Strategic location selection is paramount in an industry as dynamic as the quick-service restaurant sector, where competition remains fierce and consumer preferences are ever-evolving. Traditionally, factors like foot traffic, proximity to competitors, and demographic data have been considered key decision-making drivers. However, the landscape is shifting, and a powerful new tool is emerging: consumer spending data.
What is Consumer Spending Data?
In its simplest form, consumer spending data represents aggregated and anonymized transaction details from sources like credit cards and debit cards. This data is further enriched by being connected to retailers and geographic locations, providing a deeper look at how consumers in specific areas spend their money. This data goes beyond simply understanding what’s being purchased; it provides a granular view of buying habits, category trends, and overall spending patterns across geographic locations. Imagine having a map that not only shows population density but also reveals the specific food categories people in that area are most likely to spend their money on. This is the power of consumer spending data.
The Significance in the Quick-Service Landscape
In an era where convenience reigns supreme and the appetite for food delivery services shows no signs of waning, leveraging consumer spending data can significantly impact quick-service’s location strategy. This data aids in understanding not just the “where” but the “why” behind consumer choices, allowing for a strategic approach to site selection that aligns with evolving dining preferences. It is particularly invaluable in identifying locations where demand for food delivery is high but not yet saturated with options, enabling quick-service restaurants to establish a presence in underserved markets.
Moreover, as the industry shifts towards models with smaller in-store dining footprints, this data becomes instrumental in pinpointing areas where a delivery-focused approach would thrive. It allows for a more nuanced understanding of the market, considering the comprehensive landscape of food delivery demand, including insights from competing restaurants and adjacent sectors such as grocery delivery.
An Example in Strategic Expansion
A compelling illustration of the practical application of consumer spending data comes from a major national chicken restaurant chain’s strategic expansion. This chain recognized the potential to grow its footprint by focusing on locations that cater primarily to food delivery demand. However, to navigate this expansion wisely, the chain turned to consumer spending data for deeper insights.
The analysis went beyond the restaurant’s own delivery data, encompassing a broader spectrum of area-wide food delivery demand. This included spending patterns related to other restaurants and grocery delivery services, providing a holistic view of the delivery ecosystem in targeted locations. The insights gleaned from this data were eye-opening. They revealed specific neighborhoods where demand for food delivery services was high, yet adequately served by existing quick-service outlets was lacking.
Armed with this knowledge, the chicken restaurant strategically selected sites for its new locations, focusing on areas identified as high-demand yet under-serviced for delivery. This approach allowed the chicken chain to grow its market footprint in geos previously unavailable. It maximized the potential for immediate customer base growth and positioned the chain advantageously in the competitive delivery market.
The Impact and Beyond
The chicken restaurant chain’s strategic use of consumer spending data underscores its value in enhancing decision-making processes for quick-service location selection. By understanding the broader context of consumer spending behaviors, the chain was able to execute a new expansion strategy that aligned with market demands and consumer preferences for food delivery.
This is just one example of the transformative potential of leveraging consumer spending data in the quick-service industry. It highlights how such data can offer insights beyond traditional metrics, enabling a forward-thinking approach to site selection responsive to the evolving landscape of consumer dining preferences.
Embracing the Future with Data-Driven Decisions
For quick-service owners and operators, the journey towards integrating consumer spending data into location strategy decisions need not be daunting. With the right tools and analytical approaches, this data can unlock new opportunities for growth and competitive advantage. It invites a shift towards more dynamic, responsive decision-making, where understanding the nuances of consumer behavior becomes a cornerstone of strategic expansion.
As the quick-service industry continues to evolve in the post-pandemic world, the role of consumer spending data in informing strategic location decisions will continue to grow. It offers a pathway to understanding and meeting the demands of the modern consumer, ensuring that quick-service restaurants can survive and thrive in the new landscape. By embracing the insights offered by consumer spending data, quick-service owners and operators can chart a course for success, marked by informed, strategic, and ultimately fruitful location decisions.
Jonathan Chin is the Co-Founder and Head of Data and Growth at alternative data company Facteus.
