Joshua English and Monica Mustelier had often thought about bringing their mobile café concept to a storefront. But the co-owners of Little Havana Café in Toronto realized it would be too big a financial risk.
Their mobile business is a successful operation that runs from April to November, servicing farmers’ markets, concerts and film sets. English says owning a brick and mortar café was something they thought they could do in a couple of years. “It was written into our business plan. We went to some banks but didn’t have much luck getting financing.”
While considering their options for the winter months, an owner of a popular local ice cream and candy shop called Ice Cream Junction came up with a suggestion: why not rent her space during the winter months? “She wanted to help us out and give us a chance to test the concept and the neighbourhood,” English says.
With a popup shop, he says the rent is a fraction of the cost it would normally require to run a café, and they don’t have to worry about lease terms. “The biggest thing is that it’s a great way for new businesses to test an area and clientele. We get to have our own space with less headaches.”
Ice Cream Junction owner Tracy Grano has offered space to other startups in the area since opening her shop in 2009. After the first two years of operating year round, she realized it wasn’t feasible for her to stay open over the winter months. Having a tenant not only covers her base expenses over that time period, she says, “It’s great for security. I don’t want the store to be empty. Having a popup option over the winter helps [small business owners] and it helps me. It kind of worked for all of us.”
English says the popup model is a widely used starting point for fledgling businesses in Vancouver, where he lived for eight years. One case in point is his friend Rajesh Narine, co-owner of Cartems Donuterie, now a successful chain of doughnut stores in the area.
A pastry chef by trade, Narine had long wanted to open his own retail operation. In February 2012, he and his business partner, Jordan Cash, rented a commissary for production and then looked around for an available storefront. They came across 150 sq. ft. of retail space that was at the front of a bakery operation. “The owner said we could use the space as long as we needed on a month-by-month basis,” Narine says.
He estimates the rental for the commissary and retail space combined was around $3,600 – about half of what they would have had to pay for a permanent storefront. As luck, and talent, would have it, the business took off. By October 2013, they were able to open their first of three permanent locations. There are now three Cartems locations in Vancouver, with 56 employees.
“That popup shop allowed us to really develop our business and customer loyalty, as well as experiment with some new ideas,” Narine says.
The popup concept is becoming increasingly pervasive for startups and larger operations alike, says David Lewis, assistant professor of marketing at the Ted Rogers School of Retail Management. “Seasonal popups have been around for a while, but the idea has become much more serious in the past couple of years. They make a lot of sense because you don’t have the long-term commitment of a lease and they work well for businesses trying to enter a market.”
He cites four reasons a business owner might want to have a popup. “One is to communicate something about your business. Or they can serve an experiential purpose, providing people with the opportunity to interact physically with your business, products or services so they’re more comfortable dealing with you online.”
Another reason is experimental, in that it allows a business to test all aspects of their marketing, from product and promotion to pricing, to see what resonates with consumers.
The last reason, and the most familiar, is transactional. This may be in the form of selling seasonal goods or excess inventory. “For whatever reason, the intention is to sell something over a certain time period,” Lewis says.
While popups are an oft-used strategy by mall owners and their tenants to drive additional traffic or fill empty space, Lewis says more is happening on the small business side. “A lot is happening on the street, where landowners are having difficulty renting out space [long term]. It’s great for the entrepreneur because it’s a low risk opportunity for them to check out the retail market, and get some skin in the game.”