Originally published in Pizza Today, August 1988
Getting necessary marketing information and data entails the the use of four primary elements. The first is knowing what to get, the second knowing where to get it, the third getting it, and the fourth knowing what to do with it once you've got it.
Collecting and evaluating data needs to be done within the context of the previous Site Selection articles found in Pizza Today. These include: Understanding the Importance of Location, Recognizing the Principles of Location Selection, Knowing Your Customer Profile, Understanding Your Trading Area, Recognizing Different Types of Locations, and Understanding the Need for Accurate Demographic Data.
What to Get
Most food operators recognize the factors that affect the sales potential of a location including population, income, employment, competition, accessibility, and other factors. Where to get the information can be perplexing. The Reference Table included presents a list of the items, usually available, that can help in evaluating market opportunities. Often, it is not necessary to obtain and study all of the items listed. Instead, they represent sources for different types of data, which can be helpful in deciding what is beneficial to you in your own situation. Let's look at the key elements.
Population. The basic population data has been derived from the 1980 Census of Population conducted by the Bureau of the Census of the United States Department of Commerce. Because we are in 1988, the 1980 census is, essentially, out of date. Instead of relying upon the 1980 census, many food operators are using computer demographic services, which provide, not only the 1980 census, but, also a current estimate of population, households, families, age structure, income, and other data. Moreover, this data is available by mile radius or whatever configuration one needs. Developing demographic data, therefore, is easier than in the past. They also provide forecasts for 1991. Several of the more popular computer demographic services are listed in the Reference Table.
Here's a word of caution, though. Just because the demographic data comes from a computer demographic service, does not make it correct. This situation is especially true of all forecasts. One must gather local data to determine if the estimates of future population, households, age, and income are reasonable. Remember this adage: all too often, the data is considered gospel, when, in fact, the forecasts are too high or too low. Demographic services do not, in fact, update the data as they indicate that they do. Usually, data is forecast using model formulas, which cannot account for extreme growth or decline.
How can you check to see if the data is reasonable? Visit your local planning agency and ask them about demographic forecasts. They almost always have them made. Are they forecasting the same type of increases? If not, why not? If they are, then you have reinforced the conclusions reached by the computer demographic service.
The Reference Table also lists some other sources that you may want to check to be sure that the base information, upon which you will make a decision, is reasonably correct. I have not listed all census publications because so many of them are too old to be of any real use. Instead, I have listed those that still have some use in checking demographic change, along with other sources that are more current.
Age. I have said in previous articles that the age of the population, especially in the pizza business, is extremely important. The best current estimates related to specific sites usually are the computer demographic services. You might want to check it with the 1980 census data, which is provided by some of the computer demographic companies. I have used most of the various demographic computer services at one time or another.
Employment. Employment in the local market area is important for lunch business and perhaps plays a role in dinner or late evening activity. It is, therefore, important to know where to get employment data. The most important items to focus on are current employment information and estimates for the future. The Reference Table indicates a number of sources. Remember to determine how much time customers in the area have for lunch or dinner. This fact is often overlooked, to the detriment of the planned pizza facility. In addition, are inside dining facilities provided for your area's employees? If so, "eating out" may be limited, especially if the meals at the place of employment are subsidized.
Accessibility. Accessibility occurs at two levels - access to the area and access to a specific site. Access to a specific site includes both getting into a site (ingress) and getting out of a site (egress). Both levels are equally important. Some may survive without it. It is so much easier, however, to make sales and profits, not to mention, cope with competition with the correct access.
Only a very few pizza and pasta places are truly generative. Most places require some type of other traffic from which to feed. It is, therefore, important to determine automobile traffic counts or pedestrian activity. Traffic count data can be secured from the city, county, or state highway department. These usually are known as 24-hour average daily traffic counts. This data indicates the average number of vehicles passing a specific location over a 24-hour period. The important thing to consider is: when does traffic occur and what are the hourly statistics. Ask your city traffic engineer for this information.
Pedestrian traffic is harder to determine, unless the site is in a downtown area. Often, the city planning agency will have conducted pedestrian traffic counts. If not, you may want to count the people passing a location during the times when you expect to be doing business.
This step can easily be accomplished by going to an office supply store and purchasing a mechanical counter (about $12 to $15). Then simply count the people passing a location in each direction by half-hour or one hour increments. This exercise will provide a clear and current picture of the activity passing this location. How many people do you need to capture by hour in order to be successful? Is the number realistic? For example,
if you need to capture 75 people at lunch and the total number of pedestrians is 95, the likelihood of intercepting the required number is probably impossible.
There are numerous other data elements that will be discussed in later articles. Look at the Reference Table to see where the information you need may be found.
Remember: if you know who your customer is and the size of your typical trade area, then understanding the data is relatively simple. For example, how does the location under consideration compare to your customer's age and income, especially your most frequent visitors?
Where to Get the Information
As you start out in search of the correct necessary information for site evaluation, there are a few things you should know. First, most communities today think they have too many restaurants and fast food facilities. Instead of going into some agency and identifying yourself as a food operator, I suggest that you be an "investor." This way, any prejudice against the food industry will be removed. In addition, the people providing the data will have a broader prospective. When you mention food, everyone thinks they are an expert. Moreover, they immediately decide what data you need. I have found that they are most often wrong.
Next, focus on the area or areas in which you believe you have an interest, but continue to be an "investor." What you are doing should be confidential. These people understand that. They hear it every day, so you will not be unusual. Furthermore, you will hear more about the respective community and happenings than you will as a food operator. You will be surprised at the things you didn't know.
Lastly, do not make appointments! They most often will slow you down. And, as a "prospective investor" in the community, you will find that you rarely need one. In addition, if you are going to build several units, I recommend that you go to one of the quick print services and have some cards printed indicating that you are an investor. This step adds to your credibility.
The Chamber of Commerce
I usually start at the "Chamber." The Chamber is not the best data source. Rather, the Chamber people usually have the pulse of the community and know everyone. Thus, while they may not have what you want, they will know who does. So, when you ask about current population forecasts and they indicate that they do not have them, ask who does. Then ask them to call the person with the information and tell him or her that you will be stopping by to talk to them about the population changes. The Chamber can open doors for you and help you find the information quickly and efficiently.
Medium to larger communities may have more than one planning agency. It is necessary, therefore, to either determine which one has what you need or visit all of them. Usually, the Chamber can be helpful in indicating which one has the "marbles." Planning people are responsible for planning the community; therefore, they must make population forecasts and know the more specific places where population increases will occur. In addition, they know the neighborhoods and their socioeconomic characteristics. You usually can be very location specific with them. At this point, I would continue to be an investor. You will find out more and not be pigeon-holed.
The traffic people include three agencies: The state department of transportation, the county traffic engineer, and the city traffic department. The jurisdiction usually is determined by route designation, such as U.S. 66 or County 17 or simply "Main Street." Regardless of who has jurisdiction, you will want the latest 24-hour average traffic counts for the streets or highways where you may be considering opening a unit. Talk to the traffic engineer and find out what is happening with traffic. Has it become congested? What are they going to do about it? Are they planning to build "Median Strips" to eliminate left-hand turns? Will there be any impediments to ingress and egress? (I'll discuss this subject in greater detail in a later article.)
Competition is such an important element that there will be a separate article on this subject in a future issue. Suffice it to say that it will require your undivided attention.
At the onset, the prospect of going through the data gathering process will seem arduous, at best. You will find, however, that the process is like looking through a zoom lens. The more you learn, the more obvious the better locations become. Most importantly, simple and foolish mistakes are avoided.
DATA AND WHERE TO GET IT
LEADS TO LOCAL INFORMATION
Chamber of Commerce
POPULATION DATA AND POPULATION FORECASTS INCLUDING AGE STRUCTURE AND HOUSEHOLD COMPOSITION
United States Department of
Commerce Bureau of the Census - Washington, DC
1. 1980 Census
d. Census Tracts
e. Block Statistics
2. Current Population Estimates
a. Bureau of the Census
b. Planning Departments
c. Special Census-Census Bureau
d. School Councils
e. State Budget Departments
f. Regional Planning Agencies
g. Hospital Planning Councils
h. Universities and Colleges
i. Utility Companies
3. Computer Demographic Companies
a. Urban Decision Systems
b. National Decision Systems
c. CACI - Washington, DC
d. R.R. Donnelly
INCOME - HOUSEHOLD AND FAMILY 1980, PRESENT, AND FORECASTS
1. 1980 Census
2. Computer Demographic Services (Listed Above)
3. Planning Agencies
4. Sales and Market Management Magazines
5. Editors and Publishers Market Guide
6. The Internal Revenue Services
7. Census Publications P-25 and P-28
TRAFFIC DATA - TRAFFIC COUNTS AND TRAFFIC FLOW INCLUDING HOURLY TRAFFIC COUNTS
1. State - Department of Transportation
2. County - Traffic Engineer
3. City - Traffic Engineer
CONVENTION AND VISITORS DATA
Number of Visitors, Businessmen, Tourists, and Others to an Area
1. Chamber of Commerce
2. Convention Bureau
3. Hotel Association
4. Local Restaurant Association