3 Challenges QSRs Face When Searching For New Store Locations
Finding a good store location has always been an important but tedious task for QSRs, but three challenges make it especially painful to scout and secure the perfect real estate these days.
QSR executives reveal they have to contend with tougher competition for bang-for-your-buck spaces, overall higher rents, and decreasing foot traffic in larger centres due to the rise of small community centres.
Due to the heated rivalry among QSRs for a small number of quality locations, particularly for those in premium areas, brands like Gelatissimo are always on the lookout.
“The reality is that premium areas will always attract higher competition for sites, says Fred Pose, franchise development manager at Gelatissimo.
But while a high-traffic location is of utmost value to any brand, some are too expensive to be considered financially feasible. This often leads managers to widen their search beyond premium areas to find locations that hit the sweet spot in cost and consumer proximity.
“We only proceed on sites that resonate with our business and make financial sense in our model and for our franchise partners,” adds Pose.
“Quite regularly we receive offers for sites other retailers are vacating. Rents are still too high,” concurs Alan Holmes, operations manager at Ali Baba.
“We have to ensure that whatever sites we select they are viable.”
On top of rising competition and cost, the eroding bankability of larger centres is further complicating the process of location selection.
“A challenge for us is the high number of small community centres being developed, especially by supermarket chains. These centres are slowly eroding the everyday traffic in the larger centres we have historically relied on,” says CEO Andrew Benefield at Mrs. Fields.
Larger centres have long been a magnet for QSR brands but now even their potential is coming into question, which brings fresh uncertainty.
