Restaurant Trade Area Research

At the corner of Sandy Plains Road and Hwy 92 in North Atlanta you will find a Back Yard Burgers that has gone out of business. Most likely the owners did their due diligence and checked out the basics like traffic counts and the demographic profile of the area. Not only that, I bet what they found sounded perfect for the Back Yard Burgers positioning as an upscale hamburger restaurant. Indeed, the intersection has huge amounts of traffic and the demographics of the area would indicate `families’, plenty of roof tops, and plenty of income.  That said, the fact that a Checkers went out of business at the corner on the opposite side of the street - could have indicated that the location be viewed with caution. (The Checkers challenged an existing McDonald’s. The corner is now home to an Italian sit down restaurant.)

So, what happened? Personally, since I was a VERY light user (3 times in perhaps 3 years) I can’t speak to operations of the unit - but the experiences of my 3 in-store visits went very well. No negatives. So, assuming it wasn’t an operation problem - what gives?

What gives is that you need MORE than perfect demos and traffic counts; you need to understand the real market potential of an intersection. And, the real traffic flows for `your side of the street’.

First off, before you think the intersection was `too busy’ and had huge back-up’s of traffic that no one would want to get `re-involved’ with after visiting the restaurant - forget that. This is a well flowing traffic pattern. That said, most restaurant owners are aware that some intersections are `too busy’ and don’t make a `good spot’ sometimes.

No, it wasn’t that at all. The problem with the traffic counts in this instance was that most of it was `long - flow traffic’ — most of it going miles beyond that intersection as a final destination. Additionally, the location had difficult access due to raised cement in the median - bad access especially can limit great lunch numbers; and females.

Additionally, the trade area likely did not have good daytime worker demographics - as one would assume the `hamburgers’ skews male in positioning - and, likely, not even a strong daytime worker number compared to other intersections with less traffic.

Finally, another word about demographics — a given stores demo’s will almost NEVER fit the demo’s for a 1-3-5 mile area. Most restaurants need to know what subgroups are likely to be important (those with higher indexes) to a normal store like theirs. IF you have a restaurant that features 1/3 lb. burgers — you might want to know the indexing of males within the real trade area. (The real trade area of this store was probably ONLY Sandy Plains Rd. and probably mostly on their side of the traffic flow within 2 miles before Wigley Rd. — NOT a big real trade area.)

But, finally, the real story in this instance - was probably the competitive environment. A Five Guys opened in the direct competitive area, probably cutting off and being `first’ to a large part of Back Yard Burgers lunch traffic and even dinner traffic - and in a more accessible (in and out) location. Splitting the hamburger business with McDonald’s was one thing - 3 way splits - can close a marginal restaurant with poor access to traffic flow.

Looking over potential sites - is a service I’ve provided - find out more about my Trade Area services at www.squidoo.com/tradearearesearch

Today’s Links

Woman Wants To Limit Fast Food Restaurants

http://www.todaystmj4.com/news/local/26152264.html Now that laws have started by activists to limit fast food locations - expect to see your local do gooder getting more and more exposure for such thinking. This is a story about a neighborhood group that says 6 fast foods on a road are enough - too bad for the Church’s Chicken.

Jake Says `Don’t Use The Drive-Thru’

http://poststar.com/wordpress/?p=5836&cat=47    Seeing the miles at zero while sitting at the drive-thru; will bring out the Greens.

The EAT IN Lunch User

http://www.chainleader.com/article/CA6581159.html?industryid=47557 Quarterly survey by Quick - Track; real research and real numbers.

Hello to everyone in the restaurant industry, welcome to my new blog, my name is Rick Phillips. In this blog, I intend to draw on over 30 years of direct, in the field, restaurant research that I have conducted for numerous restaurant chains. Some of this research was qualitative - focus groups or one-on-one research; most of it was quantitative - done on-site with 10’s of thousands of restaurant customers over three decades.

Ideally, this blog will speak to the restaurant owner who wants to read frequently about store operations, marketing issues and promoting ones business. It will often feature links to daily stories in the restaurant field - spiked  with  my commentary and analysis. I hope you enjoy the daily links - such as these three today July 10th 2008:

Denny’s Responds To America’s Demand For Breakfast

Link - http://www.marketwatch.com/news/story/dennys-responds-americas-demand-breakfast/story.aspx?guid=%7B0911022C-AD79-4B44-8B1C-7376F7D1A870%7D&dist=hppr  Denny’s introduces  the `Denny’s Dome’ to facilitate To Go business. The `Denny’s Dome’ is an innovative, multi-level and task, carrying device that seems to handle any type of full sized breakfast - and keeps it fresh and hot up to a half-hour.You have to see the picture of this multi-leveled  see-thru container - which even has a method for keeping foods crispy (read to find out the science).  >>>>>>>>>>>> RATR Rating - 9 - Interestingly, in the 1980’s I conducted one-on-one research for several package good companies; even in the 80’s `tupperware’ type of containers could store foods at the same temperture they were first stored at  for HOURS. The funny part was research respondents were worried about `bacteria’ forming if the food was kept hot for an extended period — but - at 1/2 hour - that should not be a perception problem. Indeed, this is a great idea and seems like the top of the line product/device that `to-go’ food customers may have been waiting for. It also could increase the size of the stores trade area since the product would remain warm to take home to nearly any local area. For example, it could permit the `drive thru the area’  customer traffic to `stop in and pick up’ a breakfast before driving home 8 miles away - such as having a store by a Home Depot or other big box store. Additionally, in these cash strapped times, it allows for the customer to avoid the tip, possibly increasing customer frequency (viewed as a surcharge these days?) - that said, many tip at the counter on the pick-up orders.

Lack of Advertising May Have Doomed Fast Food Restaurant

Link - http://www.beaumontenterprise.com/business/local/lack_of_advertising_may_have_shut_down_fast-food_restaurant_07-08-2008_18_17_04.html Article indicates that having a poor location, and difficult obstructions to your restaurant - along with having an unfamiliar product (being the only franchisee in a market) AND a lack of advertising and community invovlement - MIGHT have been reasons for a Krystal’s demise.  >>>>>>>>>>>> RATR Rating - 7 - One of the things this blog will do is feature stories about the success or lack of success of various fast food restaurants - chains or individual stores. Indeed, my experience in seeing first hand hundreds of fast food outlets - both high and low sales units - provides me an overview of characteristics important to customers. This article, which could be written about many thousands of restaurants nationwide, is an example. One finding I’ve had for example is the near absolute neccessity of making flow of customers onto the restaurant property mindless - hurdles should NEVER have to be jumped - especially if you value your female customer base. The article implies that perhaps the demograhics weren’t the exact fit either - while demographic `fits’ might be nice - the size of home and worker bases within specific milage is more important to success. Often your demos for a restaurant won’t fit the area - but - your restaurant does fine by dominating within your subgrouping (besting your competitive environment). Finally, of course, being NEW or ALONE in a market (brandwise) does usually require some outreach or education of your market about your restaurant - and probably does require even some advertising. But, what RTAR suggests is that when one’s unit is in sales trouble (as opposed to a unit that never has good sales, after initial opening month) is to look first at the competitive environment (new restaurants) and then at operations (frequently some daypart - ie: employee group - is the problem; this will first show up slowly as only the Heaviest store user is aware of the operation problem - they are forgiving as they love the product or the location - but they will reduce frequency. If the problem, daypart related, continues - a unit can be in for a big decline suddenly after 6 weeks or so.) Finally, it’s unlikely your store will go out of business do to a lack of `community involvement’ - but - obviously, a banner at the local softball field - can be worth it’s weight in G.

Fast Food Veggie and Fruit Carts

Link - http://www.redorbit.com/news/business/1468962/call_for_fastfood_fruit_and_veg_carts/ >>>>>>>

RATR  Rating - 6 - Story is about a call in England to favor push carts that feature fruits and veggies so that folks get their needed five servings daily. —– Could the `States’ be next? Could real food be the next `brand extension’ for FF restaurants?

Thanks so much for reading this first blog post - To find out more about my services - please use my blogroll to my other `restaurant sites’. Please bookmark this site, I will try to post 3 or 4 times a week the type of stories owners of restaurants want to read.