Though the COVID-19 pandemic brought many unforeseen changes to the restaurant industry—and the nation—one of the most significant was the movement of many Americans away from urban centers toward suburban and rural settings. As national news outlets pointed to the growth of remote work and rising home prices in rural areas as an indication that former citydwellers showed no inclination of returning to their urban lives, restaurant leaders were left wondering how their brands’ growth plans might be impacted.
Yet while the nation has seen an urban exodus, the movement patterns of actual customers are not as clear cut as they may seem, says Mike Kruk director of product for Locate, the first tech-enabled brokerage in the retail industry that uses mobile data to provide real-time insights into how a brand’s customers behave so they can make informed decisions about growth opportunities. Kruk says Locate has been tracking how consumer behaviors have changed as a result of the pandemic, and the firm has seen several major shifts.
First, he says, while consumers are moving away from urban centers, they may not be moving as far as one might think.
“At first we thought they were making longer-distance moves, such as from New York to Miami or San Francisco to Austin,” Kruk says. “In reality, customer migration patterns vary from restaurant to restaurant—the longer-distance moves are affecting certain franchisors more than others, but, generally speaking, most consumers moved to suburbs of the same cities they lived in prior to the pandemic.”
For example, Locate used its real-time mobile data to track the movements of Starbucks customers during the pandemic. The data showed a 7 percent drop in population among Manhattan’s Starbucks customers. Meanwhile, nearby Starbucks in nearby suburbs were on the receiving end, such as Hicksville, New York where Manhattan Starbucks customer homes grew by 25.5 percent compared to January 2020. Nanuet’s grew by 44.8 percent, Jersey City’s grew by 4.7 percent, and Yonkers’s Starbucks customer base grew by 2 percent.
Next, Kruk explains, while foot traffic inside stores and restaurants in urban areas did dip during the pandemic, most of those changes were due to shelter-in-place orders and the move toward remote work.
“If you didn’t move, you might still live in Manhattan, but you’re probably not leaving your house due to restrictions or because you’re working from home,” Kruk says. “This is a temporary behavior, and we expect brick-and-mortar activity to resume for this consumer group as soon as people feel comfortable leaving the safety of their homes. On the other hand, for many consumers working from home and ordering groceries online is the new normal, and we expect some decrease in brick-and-mortar shopping from these consumer groups in a post-pandemic world. For these reasons, it’s going to be crucial for restaurants to understand their consumers and focus their expansion on where their customers will be in the future instead of where their customers were in the past. Locate is helping restaurants do exactly that.”
With so many rapid changes, it’s no wonder Kruk says many of the brands Locate works with are asking the same questions: Where did my customers go, are they coming back, and where should my next location be? While these macro-level trends shed some light on the situation facing restaurants, these results can’t necessarily be applied to every brand.
As Joe Lee, founder and CEO of Locate explains, while one might think data about one coffee chain might apply to another, the movement patterns of customers from a ubiquitous lower-cost brand like Starbucks won’t necessarily apply to a higher-end brand with fewer locations, like Blue Bottle Coffee.
“Not all data is useful data,” Lee says. “Many companies like to look at macro-level data about where people are moving and from where, but that doesn’t make it applicable to an individual brand. Customer behaviors are also very different based on geography, so what is true for customers in Arkansas will be very different for customers in California. This makes it crucial for restaurants to isolate customer data based on who they are targeting and where.”
Similarly, the data brands used in the past to make decisions about where they might open a new store—which usually took the form of annual or semi-annual reports—probably isn’t indicative of how a brand or location might perform amid rapidly changing travel and dining restrictions. This makes analyzing mobile data for brand-specific patterns more crucial than ever.
“We can pull similar data as we did for Starbucks for nearly any quick-service brand and for nearly any location in the U.S.,” Lee says. “We help restaurants look not only at their audience, but also at their closest competitors and create a customized analysis on a per-brand or per-site basis to not only see where their customers migrated and the percentage of difference, but also to narrow down the best markets and, in some cases, neighborhoods for expansion. And, we can use mobile data to tell day-by-day and week-by-week what a store’s traffic patterns will be or whether it’s recovered 50 or 70 or 100 percent of its usual traffic. This not only helps with location planning, but it can also tell brands when each market is recovering.”
Best of all, because Locate is the first tech-enabled brokerage firm in the restaurant industry, it provides its data and analysis free of charge to brokerage clients—an attractive prospect for smaller brands and franchisors—a big reason why fast growing brands like Clean Juice and Crumbl Cookies among others have chosen to work with Locate.
“We are a brokerage and technology company under one roof,” Lee says. “This allows us to partner with retail and restaurant clients and provide technology-enabled brokerage and a data-integrated site selection process. Though the data is going to keep changing for the next 24 months coming out of the pandemic, Locate brokers can navigate these dynamic situations and adapt with restaurants through our iterative modeling process, so they’re in the best possible position for growth.”
To learn more about how your brand can use mobile data to plan for growth, visit the Locate website.
By Peggy Carouthers