Weighing the Advantages and Disadvantages Before Entering a New Market

While some restauranteurs and brands base their new market on traffic, others consider their target markets, developing psychographic and demographic profiles for potential customers that live and work in the various areas under consideration. And some, of course, rely on “gut instincts.”

Being that this decision will determine, to a large extent, your success or failure, we recommend using all the data and inner knowing at your disposal when choosing your site. If you’ve already developed your concept, you’ve narrowed down your markets considerably. If, on the other hand, you’re choosing your location and then developing your brand, the world is your oyster. Let’s take a look at one of the biggest advantages a new market may offer – locally sourced food and beverages.


Specialty Vendors

Recently, the Dining Playbook, a program featured on New England Sports Network (NESN) that focuses on dining and entertainment in the Boston Market, spoke with John Davie, CEO of Buyers Edge Platform, and Tina Davie Donahue, President of Dining Alliance. These experts in the field of restaurant and entertainment industry supply chains, spoke about the advantages and disadvantages found in the Boston market.

“Something we have not been able to duplicate almost anywhere else in the country is the amount of valuable and good quality specialty vendors Boston has.”—Tina Davie Donahue.
Restaurant diners’ demand for locally sourced produce, protein, and even beverages has skyrocketed. According to a 2018 report published by Statista, the share of U.S. single urban households who are willing to pay more for local food was 95 percent. Yes, you read that right, 95 percent! In addition, almost 50 percent of those who fall in the Generation X category are influenced by local food when making their restaurant choices. Traceability has become the hot topic of the day, with more and more people wanting to know where the food they eat comes from and that it is sustainably sourced.
This leads us to one of the biggest advantages markets can provide—high-quality local purveyors of food and drinks.

After you’ve developed business partnerships with your suppliers, it’s time to narrow down the location. According to a survey conducted by the Centers for Disease Control and Prevention (CDC), the average distance that a customer travels from home to a sit-down restaurant is only 1.4 miles. If you’re tailoring your establishment to a specific demographic, it helps to know your neighborhood. Fortunately, technology in this area is developing rapidly, leaving the guess work to the gamblers.


Technology for Site Selection

Acutely is one such technology that uses data science and a restaurant’s POS system and the vast amount of data it contains to project sales and predict the success of a particular location using a methodical, low-risk, high-return approach. According to Matthew Focht, CEO of Emerging Concepts, Acutely is able to project sales within 85 percent accuracy before a company expands.

Now that we know a few of the advantages that can make for a successful expansion, let’s take a look at what disadvantage may be lurking in a particular location.



The cream always rises to the top. I’ve quoted this saying more times than I can count when discussing the restaurant industry with potential investors or business owners. Eventually, those that excel at their business and offer the best product will succeed. Eventually, however, is the key word. The question then becomes, do you have the funds to sustain your business while waiting for the cream to separate and float to the surface…and the surrounding patrons to notice?

Sometimes, it’s easier to enter the game when there’s less competition to face, particularly if this is your first rodeo.

According to a report conducted by Lending Tree, coastal hubs such as New York and San Francisco are filled to the brim, while flyover states such as Milwaukee and Cincinnati are ripe with opportunity including less restaurant density and significantly lower labor costs.
These are just a few of the many factors and decisions that those expanding their brand are facing. As you weigh the pros and cons, be sure to look to the horizon without fear and set your course based on both science and intuition.

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