Despite Recent Deals, National Chains Shy Away From Midtown, Experts Say

Habit Burger and BevMo may be moving into midtown Sacramento, but purists need have no fear that national chains are taking over the region’s hippest shopping and dining district — at least not yet.

The major chains want big signs, high traffic counts and easy parking, said Emily Baime, director of the Midtown Business Association. And “that is really difficult to find in midtown.”

That’s what made it so noteworthy that Irvine-based Habit Burger signed up to take about 2,500 square feet in an almost-completed building at 16th and O streets in Sacramento.

Similarly, the national liquor-store chain BevMo is departing from its usual suburban strategy by choosing the building formerly occupied by The Beat record store at 1700 J St.

Habit Burger will join a small number of national chain restaurants in midtown, including Noah’s New York Bagels, Chipotle, Spaghetti Factory, Subway and Panda Express.

Restaurant chains have stringent checklists they go through before choosing a site, including minimum numbers for nearby jobs and residents. Midtown tends to have the jobs, which means lunch customers, but its residential numbers are low, which chains equate with low dinner-time numbers, said Daniel Mueller, retail specialist with Turton Commercial Real Estate.

The local operators — including those that run their own small chains — know the market, the competition and each other. They will take a space in midtown that chain restaurants wouldn’t even recognize as a potential candidate, Mueller said.

Also, much of the dining and drinking scene in the evenings in midtown consists of a younger and alternative crowd of customers, which wouldn’t be interested in chains, he said.

The chains have their requirements and their rules, whereas local operators fine-tune happy hour menus, offer lower price points and create customers, Mueller said.

Depending on the restaurant brand, fast-food chains want to have drive-thru lanes, which are no longer allowed for new developments in the central city.

Other criteria are also difficult to meet in midtown. Chains want plenty of parking, a corner location facing oncoming traffic and open space inside the store, said David Herrera, a vice president and broker with Colliers International in Sacramento. The existing stock of buildings in midtown makes that a tough fit.

“The cost to convert an existing building into what the chains demand is very expensive,” Herrera said. A mom-and-pop shop will take an existing space and make it work with a little bit of work, he said, whereas, the chains are pretty particular. “If it doesn’t fit the mold, they won’t do it or they will change it completely.”

When Chipotle took over the former location of Greta’s Cafe and Catering at 19th Street and Capitol Avenue a decade ago, the company did extensive work on the building. The entire first floor was gutted to the walls, and the electrical, water and sewer were all completely replaced. Even the floor was replaced, with construction crews getting down to dirt and rebuilding the foundation of the existing two-story building. It took more than a year.

When there are no alternatives, chains will make any city location work. But in the Sacramento market, chains can grow in the suburbs, Herrera said.

Some sit-down chain restaurants have tried midtown — and failed. California Pizza Kitchen lasted a few years at 16th and L streets, and Una Mas Mexican Grill made a go of it with locations at 19th and J streets and 28th and P streets, but closed both locations after a decade.

Most of the chains that do have restaurants in midtown are in fact local chains.

Cafe Bernardo, Jack’s Urban Eats, Paesanos, Original Pete’s Pizza, Mr. Pickle’s, Jimboy’s Tacos, Buckhorn Grill, Beach Hut Deli, Chicago Fire, Thai Basil, Streets of London, Crepeville and Luigi’s Pizza are all based in Sacramento, Roseville, Loomis, Winters or Davis.