YWCA Downtown hopes hot dog shop helps drum up revenue
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Every five minutes between 11 a.m. and 2 p.m. on a typical weekday, nearly 110 people walk by the YWCA Greater Pittsburgh at Wood Street and Third Avenue, Downtown. That's according to a study conducted for the Y as part of its long-term strategic plan.
By opening a Nathan's Famous hot dog restaurant on that high-traffic corner, Y leaders are confident the organization can not only lure many of those students, office workers, shoppers and other pedestrians inside for lunch, but that they also can create a new source of revenue to fund the Y's 141-year-old tradition of programming that focuses on assisting women and children and promoting racial and gender equity.
Pending approval from the city Planning Commission, the 3,000-square-foot restaurant could open sometime this summer in street level space adjacent to the lobby.
The pairing is somewhat unusual - a fast-food franchise owned and operated by a social services agency - but as the economic recession continues to wreak havoc with budgets at many nonprofits, the Y's effort to get into the hot dog business doesn't seem like such a stretch.
"The lines in recent years have been blurring quite a bit between nonprofits and for-profits involved in social enterprise," said Todd Cohen, editor of the Philanthropy Journal and based at the Institute for Non Profits at North Carolina State University.
"What's happened is the recession is speeding up the process of nonprofits looking for new ways to generate income."
That's exactly what the Y set out to do when it began contacting fast-food franchises about securing a restaurant for its longtime headquarters building.
Social Franchise Ventures, a Washington, D.C.-based consulting practice for nonprofits, conducted a market assessment for the Y.
It determined the Downtown location was an ideal spot because of the number of students and commuters already in town for lunch as well as booming development in the neighborhood, including student housing and facilities for nearby Point Park University, said Magdeline Jensen, the Y's CEO.
Because the study showed that 70 percent of the foot traffic passing by is students, Ms. Jensen and her team zeroed in on food and drink prices as they considered 15 different franchises.
After ruling out some, including Panera Bread and Blimpie Sub Sandwiches, the Y narrowed its applications to Nathan's Famous and Checkers, which specializes in hamburgers and fries.
The Y ultimately pursued Nathan's, Ms. Jensen said, because the chain founded as a single hot dog stand in 1916 in Coney Island, N.Y., has no other stand-alone franchises in Pittsburgh, and its executives were eager to visit the city and scope out the location themselves.
"We thought it was a great opportunity for us to enter a market where we have little presence and a high-profile Downtown Pittsburgh location made perfect sense to us," said Randy Watts, vice president of franchise operations for the Westbury, N.Y.-based company.
Nathan's, which also features Arthur Treacher's fish, chicken and salads on its menu as well as breakfast items, has 234 stores including 228 franchises. Its closest outlet to Pittsburgh is located at Penn State University's student union building in State College, said Mr. Watts. Nathan's has a presence in the local market through partnerships with other retailers such as Bruster's Real Ice Cream which sells its products in a co-branding arrangement.
Mr. Watts acknowledged the company was concerned that the YWCA might be pursuing a franchise as a jobs program.
"I asked that question and they said while it could happen, their intent was to grow a profitable business to continue to grow their mission," he said. "And that's the best way to approach this: from a straight business standpoint."
The Y projects the restaurant could generate $80,000 in income during its first year of operation, and between $300,000 and $500,000 annually after five years.
Upfront investment to launch it would range from $385,000 to $500,000, said Ms. Jensen.
The startup funds would come from existing investments and not the Y's operating budget, she said.
A for-profit subsidiary of the Y will be created to run it, pay taxes and return proceeds to the parent organization.
Plans call for the Nathan's restaurant to operate from 7 a.m. to 7 p.m. seven days a week with wireless Internet access available to customers.
It could employ between 20 and 25 mostly part-time workers, said Ms. Jensen.
The ambitious nature of the project "is what we like about it," said Mary Smith Peters, president of the Y's board of directors. "It's important for a nonprofit community organization to try and think forward because the world doesn't stay the same."
That philosophy was a driving force behind hiring Ms. Jensen to run the Y, she said.
Prior to coming on as its chief executive in November 2007, Ms. Jensen had a long career in the federal court system, including positions as the first female chief probation officer in Arizona and as an administrator for the U.S. courts in Washington, D.C.
"I was always looking to do things in a different way," said the San Francisco Bay Area native. "I was always looking for innovative ways to do more with less. It was great training for a nonprofit."
The Y's decision to affiliate with a well-known franchise to generate income "sounds very wise and smart to me," said Peggy Outon, executive director of the Bayer Center for Nonprofit Management at Robert Morris University. "The Y is being smart about recognizing their need for knowledge and support and branding.
"They don't have to create a whole new product and market it and brand it. They're able to use the extensive work done to create a brand for Nathan's and the extensive work done to create a brand for the YWCA."
Magdeline Jensen will discuss the YWCA's plans to open a Nathan's Famous franchise at a breakfast event Friday sponsored by Chatham University's Center for Women's Entrepreneurship. For more information or to register, go to www.chatham.edu/cwe and click on events.
First Published April 8, 2010 12:00 am