The restaurant industry, like the retail industry, has recently been trying to keep up with changing consumer behaviors and technological advances in the restaurant landscape. Some restaurants are beginning to close locations or right-size their portfolios, while others struggle to innovate in order to stay top of mind with their customers. With delivery services like Uber Eats and companies like Blue Apron, restaurants are learning that convenience is king, and are working to implement these strategies into their business models.
While so many headlines today talk about restaurant closures, there are plenty of restaurant expansions at the same time. But where? You may assume the standard “hot markets” offer the best opportunities, but data shows that there are some surprising markets that offer serious potential due to factors like promising population growth and the current ratio of consumers to restaurants.
Read on to learn about a few of these markets and which restaurants specifically are seeing success there.
Emerging Restaurant Markets
When analyzing larger markets with at least 1.5 million in population, there are a few that stand out from the rest. Fresno, CA; Salt Lake City, UT and Phoenix, AZ all top the list when it comes to favorable opportunities in the restaurant space thanks to their growing populations and the fact that they are relatively unsaturated markets.
Restaurant Expansions in Fresno, CA
With a ratio of 724 consumers per restaurant versus an average of 580 consumers per restaurant, Fresno-Visalia, CA, is a relatively underserved large market. Restaurants such as Corner Bakery Café, Olive Garden, Five Guys, Cracker Barrel and Steak n’ Shake have all recently entered the market to capitalize on the opportunity.
Restaurant Expansions in Salt Lake City, UT
Salt Lake City has a ratio of 707 consumers per restaurant, but the ratio is even higher in the suburbs of West Jordan and West Valley City, which have ratios of 896 and 855 consumers per restaurant, respectively. With West Jordan’s population growth of 10% and West Valley City’s population growth of 5%, the opportunity will only increase.
The Salt Lake City metro area has recently attracted restaurants such as Pollo Loco, IHOP, Iggy’s Sports Grill and Apollo Burger.
Restaurant Expansions in Phoenix, AZ
Phoenix already ranks highly in terms of restaurant expansion opportunity, thanks to its ratio of 637 consumers per restaurant, but that number jumps to 698 based on 2021 population projections.
The following Phoenix suburbs offer a particularly promising opportunity that only gets better in the future:
- 12% population growth
- Current ratio of 752 consumers per restaurant will grow to 843 consumers per restaurant
- 17% population growth
- Current ratio of 740 consumers per restaurant will grow to 867 consumers per restaurant
Fogo de Chao, Freddy’s Frozen Custard, Giordano’s Chicago Style Pizza and Native Grill and Wings are all restaurants that have announced locations in these areas.
The Bottom Line
When evaluating new markets for expansion, it’s important to be strategic about where you plant your flag next. While it’s easy to consider the traditional successful markets, there’s value in keeping an eye out for lesser known, but still growing markets where other restaurants are having great success. The key is to find trade areas and sites that match your unique requirements.
Customer analytics can help you answer your tough business questions whether it comes to selecting new markets and sites, right-sizing your current portfolio, or optimizing your existing locations. Learn more about how to use analytics to maximize your capital investment in our on-demand webinar.