There's no business like dough business

Episode Summary

Executive Summary: Planet Money investigates why multiple Wetzel’s Pretzels outlets can cluster inside the same transit hub, using Brooklyn’s Atlantic Avenue–Barclays Center station as the case study. The answer: Wetzel’s is an impulse-buy business, so dense foot traffic, smell, and repeated exposure can support nearby stores with limited cannibalization—especially when one franchisee owns them all, shares a commissary kitchen, and targets different commuter flows.

Main Topics: The mystery of the clustered Wetzel’s locations (Priority: 5/5): A listener notices three Wetzel’s Pretzels outlets extremely close together in the Atlantic Avenue–Barclays Center complex and wonders why they exist, whether they compete, and whether they make money. Impulse-product retail strategy (Priority: 5/5): Wetzel’s leadership explains that pretzels are not destination purchases; success depends on high-traffic, high-visibility, smell-driven placement where consumers make spontaneous buying decisions. Franchise clustering and limited cannibalization (Priority: 4/5): Corporate policy prevents unrelated franchisees from operating under the same roof, so clustered stores are usually owned by one franchisee; some overlap is planned and tolerated because the concept can sustain multiple touchpoints in one space. Ricky Alam’s ownership model and business logic (Priority: 5/5): Ricky Alam, who owns the Atlantic locations and many others, says the nearby kiosks work because they serve different commuter streams, reduce labor, and can be supplied from one upstairs kitchen. Traffic counting and location selection (Priority: 4/5): Ricky describes manually counting foot traffic to decide whether a site can support another outlet, with thresholds around 1,500–1,700 people per hour during peak times. Post-COVID strain and recovery (Priority: 4/5): The original Atlantic location suffered a major drop after the pandemic, but the added subway-terminal kiosks helped stabilize the business by capturing commuter traffic more efficiently. Field observation confirms demand (Priority: 3/5): A producer’s on-site observation finds quick-moving but real lines at the kiosks, supporting the idea that even tiny sales bursts across the day can keep the model profitable.

Key Arguments: Wetzel’s Pretzels is an impulse product, so customers buy it because they are already passing by, not because they planned a special trip. Clusters of Wetzel’s stores can work because the same mall, arena, or station can contain multiple distinct traffic paths and buying occasions. The company limits same-roof competition by keeping multiple outlets under one franchisee, making clustering a coordinated strategy rather than a free-for-all. Cannibalization exists but is small enough to be outweighed by added exposure, convenience, and defensive occupation of prime locations. For the Atlantic station, two tiny satellite kiosks are economically viable because they share one commissary-style kitchen and different platform flows. Ricky’s expansion is driven by observed foot traffic, not intuition alone; he literally counts passersby before opening stores. Even after a substantial post-COVID revenue decline at the main Atlantic location, the added kiosks helped sustain the broader operation. Small, repeated transactions throughout the day can matter more than long visible lines, so profitability may be easy to miss from casual observation.

Data Points: Number of Wetzel’s locations at Atlantic Avenue–Barclays Center: 3 - Jed’s Brooklyn station cluster includes one mall location plus two subway-terminal kiosks. Other Wetzel’s cluster at American Dream Mall: 3 - The reporting found another mall with three Wetzel’s locations. Wetzel’s cluster at Del Amo Fashion Center: 3 - Another example of multiple Wetzel’s in one shopping center. Wetzel’s locations at Crypto.com Arena: 5 - The LA arena was cited as having five Wetzel’s Pretzels locations. Observed walking distance between Atlantic locations: About 1 minute - Jed said all three locations could be reached in about a minute. Atlantic first location opening year: 2016 - Ricky Alam opened the original Atlantic Avenue store in 2016. Revenue decline after COVID at Atlantic main store: 40% to 50% - Ricky said business dropped sharply versus 2018–2019 after reopening. Time from first to second location in same mall: About 1.5 years - Ricky opened the second mall location within a year and a half of the first. Total Wetzel’s locations owned by Ricky Alam: 17 - Ricky said he had opened 17 locations across East and West. Traffic threshold for opening: 1,500 to 1,700 people per hour - Ricky said he counts passersby and wants peak traffic in this range. Satellite kiosk staffing: 1 employee per location - Ricky said the small subway-terminal locations can each be run by one person.

Pivotal Quotes: "wherever there's people, there should be pretzels" — John Fisher: Wetzel’s development head describing the company’s guiding mantra and placement strategy. "We literally have Malls that have five stores in the same mall." — John Fisher: Explaining why multiple Wetzel’s outlets can exist in close proximity without unacceptable cannibalization. "All I'm doing right here, I'm bringing the pretzels to the people, that's all." — Ricky Alam: Ricky summarizes his rationale for the clustered Atlantic locations and the broader business model.

Implications: The episode shows how retail clustering can be rational when a product is impulse-driven, traffic is dense, and one owner controls multiple sites. For other brands, it underscores the value of location-specific economics over simplistic anti-cannibalization rules.