How Spatial Analysis Enabled QSR Client to Choose Location for Their Upcoming Franchises?

May 25, 2022

Highlights of the Case Study: 

Particulars Description 
Client A major Quick Service Restaurant brand 
Business Challenge To devise a data-driven approach for identifying new site locations to augment their current selection process 
Impact Our client increased its acquisition/evaluation rate from 5% to 20% through our site selection system.  

Game-Changing Solutions for Quick Service Restaurants

Spatial analysis plays an important role when it comes to the food and beverage industry. Site selection is one of the most complex and long-term strategic decisions a fast food restaurant has to make. It is a multi-criteria process that involves identification, analysis, and evaluation, for the selection of the most suitable site among all choices available. QSR owners need to consider both qualitative and quantitative site selection factors during the decision-making process. These include multiple factors such as cost, utilities, location, visibility, access, competition, and the availability of support services. These factors can positively or negatively impact the first-year sales of the QSR. Thus, companies must ensure that the choice of location is scientific and backed by data.  

Franchisors and franchisees in the fast-food service industry have become more focused on making informed decisions regarding the expansion plans of their fast-food restaurants to avoid potential risks and minimize losses. They devote significant time and resources to analyzing prospective sites as the success or failure of a QSR is determined by its location. 

The Challenges of the F&B Industry Client: 

A major QSR brand approached Quantzig to re-evaluate its ideas regarding new site locations and complement its current selection process through spatial analysis. Our client wanted to unveil three new QSRs in different formats and at different locations within the span of a year. It sought to evaluate the benefits offered by a standalone QSR, an urban in-line QSR placed in an existing shopping corridor, and an end-cap QSR.  

Moreover, our client wanted us to investigate consumers’ behaviors after the emergence of foreign QSRs into the US market and changes in fast-food consumption patterns through demographic and psychographic research. 

This is where spatial analysis comes in.

Food & Beverage Spatial Analysis and Site Selection Analysis: 

Quantzig uses a checklist, analog, regression methods, and location-allocation models to create its site selection models. The first three evaluate site-specific factors and in-store location problems, while the location-allocation model considers locations in the market area. Our models focus on objective factors such as cost, traffic counts, and subjective factors such as visibility and competition. 

In this case, our analysts used a series of target market index maps to determine site requirements and their relative importance in the first stage of the site selection process. We applied site requirements criteria in the second stage and eliminated unqualified locations. Lastly, in the evaluation stage, we examined sites based on the importance of the site criteria. Our client had enough QSRs in the network, which enabled our team to develop a sales forecast model and predict the sales level of the proposed QSRs at specific sites. 

Our QSR site selection model considered the following factors and criteria: 

spatial analysis
  • General location: We considered the proximity of the proposed site location to specific areas such as residential, shopping centers, business areas, central trade areas, educational facilities, cultural, sports, and recreational areas. 
  • Area’s future: We considered the current and future area development plans and development plans of nearby areas under the area’s future. 
  • Physical characteristics: The site’s physical features were evaluated, including the site’s condition, parking facilities, and ease of entrance. 
  • Visibility of the QSR: Criteria included an unobstructed view of the QSR and visibility of signs. 
  • Accessibility: We considered the distance to the nearest highway, public transportation, and the closeness of the QSR to stations and stops. 
  • Competition: We evaluated the location of competitors in the area, proximity to the competitors, and sales volumes of competitors. 
  • Cost consideration: We considered factors such as cost of construction, cost of development (purchasing vs. leasing), contract period and conditions, labor costs, utility costs, and ROI.

Impact Analysis of Quantzig Site Selection 

Our analysts interpreted the location, demographic, and psychographic data and selected an appropriate site for our client’s QSRs through our site selection models and spatial analytics. Our approach helped the client make the most of the real estate opportunities and debut its first freestanding QSR in a metropolitan market. In addition, our client launched an urban in-line QSR and an end-cap QSR located at the corner of a business area. Our client increased its acquisition/evaluation rate from 5% to 20% through our site selection system.  

Key Outcomes of Spatial Analysis: 

The deployment of the site selection models by Quantzig’s site selection team provided a data-driven approach to our client’s long-term business goals. This systematic process enabled the client to achieve its objectives. The client arrived at decisions resulting from a detailed and thorough analysis. The impact of this intervention by Quantzig resulted in an increase in the client’s acquisition/evaluation rate from 5% to 20%.

Broad Perspective on the F&B Industry: 

Choosing the ideal location for a restaurant needs systematic consideration, keeping in mind numerous factors such as the neighborhood, competition, clientele, visibility, space, and accessibility, to name a few. Market research has a significant role in identifying a location that is likely to yield revenue and ROI quickly. In the wake of the pandemic, there is a growing trend toward using virtual technology to advance location decisions. Players in the F&B industry have reported a transition to a hybrid or all virtual process for site selection. Virtual site tours and meetings have saved QSR brands the time and money to conduct the site selection process.  

Key Takeaways: 

  • Evaluation of site-specific factors  
  • Adoption of a location-allocation model  
  • Competitor analysis 
  • Development of a sales forecast model  
  • Increase in acquisition/evaluation rate from 5% to 20%  

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