Click to Print

Small Wonders

Once considered the second-rate alternative to a "real" storefront, today's kiosks offer benefits their full-sized counterparts can't.
April 7, 2000
URL: http://www.entrepreneur.com/article/25896

Until he learned about kiosks and express locations, Darryl Rockwitt only dreamed about owning a franchise. Although a traditional business was out of his reach financially, an express location (a scaled-down version of a franchise concept in a smaller space) fell within his budget.

"Starting an express location cost me only $25,000, whereas opening a store would have cost $100,000," says Rockwitt, who opened a Heel Quik! shoe-repair franchise in a Merietta, Georgia, grocery store in 1989. "I also appreciated the lower risk starting [small] gave me. I could test the waters, rather than going hog wild and spending my life savings."

The initial investment may have been small, but the profits have been big for Rockwitt, 51. "Over the past 10 years, business has increased by at least 25 percent every year. Gross sales are now about $2,000 a week, with 30 percent of that covering operating expenses," he says. I've done well enough to expand into other areas, including buying a full-scale Heel Quik! shoe-repair shop."

Once viewed as the low-rent alternative to a "real" retail operation, kiosks and express locations are now seen as a good way to get in on business ownership. Due to limited and costly retail space as well as customer demand for faster, more convenient service, some kiosks have even replaced traditional stores. At the very least, kiosks have become effective store complemements.

For entrepreneurs, this boom in kiosks means fewer financial barriers to owning a business. "Kiosks have given just about anyone the chance to be their own boss," says Jeffrey Morris, president of All A Cart Manufacturing Inc., a Columbus, Ohio, kiosk and cart manufacturer. "We make kiosks for people who never in their wildest dreams thought they could own a business. Coupled with franchising and the brand-name recognition it brings, many kiosk operators are experiencing almost instant success."

The Beauty Of Kiosks

Substantially less expensive to open and operate than a traditional store, kiosks can cost as little as 20 percent of the amount it would take to open the same business in a traditional setting, says Ray J. Margiano, CEO of Heel Quik! Inc. in Marietta, Georgia, which has more than 700 units in 28 countries, including 111 express locations.

The amount of money you save by opening a kiosk can be great, agrees David Rosenberg, chair and CEO of Candy Express has 40 stores in operation or under development in the United States and is currently test-marketing the kiosk concept. "For one of our 1,000 square-foot stores, it costs $175,000 to $200,000 to open a franchise," he says. "A kiosk costs half that."

Overhead is low in the small space of a kiosk, and they're much cheaper to build than brick-and-mortar structures. "Cost-wise, there's no comparison between a store and a kiosk," says Morris. "You can buy a decent kiosk for as little as $3,000."

The start-up costs may be low, but the possibility of returns is high. A successful kiosk can be much more profitable per-square-foot than a traditional retail store, says Gin Clausen, owner of a Coffee Beanery Ltd. franchise kiosk in Grand Rapids, Michigan. "The kiosk space overhead is substantially lower, and you have the potential of doing a lot of business," says Clausen, 49, who has projected 1999 sales of $300,000 for her kiosk.

Another advantage of owning a kiosk is, if you aren't making high enough returns on your investment, you can pick up and move to a better location. You can even own multiple kiosks in the same location or use a kiosk to support an existing store. Clausen, for instance, also owns a full-size Coffee Beanery shop at the Woodland Mall and her kiosk sits just 200 feet from it. "Having the kiosk so close to the shop has been a real success," says Clausen. Her store is on a corner and her kiosk is in the mall's center court, so her business gets exposure from two high-traffic areas, which generates further business. Clausen also finds kiosk work refreshing after spending years inside stores. "The walls in a store get confining," she says. "The openness of the kiosk is a wonderful change. It's exciting because you're in the limelight. People react to you differently. They want to chat and socialize, and there's more repeat business."

Kiosk work may be fun, but it's imperative to stay on your best behavior at all times, says Clausen. "There's no back office to slip into, and people expect you to know everything, including where the [mall's nearest] bathrooms are," she says. "It's important that you and your staff be extra friendly and extremely customer service-oriented."

Perfect Fit

Although kiosks have been a mainstay at fairs for decades, it wasn't until the past 15 years that franchises started to experiment with their use, says West Hartford, Connecticut, franchise consultant Michael Seid. "In the past five to seven years, we've seen an explosion in the franchise-kiosk combination," he says.

With express locations, there are even more options. Some locations pull together several types of express businesses under one roof, such as banking, dry-cleaning, food, coffee and video rentals, creating a one-stop shopping experience.

Often referred to as "downsizing," this trend takes advantage of every available square foot in response to rising real estate costs and shrinking space. Heel Quik! has made a fortune seeking out dead space for kiosks in existing business locations. "We recently opened a kiosk along an unused wall in an Atlanta mall," Margiano says. "That space is now a high-volume operation, pulling in $7,000 in sales each week from making keys and doing shoe repair. Mall management is also thrilled because we're paying them $5,000 per month in rent for an area that was previously making nothing."

With Americans constantly on the move and increasingly short on time, the demand for convenient shopping is skyrocketing--and franchises are responding. Expect to see more of this express location trend, not only in number but also in range. In the next millennium, innovative franchises will go where no kiosk has gone before . . . and they'll be seeking adventurous entrepreneurs who want to come along for the ride.

Booth Dreams

Compiled by Liza Potter

The following franchise companies offer opportunities for opening a kiosk or express location:

Baked Goods & Coffee

Hamburgers, Hot Dogs & Sandwiches

Ice Cream & Juice Bars

Miscellaneous Restaurants

Miscellaneous Retail Food

Miscellaneous Products & Services

Kiosk Tips

Before you decide to go into business, talk to as many kiosk operators as possible about running a kiosk franchise to see whether the concept sounds right for you.

Contact Sources

All A Cart Manufacturing Inc., (800) 695-2278, www.allacart.com

Candy Express, (800) 511-GIFT, www.candyexpress.com

Coffee Beanery, (616) 942-5484

Heel Quik!, 1853 Vinings Mill Walk, Smyrna, GA 30080, (770) 435-5250

Heel Quik! Inc. (headquarters), (800) 255-8145, www.aquik.com

Michael H. Seid & Associates, 94 Mohegan Dr., West Hartford, CT 06117, (860) 523-4257