Question:
I have a question about market research. I am researching opening a pizza restaurant. The restaurant will be located across the street from a new Supercenter Wal-Mart. Do you think a traffic-flow study and market analysis should still be done? Or, could I make some reasonable assumptions based on the fact that Wal-Mart is putting in a Supercenter at the same location? I’m sure they have done a lot of research. What are your thoughts? Thank you for your input.
Answer:
I’m sure you’ve heard it before … Location, location, location …
Location can play a critical role in the success of a business. Typically, when you hear location, location, location, you start thinking about retail businesses and foot traffic. But even manufacturing companies need to worry about their location relative to shipping infrastructure, raw materials, and human resources.
While location plays an obvious role in the success of a retail business, the importance of location to a restaurant is even more apparent. The logic behind your assumption that your pizza restaurant will be successful because it sits next to a Wal-Mart may be flawed. Are there other restaurants in the area? The two Wal-Marts in our area aren’t surrounded by restaurants. I’m not sure that your typical Wal-Mart location has high traffic in the evening.
It’s commonly known that McDonald’s does fantastic location planning for their restaurants, and often times you’ll see a Burger King appear down the road from a new McDonald’s. Burger King saves the research buck by piggybacking McDonald’s franchise locations. I remember one scenario where McDonald’s destroyed a location only to re-build on the other side of the street simply because the other side of the street had more vehicle traffic. I’d feel more comfortable if you were building your pizza restaurant next to a McDonald’s 😉 I haven’t heard anything about the success of small businesses surrounding local Wal-Marts. I have heard that Wal-Mart tends to make it difficult for small businesses to compete. Hopefully, they won’t start selling pizza at their snack bar.
Further, our two local Supercenter Wal-Marts have McDonald’s franchises inside. Will yours? If your pizza target market is the same group of people who eat fast-food burgers, you have to ask if they would go outside to go eat your pizza when they can easily nosh burgers and fries while they shop.
I think you should probably move forward with your traffic-flow study and market analysis. It doesn’t hurt to play it safe in this situation. Location will be critical to the success of your restaurant business and you don’t want to be the only restaurant proprietor adjacent to the local Wal-Mart that becomes a ghost town after 6 p.m.
Thank you,
Cale has developed a strong insight for what works and what doesn't work when it comes to business plans and marketing plans. He has business degrees in marketing and management from the Charles H. Lundquist School of Business at the University of Oregon and a solid background in business management and product marketing.
