Can Papaya King Expand Beyond Its New York City Roots?

Franchising at Papaya King, a venerable New York City-based hot dog stand that opened in 1932, has come and gone like waves in the ocean. Once it was franchised in several cities and had several outlets in New York, and now it’s down to its original store on the Upper East Side. But that hasn’t stopped it from ramping up its franchising efforts.

In New York, its second location, on St. Mark's Place in the East Village, closed last November when the landlord decided to build a new apartment tower on the location.

In 2016, Papaya King owner Wayne Rosenbaum signed a franchising agreement with Fransmart. After six short months, that alliance disbanded. But now Rosenbaum is partnering with the QSR Franchise Development Group and is looking to open 20 outlets across the U.S.

Papaya King has been adapting to changing consumer tastes. Besides the classic hot dog, it specializes in green juices for consumers who are more health-conscious. It has also added a veggie burger, nachos and a foot-long frankfurter.

At times, there have been Papaya Kings that opened in San Francisco, Miami and Baltimore, but they did not last. So why is this expansion different? Here’s what owner Wayne Rosenbaum; Steve Garner, founder of QSR Franchise Development Group; and Ray Payne, a franchise consultant at QSR, had to say.

Papaya King has tried franchising several times in the past, as recently as 2016, and none succeeded. Why is this deal different?

Rosenbaum: It takes a village to grow a franchise brand. Not having the proper team in place was a factor. The operating partners didn’t have the same vision as the corporate entity, so there will never be a success. The most important thing in franchising is that the franchisee is well versed in business operations as well as customer service and public relations.

What did you learn from it?

Rosenbaum: The main things we learned is everyone needs to be on the same page and corporate is dictating what goes on with the franchisees. The franchising partners need an open line of communication at all times with the corporate entity.

Why is the time ripe to franchise now?

Payne: It’s a legacy brand. We’re retrenched in terms of infrastructure. We’re aiming to bring in qualified franchisees that have strong financial capabilities in terms of putting in capital, the right franchisees coming in from the food service business who know how to operate these types of legacy brands. We’ll have all the people in place to design them, open and operate them. That lowers the capital in terms of cost to build so we get a better ROI for franchisees and get them to open and operate more quickly.

Many urbanities are health conscious and work out, so hot dogs aren’t their No. 1 menu item. How will Papaya King find an audience?

Rosenbaum: We’re enhancing the juice bar offerings, and expanding the menu to include green juice, a variety of different fresh fruit smoothies, no sugar added, to appeal to a younger millennial audience. We started to deliver through Caviar, as well as order ahead via mobile through Caviar website.

Garner: There is no strong brand recognition for hot dog retailers in the fast casual arena. There are hundreds of independent mom-and-pops, but most people know Nathan’s. There are bigger players on the West Coast, but only a few. Papaya King is aiming to be the McDonald’s of the hot dog world. Millennials may not want a hot dog after working out, but they will eat them when they get the opportunity.

So who is Papaya King’s target audience?

Payne: Everybody eats hot dogs in moderation, so there’s an opportunity to not only appeal to millennials but go across all categories and appeal to children and older adults. It’s like pizza, and it’s a fabric of the piece of the New York marketplace. But it’s translatable. People also eat Chicago hot dogs.

But aren’t hot dogs unhealthy?

Rosenbaum: It’s 100% beef; there are no fillers. It has a nice snap, blend of paprika, onions and garlic, and is hickory-smoked. It’s never frozen. I get a delivery every day. Yes, it also consists of sodium nitrates.

How is the franchising being marketed?

Garner: It’s always a combination of many components: PR at the forefront. We’re starting in the New York metro market and other locations where the brand is recognized, like California. It’s being marketed directly to many fast-casual operators that have experience with fast food and are looking for the next brand to run with. We’ll be target-marketing them through social media, Facebook and LinkedIn.

How large will the shops be?

Rosenbaum: There are going to be three different versions: the mall format, midsized store and stand-alone format. The mall format will offer a scaled-down menu and will be from 300 to 500 square feet. The mid-size store will have a scaled-down menu from the original location with enhanced juice bars and be from 700 to 900 square feet, and the stand-alone store will have an enhanced juice bar and the food offerings of the flagship store, seating from 18 to 20 seats and be 1,000 to 1,250 square feet.

Size and locations vary, but what’s the approximate cost?

Rosenbaum: Each deal is different, but the total cost for the express version should be about $120,000, and the in-line size will cost from $250,000 to $325,000, and stand-alone anywhere from $325,000 to $425,000.

How close are you to signing franchise agreements?

Garner: We’re close to signing several different agreements. By the second quarter of next year, you’ll see new Papaya King’s. They may not necessarily be in the New York metro area. There’s one multi-use operator based in Los Angeles but has lived in New York who is strongly considering it, and you could see more open in urban markets like Miami; Washington, D.C.; and Boston.

Why is Papaya King mostly an urban concept?

Garner: It’s a fit for everywhere, but hot dogs are an impulse item, You require foot traffic. It’s a street food at the end of the day, so you need foot traffic, and urban markets have the most traffic, along with airports, university campuses, malls and entertainment centers.

What are the key factors in success?

Payne: It’s timing the right location with the right qualified franchise with the right mindset to operate the Papaya King: individuals that come from the food or retail business who understand the brand and market.

Garner: Operational management skills are critical. Given our franchise support, it’s a partnership at the end of the day. If they’re not successful, we’re not successful.

Rosenbaum: Success comes down to three components: the passion for the product, knowing the market, the quality has to be the same as our jewel location on 86th Street and Third Avenue.

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