Data Intelligence

Using Customer Demographics to Select Your Next Location

As the COVID-19 vaccine rollout continues, restauranteurs and their customers are looking ahead to a time when indoor dining returns and guests commiserate about the once seemingly never-ending pandemic while reveling in the taste, smells, and ambiance of their favorite eateries.

Some operators are gearing up for these times by continuing their expansion plans, despite the current lockdowns. Let’s look at what these fearless entrepreneurs consider when choosing their next site and the many more to come.

As the British real estate tycoon, Lord Harold Samuel, immortalized in 1926, success is all about “location, location, location.”

Data Analytics in Market Selection

David Knighton, VP of operations for the Brazilian 23-unit steakhouse, Rodizio Grill, shared this important recommendation with Upserve: Don’t get emotionally attached to a new location. Ask the right questions and use analytical research to answer them.

This analytical data, used by many expanding operators, include the following:

  • Demographics—A concept’s target market including age, gender, household size, marriage status, income, and education level.
  • Traffic—Amount of foot and vehicle traffic.
  • Income—Disposable income of community members.
  • Density—Total population and competing restaurants.
  • Visibility—Visibility as well as accessibility.

Current Customer Base

While traffic, income, and density all play important factors when evaluating potential sites, one of the top considerations is how the new potential customer base looks like your present one. Defining your target market using a restaurant concept formula may appeal to entrepreneurs looking for a blueprint, but the best approach for minimizing risk is actually “in your own backyard.” Your current customer base holds valuable insights into the type of customers that appreciate your concept.

Before you use this model for expansion, you need to define your VIP, core, and infrequent guests. Infrequent guests are those that stop in now and then. Core customers are semi-regular, while VIPs represent your regular repeat guests.

In many ways, VIPs and core customers define a restaurant’s success. Did you know that VIPs spend, on average, 5 to 10 times more than your occasional customer? How can you use this information to reduce the risk when choosing real estate for expansion plans?

Restaurants that have embraced data analytics use the massive information created by point-of-sale (POS) systems and other software solutions to create precise customer profiles. These customer profiles represent your VIP, core, and infrequent guests. Perhaps a significant segment of your VIPs are both male and female, in their twenties, attend the local college or are recent college graduates, live within 5 miles of the restaurant, and frequently order your craft beer and small plates when visiting with a group of friends. Their social media of choice is Facebook, followed by Instagram, with TikTok gaining steady use.

Psychographics also play a part in a customer’s profile. In the above example, it’s determined that ethically, sustainably, locally sourced products play a role in your VIPs selection of eateries.

Not only have you defined your potential market, but your social media marketing plans, as well. You can see why this consideration is as important, if not more so than the other metrics. Identifying your expansion site via targeted VIP and core guest’s demographics includes analysis of the following:

  • Where do they live and how far are they from your site selection?
  • What is the population density of your target market?
  • Do they travel on foot or by vehicle or bike?

In this model, both demographics and psychographics of your VIP and core guests are used to create an extensive profile of potential guests.

Data Analytics—Best in Class

Acutely’s restaurant data intelligence combined with EMERGING’s Intelligence Tool gives operators the information they need to expand with confidence.

EMERGING’s Intelligence Tool uses POS data to define your VIP, core, and infrequent customer profiles. Customer spend, frequency, and trends depict if you’re losing or gaining VIP and core customers on a weekly basis.

When you’re ready to expand, use this information to evaluate viable locations and determine which ones provide a new potential customer base similar to these all-important guests.

Acutely’s deep learning model helps restaurant owners and chefs identify the best markets and sites based on data analytics. Hudson Piehl, COO of Acutely, defines the company’s core intent, “Acutely brings data-driven site selection to growing restaurant chains. We use smart data science along with fundamental industry knowledge to help our clients discover the best new locations with confidence.”

Selecting the wrong site can have catastrophic consequences, including creating a financial strain on your current successful locations. It is imperative that you use all of the available data and insights to reduce expansion risks.

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Data Intelligence
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