A new wave of businesses is hitting the Tempe-campus area, but it may not improve the local economy, according to an ASU economist.
Dean Robert Mittelstaedt of the W. P. Carey School of Business said the new businesses — including seven restaurants and cafes — are consumer-driven and will compete against existing businesses for the same customers.
“Unless a restaurant is so good that it draws people in from great distances, all it does is cannibalize other businesses in the area,” Mittelstaedt said. “In an economy when most people are spending less money to eat out, it’s not a great time to open a new eating establishment.”
Of the at least eight incoming businesses to the Tempe area, seven will be part of the Mill Avenue District, and most are expected to open in September.
These businesses include Jimmy John’s, Five Guys Burgers and Fries, SuckerPunch Sallys and Clancy’s Irish Pub, all located on South Mill Avenue.
Other additions to the Mill Avenue District include Smashburger and Dave’s Electric Brew Pub, located on East Fifth Street and South College Avenue, which will cater to graduate students with occasional on-site brewing.
Christina Cenzano, general manager of Dave’s Electric Brew Pub, said her microbrewery will do more than just generate sales-tax revenue for the city of Tempe.
“It’s adding another place to come as a destination,” Cenzano said. “We don’t see ourselves as something you just stop in at. We see ourselves as being a brew-pub destination … and we really think that adding another business like that to downtown Tempe only helps to revitalize all of the empty store fronts.”
But Mittelstaedt said restaurants alone rarely draw new people into an area.
“It’s a tough economy, and starting any business at this time is likely to be difficult,” Mittelstaedt said. “You have to make sure that you have something that is differentiated at a time when consumers are spending less money to begin with.”
Brubakers, a bakery and café, and Pink The Salon, an urban-style hair salon, are new businesses located in Paseo Exchange at Vista del Sol.
Owner Teri Colby said the salon will help bring — and keep — people coming to the Tempe area.
“These are very new businesses,” Colby said. “We just give another reason for people to come and shop at Vista del Sol and spend time here.”
Colby said she’s happy the businesses allowed her to employ people who need jobs.
“I feel like I’ve been blessed to be able to do this because I’ve been able to offer so many people jobs,” Colby said. “It’s been a really neat experience.”
Though these businesses will target ASU’s anticipated 69,000 students this semester, accounting sophomore Kelly O’Brien said she doesn’t think that translates to automatic success.
“Just because they have a large market doesn’t mean they have a large market of students that will be wanting to use their businesses,” O’Brien said. “It’s going to be how they market themselves and how they make themselves available to students.”
However, O’Brien thinks students will not let higher tuition or the economic recession affect the way they spend if businesses go after them in the right ways.
“I think convenience for college students sometimes outweighs expense,” O’Brien said. “A lot of it is going to just depend on how they brand themselves and if they really do market to the ASU population.”
Reach the reporter at snrodri@asu.edu.
