Restaurant Site Selection - Where Good Food Matters Most

A number of successful chain restaurants choose their sites based on lifestyle in order to target consumers who are more likely to eat healthy. Read the interesting article below recently found in Chain Leader magazine.

Restaurant-chain operators have discovered that highly educated, affluent diners are eating healthfully, so they're trying to locate where these diners live.
By David Farkas, Senior Editor -- Chain Leader, 9/1/2009

The more customers are aware of the nutritional value of food they eat, the more likely they are going to be customers of Fresh City, says CEO Larry Reinstein.
In 1986, Fresh Choice founders Martin Culver and Brad Wells tapped a culinary well that has yet to run dry by betting that well-educated consumers would become loyal guests if they perceived the offerings as healthful. If these people had an above average income and lived in close proximity to each other, all the better.

“Fresh Choice was one of the early ones to identify that market,” recalls former Montgomery Securities investment banker Al Baldocchi, who remembers affluent-looking females piling into the salad buffet restaurants in Sunnyvale and Palo Alto, two of the brainiest and wealthiest cities in northern California.

By the time Baldocchi took the then-22-unit company public in 1992, raising $13 million in the process, annual revenues had jumped 57 percent and net income had climbed $1.3 million.

But that was then, Baldocchi declares. Today, he insists, you can find chains with healthful menus just about anywhere in the country. “It may have started in sophisticated urban centers, but the market has broadened from there,” he says.

Yet chain leaders interviewed about growth strategy say education, income and population density remain important site-selection factors. Their concepts, all of which boast good-for-you menu items, do well when in markets filled with consumers who care about their health.

McAlister’s site-selection criteria includes a screen for “health seekers,” a category that includes consumers looking for healthful ingredients and menu items.
The Educated Consumer
“We find that the better-educated the consumer is, the more apt they are to be our kind of guest because we are asking them to pay a little more than in a QSR,” declares Larry Reinstein, CEO of Fresh City, a Needham, Mass.-based restaurant chain that operates and franchises 16 fast-casual eateries that emphasize fresh, nutritious foods.

Reinstein has found such customers in Herndon, Va., outside Washington, D.C., and plans to open more Fresh City units there. “Washington, D.C., will be strong for us,” he says.

As a similar chain has already discovered. “Our best customer is a younger person who is eco-conscious and likes healthy food,” offers Nathaniel Ru, a partner in a salad and yogurt venture called Sweetgreen. The partners, recent Georgetown University graduates, have so far opened two fast-casual restaurants in Washington, D.C., and one in Bethesda, Md., since 2007. They plan to open at least one next year, possibly in nearby northern Virginia.

The menu at the eco-friendly concept, based in the District, typically features locally grown, organic vegetables, and the restaurants themselves incorporate repurposed building materials.

“Our loyal customers understand the concept and why they are there,” Ru adds, referring to its low-calorie menu that emphasizes quality, freshness and nutrition.

The District of Columbia ranks in the top 10 of the “Healthiest Cities in America” and “Most Energetic Cities” surveys. According to Bestplaces.net, which published the lists in 2005 and 2007, respectively, Washington, D.C., scored high in general good health and boasts many fitness facilities and outdoor shops. The Web site also shows that as of 2006, 49 percent of Bethesda, Md.'s 1.1 million residents have at least a bachelor's degree; of Washington, D.C.'s 4 million people, it's 39 percent.

Scottsdale, Ariz.-based Kona Grill does well when highly educated people live or work nearby. CEO Mark Bartholomey lists Troy, Mich.; Tulsa, Okla.; and Kansas City, Kan., as good markets for the upscale-casual concept, which offers vegan, wheat-free and healthful-dining menus.

Good markets, that is, as long as the chain identifies a site among educated customers. “There seems to be a food quality-slash-education crossover, though we have no data to prove that,” Bartholomey adds.

Targeting Lifestyles
He hopes to have a better picture soon. Bartholomey recently retained a site-selection firm to help refine Kona Grill's site-picking process, which has relied on “raw” demographic data like income and education levels. That led to mistakes in a couple of cases.

“We could find incredibly intelligent people who want to eat healthy, but they could have too high of an income and are looking for a different caliber of food than ours,” he says. The chain has opened “one or two” restaurants in such areas.

“When you look at demographic reports from a real estate perspective, they're not typically going to list 'health-minded consumer,'” acknowledges CEO Jeff Levine of Miami-based Salad Creations, a 53-unit fast-casual chain. Ideally, he says, he'd like to know that “28 percent of the population in this area is healthy-minded and makes better eating choices and shops at Whole Foods.”

Salad Creations CEO Jeff Levine, who believes people in the West are more interested in personal health than elsewhere, says outposts in Wyoming and South Dakota are doing well as a result.
Drilling down that far into personal habits isn't possible without commissioning an expensive custom survey. Yet Former Applebee's marketing executive Bill McClave, a principal at Birchwood Resultants, claims “lifestyle segmentation” data, which includes information from U.S. Census Bureau block groups, does come close. A block group is roughly 1,500 households that shared information about education, employment, housing and transportation in the last census.

“More than half of the fast-casual and upscale-casual-dining chains are chasing educated, middle-class and up, white-collar-employed consumers,” McClave estimates. Using modeling techniques, he adds, chains can find “disproportionate concentrations” of people that like quality food and like their concept.

Health Seekers
McAlister's Deli CEO Phil Friedman notes he has discovered one such concentration through the segmentation process. “One big segment for us is 'health seekers,'” he says. “They are looking for taste and variety, but they are also looking at specific ingredients.”

The Ridgeland, Miss.-based salad and sandwich chain of 292 units in the Southeast includes health-seeker preferences in its site-modeling criteria, which is updated annually. “The trend toward looking for healthier options is incorporated in our site screens because we are always looking for sites where we can be more successful,” Friedman says.

Friedman hesitates to describe an ideal McAlister's Deli location, though he will say restaurants that open in affluent suburbs with “good residential and business” do well. Throw in a hospital or a university, and it's icing on the cake. “The infrastructures of both historically have worked well for us, and that relates a bit to education and income,” he says.

Levine, on the other hand, isn't shy at all about where he'd like to see a Salad Creations go. “On Lincoln Rd. [in South Beach]. Oh my, it has our name written all over it,” he exclaims. “Everybody there looks like they just walked out of a magazine cover.”

Trouble is, rents on the popular pedestrian mall run $300 per square foot, he adds, making it tough to convince a franchisee to sign a lease.

So far, the Levine has had to settle for more prosaic outposts like Greenville, S.C., which proved to be a bust. “It was a smaller town without the population density of white-collar, educated consumers that we need,” he explains.

Go West
The recently opened Salad Creations in Billings, Mont., and Great Falls, S.D., however, are doing fine. “I attribute that to an outdoorsy population that likes to eat better,” Levine says.

Levine, who also wants to open units in Denver, is on to something. Eight of the top 10 most energetic cities are in Western states. Three of those states—Colorado, Hawaii and California—have the fewest obese residents, according to the Centers for Disease Control.

None of this has seemed to help Fresh Choice, which had fallen on hard times by the end of the '90s, largely the result of overexpansion. Today, the Newark, Calif.-based chain operates 34 restaurants (down from 53 in 1995).

Still, says CEO Sandy Boyd, who bought the chain 18 months ago: “The irony is, you drive down the Peninsula [from San Francisco] and see four or five of our stores and Whole Foods across the street. We were there first.”

Boyd is adding locally grown, organic vegetables to Fresh Choice to attract the Whole Foods customer. “I am trying to get them back,” he says. “That is the one customer we really need.”

More on this interesting article can be found here:

Views: 235

Tags: diners, healthy, lifestyle, market, organic

Comment

You need to be a member of FohBoh to add comments!

Join FohBoh

Advertisments

 

DEPARTMENTS

Social Wine Club for Craft Wineries

Smartbrief

Fast-casual growth comes from new openings as market matures

Sales at fast-casual eateries are growing at a pace similar to that of quickservice and sit-down restaurants as young, high-i -More

Taylor® Grills. Cooking made Easier, Faster, and Smarter.
With efficiency and food safety top of mind, the Taylor® L810 two-sided grill is a foodservice industry favorite. Optimize profits and cooking efficiency with three separately controlled cooking zones, programmable cook times, pre-set temperature and automatic gap settings. To learn more click here.

In the swim: Gulf state seafood catch safe for now

Businesses fighting to preserve commercial access to seafood fished in the Gulf states scored a big win this month when the G -More

Ruby Tuesday revitalization prompts sales growth

Maryville, Tenn.-based Ruby Tuesday posted gains in same-store sales in the fourth quarter, with a 5% rise at franchised rest -More

JOBS & CAREERS

Posting a job or finding a job starts here at FohBoh. Call us about special $50 posting packages to syndicate across all major jobs boards.

National News

Main Event Entertainment to Open First Center in the Rio Grande Valley

Main Event Entertainment, the fastest-growing family entertainment center in America, is celebrating its new center opening in Pharr, Texas, a suburb near McAllen in the Rio Grande Valley. Doors will open to the public at 9 a.m. on August 6.

Darden Announces Leadership Succession Plan

Darden Restaurants, Inc. (NYSE: DRI) announced that Clarence Otis is stepping down as Chairman and Chief Executive Officer of the Company. Darden's Board of Directors has appointed the Company's current Independent Lead Director, Charles A. Ledsinger, Jr., as Independent Non-Executive Chairman of the Board, effective immediately. The Company also announced that it has amended its corporate governance policies to provide for the separation of the Chairman and Chief Executive Officer roles.

National Restaurant Association Statement on NLRB Joint Employer Decision

Today the National Restaurant Association issued the following statement regarding the National Labor Relations Board’s (NLRB) decision asserting McDonald’s Corporation is a joint employer of its franchisees:

National Restaurant Association Issues Support for Clearer ACA Definition of Seasonal Employment

The bipartisan legislation will align the definitions of seasonal employment in the Affordable Care Act and streamline the applicable large employer determination process.

Rising India, Inc. Announces Acquisition Strategy Toward a Sizable Slice of the QSR Pizza Pie

Rising India, Inc. (OTC: RSII), announces today it will immediately begin work toward the acquisition of up to 5 profitable stores in the popular Quick Serve Pizza Restaurant segment. Current targets are currently earning about $450,000 in revenues per year, per store. Acquisition of targets would provide immediate cash flow identified from profitable longstanding, absentee owner operations with proven model success.

CROWD FUNDING

If you are looking for capital to start or grow your restaurant, create the next 501c3, develop and launch the next app for the restaurant industry,or want to help your peers in some meaningful way, we want to know about it.

TED TALKS VIDEO

TED: Ze Frank: Are you human? - Ze Frank (2014)

Have you ever wondered: Am I a human being? Ze Frank suggests a series of simple questions that will determine this. Please relax and follow the prompts. Let's begin …

TED: Heather Barnett: What humans can learn from semi-intelligent slime - Heather Barnett (2014)

Inspired by biological design and self-organizing systems, artist Heather Barnett co-creates with physarum polycephalum, a eukaryotic microorganism that lives in cool, moist areas. What can people learn from the semi-intelligent slime mold? Watch this talk to find out.

TED: Shih Chieh Huang: Sculptures that’d be at home in the deep sea - Shih Chieh Huang (2014)

When he was young, artist Shih Chieh Huang loved taking toys apart and perusing the aisles of night markets in Taiwan for unexpected objects. Today, this TED Fellow creates madcap sculptures that seem to have a life of their own—with eyes that blink, tentacles that unfurl and parts that light up like bioluminescent sea creatures.

TED: Nikolai Begg: A tool to fix one of the most dangerous moments in surgery - Nikolai Begg (2013)

Surgeons are required every day to puncture human skin before procedures — with the risk of damaging what's on the other side. In a fascinating talk, find out how mechanical engineer Nikolai Begg is using physics to update an important medical device, called the trocar, and improve one of the most dangerous moments in many common surgeries.

© 2014   Created by FohBoh.

Badges  |  Report an Issue  |  Terms of Service