Restaurant Development & Design

JAN-FEB 2018

restaurant development + design is a user-driven resource for restaurant professionals charged with building new locations and remodeling existing units.

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4 4 • r e s t a u r a n t d e v e l o p m e n t + d e s i g n • J A N U A R Y / F E B R U A R Y 2 0 1 8 is critical, Polanski adds, drawing on the retail concept of omni-channel marketing. "Restaurants need to start thinking in the same way," he says. "You have dine- in, catering, takeout, delivery — many different ways that customers can interact with a restaurant. One size doesn't fit all; you need an overarching strategy with multiple prongs beneath it. Recognizing those various opportunities and analyzing trade areas accordingly has to drive site selection. It's about dissecting and under- standing customer demand by channel within specific trade areas. If you just look at total sales — or even sales by daypart, which has always been a piece of site- selection analytics — you're not going far enough. You have to slice the pie a few more times to understand true opportuni- ties for a new site and the type of physical asset that would best enable you to tap those opportunities." Mark Chase, principal at Restaurant Real Estate Advisors, a Los Angeles-based brokerage, agrees that off-premise sales via takeout and delivery will increasingly impact site-selection strategies for many brands. As that end of the business grows, he says, it provides important new metrics for operators to add to their search criteria. "In general, I'm not completely sold that some of the big-data analytics are as helpful as some of the companies assert. Site selection still has to be a blend of art and science," Chase says. "But it could be very helpful if we could mine data from companies like third-party delivery services, for instance. If we had access to data from, say, GrubHub, that would clearly show where a brand's customers are ordering from and how far the driver has to go to reach them; it would help to identify trade areas and where there may be gaps for brands that are targeting delivery." Go Small, Trade Down If moving closer to customers is one ramification of takeout and delivery trends, so is a developing taste for smaller sites, often in slightly less traditionally desirable locations. At a minimum, restaurant companies winning the real estate game are getting smarter about developing mul- tiple, flexible prototypes that enable them to tap new opportunities and right-size locations for specific channels. Judy Messenger joined Rave Restaurant Group as its vice president of real estate in February 2017. A veteran of corporate chains including Noodles & Company and Chipotle Mexican Grill, she's part of a new leadership team working to transition Rave, parent of Pie Five and Pizza Inn, to a franchise business model. "I think that the inevitable reset is happening right now," Messenger says of the restaurant real estate market. "At cor- porate-driven chains such as Noodles and Chipotle, we were always looking for the A+ endcap spaces, and there was so much competition for them. In key markets, rents and the cost of real estate and construction have gotten so high that it's just not sustain- able for the franchise business model." As a result, many companies see their franchisees settle for what Messenger calls "tweeners" — locations that fall somewhere between two trade areas. She counsels Pie Five franchisees to avoid making such a mistake, advocating instead to locate within a desirable trade area but not neces- sarily to go after the A+ sites. "When I work with franchisees to develop market plans, we pick the trade area where we want to be — one that has the most generators that fit who our custom- ers are. We start at the main intersections and go from there," Messenger says. "I don't think you have to be in an A+ site or that you even necessarily need to have an endcap as long as you're in the right trade area and the fundamentals of access, visibility and parking are reasonably good. I'm not sure that from a profit standpoint it was ever worth going after the very best locations because the rents are so much higher. If you have a strong brand, you probably would make as much if not more money by taking a slightly lesser site with decent fundamentals." Fazoli's is sharply focused on getting the brand in front of developers to remain competitive for prime drive-thru-friendly sites and utilizing analytic tools to improve the accuracy of its sales modeling. Image courtesy of Fazoli's Franchise System, Inc. SITE SELECTION

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