By Ray Birch
ROCHESTER, Minn.—One credit union says it couldn't have purchased enough billboard advertising to drive the same kind of traffic to the CU that tenants at its new multi-purpose branch are driving.
Calling coffee shops “recession proof,” First Alliance Credit Union has joined with a growing number of other CUs that are building new branches to house other businesses as well. In the case of First Alliance’s newest location, that includes a coffee shop and a bread company.
“These new businesses that are leasing space from us are living billboards for the credit union and they are driving a great deal of traffic to our new office during the pandemic,” said EVP/COO Mark Hettinger.
Mark Hettinger
The credit union’s 8,000 square-foot location houses Moka and Great Harvest Bread Co., and has room for two more businesses (see photo). When consumers walk into the “open-concept space,” all three businesses are positioned around a central seating area with a fireplace, TVs, charging station, and a community conference room (see image).
Hettinger said the branch has been its busiest during the pandemic and has been the office delivering the most loans.
‘Unbelievable’
“It is a bit unbelievable how pandemic- and recession-proof a coffee shop is, especially if they're a good one, which Moka is,” said Hettinger. “This coffee shop probably has 20 locations in a 10-county area and they said by far this this is the most successful grand opening they've had.”
The First Alliance multi-purpose branch opened in the summer of 2020.
“This branch has been a much-needed boost for us and has somewhat surprised us as to how well it has done,” said Hettinger. “Branch traffic was a bit slow at first, but since those early weeks traffic has not slowed down. The coffee shop’s drive thru has been backed up all the way out to the street many times.”
First Alliance’s office has been the beneficiary of that popularity, with it posting some of the highest traffic totals of all First Alliance locations,” explained Hettinger.
Hettinger contends a branch model that includes other businesses fits with how consumers’ mindsets are changing due to the pandemic. He said consumers like to get a lot done in one trip, not only to be efficient but to also limit potential exposure to COVID-19.
Potential New Tenants
Hettinger said the $235-million First Alliance, based in Stewartville, Minn., is looking to fill the final two slots at the branch with possibly a UPS or FedEx store, or a cell phone provider. All tenants simply pay monthly rent to the credit union. There are no other financial arrangements, he added.
“When we began considering adding this branch in Rochester, we decided we did not want another standalone facility, as we believed it would not generate the traffic volume that we needed,” explained Hettinger. “So we began to look at other businesses to partner with that might be great traffic drivers, and we landed on Moka and Great Harvest, two local businesses doing very well.”
Hettinger noted the bread company at the branch has not been as busy as the coffee shop during the health crisis, but business has been picking up for Great Harvest at the shared location. He said the bread company is partnering with Moka to sell sandwiches through the coffee shop, which has helped.
“Our vision for this branch has always been about convenience,” Hettinger said. “We know our members will appreciate coming to do their banking while also being able to quickly grab their daily cup of coffee, whether that’s in the drive-through or by stepping inside. We chose to partner with Moka because their dedication to convenience and personal service aligns with the ideals we hold for serving our members.”
Not Enough Billboards…
Like other credit unions that have established multi-tenant offices, First Alliance expects consumers to stop in to get a cup of coffee or a sandwich, sit down in the common area and talk, and then think about doing their banking with the credit union.
The new location has limited staff and interactive kiosks to handle most daily financial transactions, explained Hettinger.
“Having a well-known coffee shop and bread company in your building…there aren’t enough billboards in town to generate the awareness of the credit union that this arrangement has generated for First Alliance,” Hettinger said.
Hettinger contends the pandemic will only make these kinds of branches more attractive in the future, as consumers become more accustomed to getting a lot done in one trip.
Model Moving Forward
He added First Alliance will likely make a multi-tenant office the model for future new branch builds, and that it may even consider retrofitting older offices that have sufficient space to allow for other businesses at those locations as well.
“At some smaller offices we would have to change the type of business we partner with, to one that requires less space than a coffee shop or bread company,” said Hettinger. “That would mean possibly bringing in a lawyer’s office or investment company, for example.”
