with the sense of adventure and memories that Vegas makes."

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