Growing Cincinnati Sub Chain Sees Opportunity In Pittsburgh

PITTSBURGH (Friday, November 10, 2006) - Penn Station East Coast Subs, a fast-growing Cincinnati-based sandwich chain, is preparing to open its first Pittsburgh-area location.

An investor group led by Dormont native Rick Costantini has signed a lease for its first location in Centre Plaza, a small shopping center on South Millvale Avenue in the Baum-Centre corridor in Oakland.

Costantini recently closed a pizzeria he operated in Cincinnati to move back to Pittsburgh to operate the new Penn Station store.

Costantini said he has a development deal to open five Penn Station locations in Pittsburgh and expects to eventually operate eight to 10 in a territory that includes the city and its southern suburbs. The Oakland store will open next month.

"We immediately will start on the second one, hoping to have it open in the next six to eight months after that," he said.

Costantini will run the Oakland store, while serving as a manager/owner backed by an investment partner whose name he declined to divulge.

The manager/owner approach is a business strategy Penn Station Inc., the Cincinnati-based corporate parent of the chain, has used to grow the business to 165 locations and nearly $90 million in annual sales.

"We give that person in our system a chunk of the business, so that gives them more incentive to do well," said Alex Lukondi, director of corporate marketing for Penn Station.

Penn Station offers grilled sandwiches, such as Philadelphia cheesesteaks, salads, fries and fresh-brewed lemonade on its menu in an attempt to stand out in a growing field of chain sandwich shops. Penn Station ranks among Cincinnati's fastest-growing companies, according to Deloitte Cincinnati USA 100, an annual ranking of fast-growing firms in Cincinnati.

Sandwich chains including Subway and Quizno's Subs, as well as smaller operators such as Jimmy John's Gourmet Sandwiches, continue to expand in Pittsburgh as part of the fast casual restaurant trend, said Ron Sofranko, a Wexford-based restaurant consultant.

Sofranko attributes the growth in chain sandwich shops, in part, to the low cost of operating such businesses.

"It's similar in some respects when it comes to food-costing with hamburgers and pizza," he said. "You can really make a substantial margin in putting subs together."

Nationwide, Quizno's is Subway's largest competitor. Subway has more than 50 locations in the Pittsburgh area alone. But Quizno's has downsized from more than 40 locations to 19, said Sofranko, who has done some consulting work for Quizno's.

"The door is kind of open for the right operator," Sofranko said.

Anthony Dolan, a principal of Walnut Capital Partners, which owns Centre Plaza, sees Penn Station offering higher quality food than other sub chains, with a made-to-order approach.

"It's just a matter of the quality of the product," said Dolan.

Penn Station

East Coast Subs
Sandwich chain
Based: Cincinnati
Locations: 165
Revenue: $90 million
Web site: www.penn-station.com

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