Your restaurant brand is booming – you have a steady stream of loyal and new customers, you’re profitable, and have developed strong brand awareness. And now it’s time to expand your foodservice operation.
Expansion is exciting – you get to serve new customer segments, try out new markets, and get your restaurant brand out in new unexplored regions! Expanding your restaurant business involves considering multiple factors, especially in this current economy. A franchise or new location means increased brand awareness and revenue, but it can also jeopardize your business and restaurant brand reputation.
Just like opening your first restaurant location or foodservice operation, opening an additional location is a lot of work; it requires analyzing the risk, defining objectives, crafting a budget, and a whole lot of research.
Market, target market, available real estate, and existing competition are just a few of the things that must be researched prior to expansion. This level of research is time-consuming, energy-intensive, and often costly, but using foodservice market data can streamline the entire process.
When it’s time to expand, location is definitely the most prominent factor in this decision. Let’s keep it real here – going off a gut instinct is not going to be enough to validate a decision. If you “feel” like a certain area is a right fit, explore that. What makes it feel right – the population? your competitive edge? The energy of the city?
First, start narrowing down the geographical location. If your restaurant has a high level of brand awareness in your current area, then the next town over might be the perfect fit. Maybe you are looking to expand in strategic areas where your competition is receiving poor reviews and ratings or perhaps open in areas where your menu item is not available.
Next to consider is neighborhoods, and what type of area makes the most sense such as downtown, the suburbs, or a more rural area. What other businesses or attractions are in the area? Your fast-casual sandwich shop is probably a great fit near offices and a coworking space. A winery with a large outdoor seating area would work well in an industrial area in a city or on the outskirts of town.
Look into the operating hours of nearby businesses as well. If all offices in the vicinity close at 5 pm, opening a dinner spot in the area that operates from 4 pm-10 pm is likely not the best fit. If a downtown area has many bars that stay open until 2 am, a late-night joint will be wildly popular.
Pro tip: On Brizo’s platform, you can use an operating hours filter to see how many foodservice operations are open during selected hours.
Your target market is directly tied to choosing a geographical location. In fact, you might start your search by first figuring out your ideal target market and where they are located. If you have a restaurant or foodservice operation, you likely already know your target market. These are the customers that already dine at your restaurant and keep coming back. Your target market consists of psychographics (the “why” they buy), behavior (“what” they do and buy), and demographics (the “who”). When defining your target demographic, here are factors to consider:
A fine dining restaurant would be silly in a young neighborhood in a college town, while a lively bar with late-night music would be a poor choice in a family-filled suburban neighborhood. You may find that when you expand into a new market, your target market also expands.
Are you looking to open up in a suburb or a more rural area? Or, is a new location in a high-traffic downtown space the right move for your brand? Wherever you envision your newest location, you’ll need to make sure that there is real estate available here. Even if you feel like a certain street or neighborhood is the perfect fit, it becomes irrelevant if there is no space to rent or buy. If you have a few areas picked out but cannot decide which is best, looking at available real estate can be a deciding factor.
Pro tip: Try out new markets with your own virtual brands available for delivery only.
If there are 100 chicken wing restaurants in the area you are looking to open in, then it’s going to be quite difficult to compete for customers and differentiate your offerings. If there are a fewer wings shops on the other side of town, your chances of succeeding there are much higher.
For example, using Brizo FoodMetrics, we found that there are 247 establishments in Denver, Colorado that serve chicken wings. In Boulder, Colorado, a smaller college town 30 minutes away, there are only 29. With less competition and a target market perfect for a fast-casual chicken wing concept, Boulder might be perfect for your next chicken wing spot.
If you are set on a location but realize there are many other establishments serving similar menu items, how can you differentiate from them? Explore differentiating through experiences such as offering online ordering or building a drive-thru option.
Expanding is risky, but if your foodservice operation is doing well, there will inevitably be a point where opening up in a new market makes sense. Like opening up, your first new delivery-only concept, opening an additional franchise or a location in a new market requires a high level of research and coordination. Luckily, precise and up-to-date foodservice market analytics can do a lot of the research and competitive intelligence for you.
Also lucky for you – you can gain access to this high level of data and analytics on a single online platform. Brizo offers intelligence on over 1.2 million establishments in the U.S. and Canada, and it’s more than just generic data. It’s big data analytics for hungry foodservice suppliers that will satisfy your cravings for growth and expansion.