Strategic Compass Helps Set Course to Expansion – Part 1 of 2

The last few years have been challenging to the restaurant industry. The U.S. restaurant count has been falling for a number of years now, with independents taking the hardest hits.

Starting or expanding a business is a natural desire for many, but finding the right formula in today’s market is no easy feat. Sure, one way is to adjust the value equation by aggressively challenging food retailers and other restaurants on price. However, a bottom dollar price strategy usually leads to a less-than-desirable bottom line in the long term.

“Growth has killed many brands.” Those words, from Dallas-based Corner Bakery Café’s CEO Mike Hislop, sum up a problem that several foodservice CEOs face: How do you expand into new territories, maintain a brand-wide personality, and do you or don’t you adjust for regional preferences? Because one thing is for certain, in today’s market, the old adage “if you build, they will come” is far from reality. New market entry requires careful understanding of customer segments, regional preferences and site location, as Pollo Campero found out firsthand.

Pollo Campero is a regional force headquartered out of Guatemala, where it opened its first store in 1971. They entered the U.S. market with the traditional concept and saw success opening nearly 40 locations. After the initial success, the company decided to roll out a new store concept. They faced not only the competitive environment, but also a lack of awareness about who their customer would be for the new restaurant format. Buxton was able to help the chain gain a clearer understanding of the path to success by combining proprietary data from both companies. Analysis of the various data sources provided insight of key segments within the U.S. population that would have a greater interest in Pollo Campero’s offering. This ultimately helped Pollo Campero determine prime locations in their test market, Houston, Texas.

Pollo Campero purposely chose three different types of areas with varying degrees of income and population density to provide lessons for further expansion into other markets. This is much like grocery company H-E-B’s roll-out strategy used for its Joe-V stores, also first introduced in the Houston market.

Using revenue and customer data, Buxton and Pollo Campero will be able to use the data from the first three stores to fine-tune the model, providing a strategic compass to both corporate and franchised units to support the chain’s U.S. growth strategy.

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