The Science Behind Margaritas' Site Selection Process

By Kenneth Cox, Chief Financial Officer, Margaritas Mexican Restaurants | March 03, 2010

With delicious food, unique decor, and an exciting restaurant concept, Margaritas (www.margs.com) has been one of the most successful Mexican restaurants in New England for decades. Over the years, the company has steadily added new restaurant locations by retrofitting existing structures or building from the ground up. As Margaritas prepared to launch its most aggressive expansion plan in its history, which includes a franchising program for the first time, the company saw the need to put more science behind its site location decisions to ensure that the best locations were targeted.

To make this happen, Margaritas turned to Buxton (www.buxtonco.com), a provider of customer analytics. Buxton has a long track record of helping top names in the restaurant and retail industries find high-performing locations through their ability to take customer analysis down to the household level, and up to eight individuals within each household.

Better marketing through better data
A directional model was built for Margaritas using the restaurant's own customer data, Buxton's consumer databases, and proprietary technologies. By analyzing the characteristics of Margaritas' current customers, including lifestyle choices, hobbies, purchasing behavior and media preferences, a detailed profile of the restaurant's "best customer" was created. In the search for ideal new locations, one of the key indicators is a high concentration of people who match this "best customer" profile. Other variables used to develop the model included nearby tenants, traffic counts, competitive restaurants in the area, and the performance of existing locations.

Buxton also performed a market optimization study for Margaritas for the entire Northeast U.S. This analysis showed how many stores a particular market could hold and the revenue results that each store could potentially produce.
 
When the directional model was completed, it was loaded into SCOUT, Buxton's online mapping and customer management system. With a few clicks, Margaritas can see map views of current and potential store locations, along with current customers and the best potential customers. Once Margaritas identifies several promising locations in a market, Buxton performs a more detailed analysis of each address and produces a site score, which can predict the sales of a new restaurant.
 
After a new restaurant opens, Margaritas is then able to spread its marketing message to key audiences. Since the restaurant will know who is likely to become a customer, it can deliver promotions in a much more targeted manner and easily communicate with different customer segments. For instance, families with children could receive a message about the kid-friendly aspects of Margaritas.
 
As the company continues to expand, Margaritas plans to keep Buxton's capabilities on its menu of business solutions.
 

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