The Top 4 things to consider when picking a new location for your QSR - Part 4: The CBD site

A QSR normally fits into one of 4 categories:

• Free Standing with Drive Thru (FSDT)
• InLine
• Mall
• CBD

Each has a series of Drivers to consider and these vary obviously depending on the type of store your wish to open. In this episode, I shall address the CBD stores.

CBD’s are different to any other area or type of store. The CBD QSR is normally mainly about lunchtime trade, and does have some share of their business potentially in breakfast, and in the evening trade.

Depending on what you are selling, you will have some idea as to your suitability. For example McDonalds covers all aspects, breakfast, lunch and dinner. The likes of a small take away sushi shop however does not have much breakfast opportunity, is all about the lunchtime trade, and not much for dinner, when people are more likely to want to sit down to eat.

Pedestrian Traffic

For a QSR to sell to customers, the customers must be coming past. In the CBD, the passing trade is everything. There is very little information on pedestrian traffic, however some of the larger councils like Melbourne City Council now have some information on their website.

I find it really easy to use counters, and spend some time taking 5 minute counts at different places. Make a line across the traffic flow, and just count for 5 minutes ALL persons who walk past in either direction. Go and do that in a few areas, probably coming back to do each one a second time, say ½ an hour later. It is amazing how it can clarify your views on pedestrian traffic.

Owners definitely have their own views of the traffic and will be advised by their real estate agents what rent to charge, partially based on the pedestrian traffic.

I can only suggest that the vacant site down the side lane with the low rental is there because it does NOT have much passing traffic. In my earlier episode (on Inlines) I did refer to Impulse vs. Destination, and this applies exactly the same whether you are on a shopping strip, a CBD site or in a Mall.

Some opportunities arise within a food court in the CBD, and you can see where the pedestrian traffic is coming from, and to where it is heading. If a food court is square or rectangular, you can often see quiet sections tucked away in corners, and the busiest sections near the main entrance. Quite often one side of the food court is far stronger due to the tenants, and the other side is quieter. Again, using a counter to measure pedestrian traffic in maybe 2 minute lots at the busiest times, will quickly reveal the quiet corners of the food court.

In the CBD, you can be offered a variety of sites, from small, hole in the wall sites, to foodcourts, and inline type stores. The store is pretty much a function of size, window frontage, whether you are on a corner or not, and to an extent being at ground level with easy access. Store suitability is having the right size and shape of store for what you are selling (and rent you are paying). If you need 80 sq m for your coffee shop, it is no good having 120 sq m. if you are not likely to use all the space. If you need to display your goods in the window, it is no good having a 3 metre frontage, with the door taking up the first 1.5m!

I would like to break this into 3 sections:

1. General QSR’s in a City Mall, but not in the food court, generally are more of the coffee and cake type of store. These stores often have some outside seating and aim more for the customer to sit down to consume their goods. These stores need to be the right size, often have good visibility, such as on a corner and be allowed to put up good signage and colour to attract the clientele.

2. The food court stores in the CBD are all about size and frontage so it can be seen, and can display the food for sale and still handle the rapid lunchtime traffic. Many food courts in the CBD only trade during the day, Monday to Friday, and do not open on a weekend. Most food court stores are around 8 m across, with kitchen space behind for the food preparation.

3. The general street store in the CBD can be any size and type from a huge store to a hole in the wall type of site about 4 sq m for one person to operate out of. It is all about passing pedestrian traffic.

There are definite brands that attract people into their area such as McDonalds and KFC, so being near them (if possible) has some advantage. Whether in a food court, or on the outside, these act as generators to your business.

Precincts

Different parts of the CBD have different functions, and therefore different demands. Whilst we live in Melbourne, other large CBD’s such as Sydney have very distinct segments. You only need to look around and in most cases these are identifiable:

Business District

This is the high volume Monday – Friday area where the tall buildings and the businessmen are. There could be a couple of these, and other segments may be intertwined with this. In Melbourne this could be considered around Colins and Bourke Sts, near Queen and William St, or top end of Collins St. In Sydney this could be around Martin Place and all along George St. Great lunch time trade.

Shopping Precincts

Think where the Myer and David Jones stores are. Bourke and Swanston St in Melbourne, and Pitt St mall in Sydney, plus many other areas. Fairly general weekday and weekend trade.

Tourism precincts

In Sydney think Darling harbour and Circular Quay. In Melbourne now think Docklands, Southbank and Swanston St. Good all round traffic.

Restaurant precincts (including Chinese areas)

In Sydney think Haymarket, and in Melbourne Little Bourke St, Crown Casino and Docklands

In general, you can see these precincts and your concept needs to match the demand. For example the Business District is all about early morning coffee, quick serve lunch, take away food and a small amount of high dining.

Demographics

The fourth is the demographics. It is no good having a store selling one product range when either there are few people in the area, or they are not likely to be your customer. Whilst companies like ours can provide detailed demographic information, you can always look up any area in Australia yourself on the ABS website, www.abs.gov.au and then look for Census Data, and then Quikstats. You can put in a postcode or suburb, and find out from the Census 2011 about that area.

In the CBD, more people are moving in to live there, whether they be rich retirees, or Asian or Indian students. These people have high food demand as in many cases the kitchen is very minimal. When you look around the CBD you can identify who lives in various precincts. In Melbourne for example there is a very high number of Asian and Indian students living at the top of Swanston St due to Melbourne University, RMIT and other smaller campuses.

Also think in terms of what you are selling, the pricing point and who you are selling to? If your average meal price point is very high, then selling into low socio economic areas is probably less attractive than high socio economic areas. If you are selling low cost Asian or Indian food, then young students should be the best target audience.

A Target Market Index is one way of putting together 2 or 3 demographic variables to see which areas are best for what you are selling. This can be done down to SA1 level, the lowest geographic area the ABS supply all their data at, of which there are around 54,000 SA1’s in Australia.

Summary

In summary, my 4 top things for consideration for a QSR in the CBD are:

1. Pedestrian traffic
2. Store Suitability
3. Precincts
4. Demographics