In our conversations with restaurant operators, we often hear exasperation when it comes to available restaurant data and harnessing it for actionable insights. They know their restaurants make enormous amounts of data, otherwise known as big data, but how do they optimize it to make critical decisions, like where to open their next unit, reducing risks while maximizing profits?
The answer lies in using advanced analytics to clean, organize, and integrate the massive amounts of data your business creates. From this, patterns, forecasts, and predictions emerge. You understand your customer demographics and can use this to determine the neighborhoods designed for your concept.
While these decisions are often complex and require extensive exploration, one of the essential cornerstones when selecting real estate is neighborhood data. This can provide powerful insights with hyperlocal forecasts that identify target areas. Let’s explore the basics and what to consider when extending your brand.
A Neighborhood Analysis
Location analytics and demographic data are critical components when deciding where to expand. Because most people dine in restaurants close to where they live or work, a trade area analysis can help determine where your customer base lives and how far they would need to travel to reach your new location.
Whether your brand carries weight in a business or residential district or both will define the starting point of a neighborhood analysis. We note residential areas and commercial districts around possible locations, noting major roadways and highways that would affect how your target market will reach you. Additionally, it’s important to consider the other businesses in the area that help bring in traffic, whether entertainment sites or retailers.
Knowing your competition is critical in any business, particularly so in the restaurant industry. Through big data, we gain insight into competitors in the neighborhood, including concepts, sales, and marketing tactics. This information ensures you’re offering a unique product and can differentiate your concept.
Imagine opening a restaurant in an up-and-coming neighborhood before it becomes the next hot spot. Such is the experience for those brands who saw the writing on the wall and came up with a prime location before rents went through the roof and high demand left little choices. Predictive analytics, or using data to predict future events and trends, can help make this experience a reality.
Know Your Neighborhood
While it seems obvious, many restaurateurs get invested in a concept without determining if the type of cuisine and overall ambiance is fit for the neighborhood demographics. If you’re determined to open in a specific area, it may benefit you to be flexible regarding your concept. If you’re steadfast in your concept, it’s recommended you choose the neighborhood accordingly, include weighing the neighborhood’s price point and expectations.
At EMERGING, our team is made of real estate experts and data scientists focused solely on the restaurant and entertainment industries. First, we’ll determine your target market by capturing relevant data and defining your VIP customers in their entirety. Then, we narrow down the options for expansion, analyzing weaknesses and strengths based on data analytics and numerous other considerations. We evaluate real estate opportunities across the country and, once a location is determined, negotiate with developers and landlords, maximizing returns and minimizing risks.
We understand leases and the unexpected fees and stipulations that can find their way into the small print. The time to negotiate is before these legal documents are signed. One consideration for a new brand is a variable lease rate or a percent rent deal that limits excess costs until you get your establishment well-known in the area. Getting tips from those already in the area can also help establish reference points when making financial projections and negotiating the lease.
Looking Beyond Your Physical Location
Today, restauranteurs are thinking beyond their physical locations, adopting other streams of revenue. From catering to delivery, selling branded merchandise online, cookbooks, and selling data to suppliers, the last few years have left an indelible mark that will forever affect our industry. Considering these avenues in relation to your expansion plans can significantly affect your bottom line.
To schedule a demo or learn more about our data-driven process, contact EMERGING today.
What factors go into picking a restaurant location?
Some important considerations include your target customers, demographic trends, competition, visibility, parking, neighborhood crime rates, and accessibility. Today’s predictive data analytics and accessibility to neighborhood data can significantly support a restaurateur in choosing the ideal location.
How can data analytics help restaurants?
Data analytics analyzes each data point, cleaning and organizing data before converting it into meaningful insights. This data can help in nearly every aspect of the industry, from marketing to menu optimization, staff training, inventory management, and expansion plans.