Macy’s is betting on sandwiches.
Next summer, the struggling department store chain will add Potbelly Sandwich Shops to four Macy’s stores, including the one at Smith Haven Mall in Lake Grove. That will be the first Potbelly on Long Island.
The multi-unit development deal calls for the other three Potbelly shops to be added to Macy’s stores in Modesto, Concord and Santa Clarita, California, according to Potbelly Corp. Macy’s will be the franchisee for all four shops, Potbelly said.
“It’s kind of an innovative approach,” said Peter Ortiz, vice president of franchise development at Chicago-based Potbelly Corp.
Founded in 1977, Potbelly is a fast-casual chain with more than 470 locations nationwide, about 10 percent of which are franchises. The company began franchising about 10 years ago but ramped it up last year, Ortiz said.
Macy’s has some experience with the chain.
In December, Macy’s opened a Potbelly in its store in Minneapolis at the Mall of America, which is the largest mall in the country. But Macy’s isn’t providing much detail on its partnership.
“Macy’s is always looking for the right partners to create an exciting shopping destination, and Macy’s is thrilled to add a Potbelly shop to our Macy’s Smith Haven store,” said Bridget Betances, spokeswoman for Cincinnati-based Macy’s Inc.
The Macy’s at Smith Haven Mall is part of Macy’s Growth100, which is a group of 100 stores that have gotten or will get upgrades, such as expanded merchandise selections, and more employees and new technology to improve customer service, this year.
The store-improvement initiative started with 50 stores last year, when Macy’s said in a statement that some of the stores getting improvements “will now offer a food and beverage option for customers, such as Starbucks, Potbelly, Pinkberry, Macy’s Tastebar and more.”
There are 579 full-line Macy’s stores.
As for Potbelly, it doesn’t have any other partnerships with retailers, but Ortiz expects that to change.
“I’m sure we will begin receiving calls on that when these stores start to open [in Macy’s],” he said.
Plus, Potbelly wants to expand in the Long Island market, he said.
Potbelly and Macy’s partnership makes sense because of their similarities — great products, customer service and value, Ortiz said.
The in-store restaurants will average about 1,500 square feet in size.
Restaurants in stores is not a new concept. They used to be common in high-end department stores, such as Saks Fifth Avenue and Lord & Taylor, back in the day when rich people dressed up to go shopping and before mall food courts became popular.
But the restaurant business is tough.
“It’s not easy to run a restaurant, and the margins are low and competition is high. That is likely a big reason why retailers decided to ‘stick to their knitting,’” said Sucharita Kodali, a retail analyst at Forrester Research Inc., an advisory firm in Cambridge, Massachusetts.
But a few retailers are experimenting with in-store restaurants now.
“I think it’s more about having a diversification strategy and leaning into other adjacent sectors,” Kodali said.
Barnes & Noble Kitchen, an “upscale casual American restaurant,” is in five Barnes & Noble bookstores in different states, including Scarsdale, New York.
In July, high-end yoga apparel chain Lululemon opened a 20,000-square-foot store — the largest in the chain — in Chicago that includes a restaurant.
The same month, home goods retailer Crate and Barrel opened its first full-service restaurant, The Table at Crate, in its Oak Brook, Illinois, store.
Of course, Swedish furniture retailer Ikea has had in-store restaurants since the 1960s.
“Ikea’s restaurant works because people spend a lot of time in IKEA and by the time you’d leave the store and find a place, you could have just eaten at the restaurant and had an inexpensive tasty meal,” Kodali said.
Retail Roundup is a column about major retail news on Long Island — store openings, closings, expansions, acquisitions, etc. — that is published online and in the Monday paper. To read more of these columns, click here. If you have news to share, please send an email to Newsday reporter Tory N. Parrish at email@example.com.