Time-saving site selection: case study

By Sarah Stowe | 10 May 2019 View comments

Why do some restaurants in a chain perform better than others?

One hospitality firm needed to find time-saving site selection processes to avoid sifting through potential locations that didn’t fit the target market.

The Ribs & Burgers chain is part of the Seagrass Boutique Hospitality Group which includes The Meat & Wine Co, Butcher & Farmer, Hunter & Barrel, and Italian Street Kitchen.

Seagrass head of marketing David Ovens engaged Geotech to provide an in depth analysis of the Ribs & Burgers, and to a lesser extent the The Meat & Wine Co brand. The goal was to better understand the key sales drivers for the brands and pinpoint the reason for successful restaurant performance.

As a multi-brand business, Seagrass is able to extend the findings to other brands.

Ovens says “In the case of Ribs & Burgers we have sufficient number of stores in the network to enable Geotech to build a sales forecast model. More importantly we now have a framework to enable us to assess sites using a defined set of criteria specific to this brand.

“So we remove the subjective approach and/ or rental deal driven approach, with a more objective and consistent method for evaluating sites. Given that we have operators in each state doing the physical evaluation of sites, it’s a huge improvement to have them all using the Geotech site evaluation tool, versus having to rely almost solely on personal opinion.”

Ovens says the firm has developed a new site selection and store development process.

“Stage 1 is site selection including Geotech, physical assessment and all base financials. There is then a Go/No Go decision and we make a group decision (finance/marketing/operations) as to whether or not a site is to move forward.

“The goal is to kill all poor sites.

“We can now identify many, many more potential locations using Geotech info and then have agents look for sites in these locations.”

Measures to improve site selection

Geotech’s Jeff Vassel explains what measures were used to improve the site selection process.

Demographics vs position

“The first step in a project like this is for Geotech staff to physically visit, capture and document the characteristics of each of the restaurants in the network,” Vassel says.

Geotech then analyses this and other data sets available (including Mastercard merchant data) to find which factors correlate to sales performance.

“In other words, was the demographic characteristic of the catchment area more important that the precinct itself?

“If the answer was yes, then how much of an impact did this and other factors such as business demographics, signage and visibility, positioning in the precincts,  have on the sales performance of the restaurant?”

Impact of new stores

The business needs to ensure any new restaurant opened does not cannibalise sales from another.

“Destination driven brands can be quite heavily impacted by cannibalisation if positioned too close to each other. The surrounding residential catchment must be able to support the business, and not just cannibalize sales from the existing store,” says Vassel.

At this point the business was then able to determine and quantify how much of an impact (if any) cannibalisation was having on sales performance when the new restaurant was introduced into the network.

“Geotech was able to map the catchment area for each of the restaurants by mapping customer data supplied by them. We were then able to determine where customers were coming from to visit each of the restaurants.

“We could then determine and quantify how much of an impact cannibalisation was having on sales performance when the new restaurant was introduced into the network.”

Market position

The research showed that regulars of The Meat & Wine Co, for instance, seek out the brand not just locally but while they are on business interstate.

“The subsequent report provided to The Meat & Wine Co, found the brand to have a distinctly unique position in the market and a clear target market of consumers who valued food quality, the intimate surroundings of the restaurant and personalised service very highly.”

Benchmarking tools

Now the business uses a sales benchmarking model to forecast sales potential for any new site of interest.

The property team can now use the tools provided to score a potential site before requesting a sales forecast or a more detailed site potential report. The prioritised site selection list can also be shared with leasing agents to ensure all key stakeholders are looking at and assessing the right tenancies in the right precincts, says Vassel.

The benchmarking model is also useful for assessing current restaurants to continually improve performance.