Sam’s business was on a roll. He saw the trajectory of his growth and it charted solidly up and to the right. As a co-owner of an upscale fast-casual small chain restaurant, imagine an Asian inspired Shake Shack, he had big plans for the future. He went ahead and signed up with a market-leading service that has been helping companies pick locations for years. Sam’s SCORE mentor told him to keep his focus on what he did well, which was all aspects of the restaurant business, but never hesitate to bring in expertise in areas that are not your strength. Great advice! And choosing the best real estate, and knowing if and why it would be successful was not his strength.
Of course Sam knew the importance of easy ingress and egress out of a large enough parking lot (that offered at least 5 spots per 1000 square feet of store) with a right hand turn access. It was super important that the signage was clearly visible during the drive by and a corner location is almost always preferred. He had heard advertising guru, Roy H Williams tell people “expensive rent is often the cheapest advertising your money can buy” at a marketing class at the Wizard Academy in Austin. These were the things that everyone could see with their own eyes, but he also intuited that there were factors to a location that one could not grasp simply by looking at it.
Have you ever seen a retail location that looks “great” but where several businesses failed painfully one after another? The location had great access and visibility, the demographics couldn’t be beat, the foot and drive by traffic were impressive, the neighboring stores were flourishing, and the broker assured you it was a “great” location. Maybe you could be the lucky one to break the “curse.” Sam isn’t the gambling type.
Sam needed a site selection expert. Going with the best known brand in the industry, even though they were really well past the price point he was comfortable with, seemed a no-brainer. Like IBM in the day, he knew his partners couldn’t argue with him for selecting the best-known incumbent. The consulting team performed their analysis and their mapping software found Sam a location in a very popular shopping center. The rent was reasonable and the consulting team said he should jump on it.
A little over a year passed and Sam’s partners are fuming. This can’t-miss location missed big and after signing a 5 year lease plus build-out costs, this investment hurt. This location is only producing around 22% of the expected revenue for a location of this size. Don’t worry the story doesn’t end here.