Location Criteria

HA442 : The Class : Concept Development : Location Criteria : Location Criteria

Location Criteria

Principles of Site Selection

It was once thought, "If you build it they will come." Well before the great growth in chain restaurants that might have been so. In many areas restaurants are overbuilt, making it harder and harder to be successful. Instead of just finding an ideal location and building your food service operation care must be taken to find a place that fits the operation's needs. The purpose of this section to present information and principles that should be considered when choosing a site for a food service operation.

Proper site selection takes time and money. This is the reason many people decide not to attempt it. There is a tendency to play follow the leader and go to the new trendy areas or to go where they can get a lower price. There is a tendency to have someone else do the research and simply use that in place of legitimate research. The problem with this method is that the large established chains make mistakes but they usually have deeper pockets to weather out a bad decision than independent operators can. There is no substitute for doing the research and legwork it takes to find a successful location.

The principles listed are by no means an exhaustive list, but instead are a list of basics. There are complete textbooks on the topics listing other factors in more detail. This overview of the topic should help you gain insight into this important aspect of food service planning.

Key Principles

1. Know your operation
2. Determine your customer profile
3. Establish locational criteria
4. Gather market data
5. Accessibility / Visibility

Know your operation

You must thoroughly understand the intricacies of your business before you decide to choose a location. Questions such as who is your target market or the group of people you plan to attract to your business, what are there demographics, such as age, income level, disposable income, etc. , eating patterns, and menu choices are all crucial to find the site that will maximize the chances for your business success. You want to choose an area that is near and convenient to the type of clientele you want to attract to your operation. Menu selection is important to consider, you do not want to put a trendy new concept in an area populated by seniors who prepare more standard menu choices and vice versa. What level of business will you need to sustain your business? Does the proposed location give you ample customer flow to provide that?

Determine Your Customer Profile

A business person who says its business's customers are all ages and from all walks of life is not examining there business close enough. Although, some restaurants appeal to a cross section of clientele a detailed customer profile should be done to isolate the characteristics of their customers. Once the characteristics are isolated they can be used to attract others that are similar.

Customers generally have many choices when dining out. Different customers are attracted to different food service operations for various reasons. When planning an operation you must be aware of the profile of your guests. All food service operations provide food, but are not in competition with each other. A customer that is in a hurry and has a short period of time to eat is not going to consider an elegant fine dining restaurant. Customers are often occasion driven, they look for different types of operations depending on their needs at the time.

Customer profiles examine many factors that impact the location of the business. The frequency of guest visits is important to examine. A guest that visits your operation only once a year is not much help, but a guest that visits your operation once or twice a week can provide valuable information. The characteristics of these guests that return multiple can help you identify other prospective guests.

The time customers are willing travel is important in determining how big of an area your operation can draw from. Travel time is more important than distance when looking at guests preferences. This can also help you decide where to publicize your operation. Your promotions will be less effective if you promote your business in an area outside of the area guests will normally travel from.

The income level of the customer is an important factor. Generally the more money a person makes the more they have to spend on meals away from home. This effects both frequency of visits as well as the level or type of restaurant they choose. The restaurants your guests perceive as competition is important to examine. Guests may state operations you would not personally consider as competition. You also want to find out why they consider it competition and what you do better than the competition and what they do better than you.

Both the average age and age range of customers is important to look at when determining a customer profile. Age determines many factors such as dining frequency, menu choices, price ranges, hours of operation, etc. The customers' primary reason for eating at your food service operation over another food service is an important factor to consider. There are many factors that customers rate as reasons for dining at a particular food service operation, but the quality of the food generally rates the highest. The others reasons may be convenience, attitude of staff, cleanliness, menu selection, prices, value, etc. Knowing the reason or reasons guests eat at your operation are an important factors to consider. This help you decide what to continue to focus on in the operation of your business.

Where guests originate their trip to your operation is also key. This demonstrates the trade and business areas of your customer. Important when planning promotions and advertising. This also has an effect on business hours. Guests originating at work will visit your business at different times than guests originating at home. This also helps you decide which side of a busy street would work best to make it more for your guests.

Determine Locational Criteria

In the ever more competitive world of food service locational criteria has become more important. Locational criteria are factors of a location that should be present for it to be a successful site. Locational criteria factors are things such as population of the town or city, the traffic counts by the location for the day or during certain parts of the day, proximity to traffic arteries, visibility, accessibility, etc. These factors as well as others can have an important impact on the success of the operation and are best not overlooked.

For example, often times customers are not willing to make a dangerous left hand turn across traffic when a food service operation they perceive as comparable is an easy right turn for them. When evaluating multiple sites it is useful to determine which best serves ones needs by determining how they fit in with the locational criteria developed.

Chains with multiple units have found locational criteria that works best for them. Independent restaurant companies do not have the history that multiple unit chains. They must do their homework and evaluate both the success and failures of comparable operations until they can determine the criteria that works best for their particular operation.

Gather Market Resource Data

Accurate information is crucial to the planning of the business. Such things such as the amount of people in the area as well what they make and what they spend is crucial in the determination of a location. Other market resource data are things such as lifestyle, average eating out expenditures, number of people in the family help the planning process. It is crucial to not solely look at the number of people in an area, but rather to look who the people are and what they spend.

Accessibility / Visibility

The success of the site you chose can dramatically depend on how accessible and visible your the site is to your potential guests. Care must be take to look at the number of lanes, turn signals, turning lanes, speed limits, location in a shopping center, and sources of congestion when choosing a site. It is simple if a guest can not see or get to your operation they will simply go to a competitor. Guests must be able to get to your operation easily. Care must be taken when choosing a site that the speed limit of the street is not to fast for customers to make a safe turn into the parking lot. Imagine a location where the guest can see your business but it on a one-way street going against the way they are driving. It is important to look at the traffic counts by your location by the hour rather than the total traffic count for the day. High traffic counts are good except when they do not allow customers in your operation. The more visible the location the greater the chance it will draw customers simply driving down the street as well as make it easier for customers trying to find your business to locate it.

New Factors Affecting Site Selection

OLD FAVORITES, NEW LOCATIONS
More fast food restaurants are showing up in the strangest locations. Little Caesars is now in K-Mart and McDonald's is now in Wal-Mart. This trend will continue as increased competition and
saturated markets cause fast food companies to become more creative in selecting their locations.

OLD FAVORITES, SAME LOCATIONS
The use of "multiple-branding"; - whereby several restaurant chains operate at the same location - is an attempt to draw more customers by offering a large number of items from which to choose. Chains that engage in multiple-branding can better absorb fixed operating costs, such as rent. Pepsico, owner of Taco Bell, KFC and Pizza Hut, has started co-branding where you'll see a Taco Bell kiosk in a KFC store.

Both of these above examples indicating changes in the industry which will change site selection criteria in the future and chain operations struggle to compete.

Summary

The time and effort spent on analyzing a site prior to its purchase pays off many times in the future operation of the business. A matter of fact it may be one of the best investments an owner makes in the planning and set-up of their business. An examination of the above factors will help increase the chances of success for the food service operation.

To complete this Topic successfully, please complete the following activities in the order shown below:

ASSIGNMENT 1: Evaluate the site of a local restaurant

You should now:

Go on to Design Criteria
or
Go back to Concept Development Site Selection

Send E-mail to Dr. Rande or call (520) 523-1710