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

Let's continue our discussion on smarter growth for restaurant chains. Part 1 of the post talked about opening a new concept, in and untested market. Our example was Pollo Campero.

As restaurant chains grow outside their home area, there is the question whether or not to incorporate menu items or regional customs specific to the new markets they are entering. After all, cultural norms and palate preferences shift around the country. As such, things like store footprint, dining patios or even menu items might vary by market. It is important for brands to identify core components that will be present in each location across the organization.

However, instead of adapting too far outside the core position to adjust for regional preferences, a better strategy may be to connect to the local community by ways of sponsorships, community events and other tie-ins with local schools or sports teams. Beyond the question of regional adjustments is the question of where to take market expansion plans. Café Rio, a chain out of Salt Lake City, struggled with the same question a few years ago.

The core of Café Rio’s business was and is “quality versus quantity” with a focus on freshness and made-from-scratch offerings. With all initial six restaurants in Salt Lake City, the chain’s core audience was not very diverse in terms of income, ethnicity and other key demographics. However, the management clearly recognized that when expanding into more culturally diverse cities across the U.S., finding the ideal location to match their customer base would be crucial. As with their menu offering, Café Rio aims for quality over quantity — preferring fewer high-performing stores over more moderately-performing ones.

Café Rio enlisted the aid of Buxton to help map out the most logical and promising markets to pursue first. This included mapping out the entire country with a prediction of the number of optimal locations before reaching a saturation point as well as a strategy for guiding growth into new markets. One of the tools used included Buxton’s “SCOUT” platform. This web-based application allowed Café Rio to upload and combine third-party data with Buxton-supplied data, putting vast amounts of information to size up potential markets right at their fingertips. The quality combined with the speed of these insights provided Café Rio with complete confidence in their decision support for new restaurant openings.

Both restaurant examples provide important lessons:

• Don’t generalize, specialize. Understand your brand’s core position and stick to it. Rather than adapting the brand to match each market and location, use decision aids to find the ideal location for your brand.

• As you grow, stay true to what made you known and what you stand for. Use existing customer data and team up with a data analytics firm to develop a strategic compass for future expansion that helps you focus on what you do best.

• Embrace or reject influences from outside factors to successfully maintain your image with your core audience. Engage customers through a variety of channels for feedback and insights.

• Balance growth with a consistent, brand-wide personality to successfully move into new markets.

• Continue to add data to fine-tune and adjust modeling. This will also help you spot potential problems and new trends early and adjust accordingly.

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