Dave and Buster’s Site Selection
Introduction:
The purpose of this report is to analyze potential sites for a new Dave and Buster's restaurant franchise in the Madison, Wisconsin metropolitan area. Using ESRI Business Analyst software this report will analyze potential store locations in terms of
· Location of Competitors
· Ideal Customers
· Drive Time Trade Areas
· Optimal Store Locations
· Gravity Model/ Point of Indifference
The data source for each analysis is ESRI 2016 business analyst data.
Background:
Dave and Buster’s is an American Restaurant/ Entertainment business that began operations in 1982 and is headquartered in Dallas, Texas. The business specializes in American cuisine such as burgers, steak, chicken and seafood. Each location includes an extensive onsite video arcade and full bar service. It has often been informally described as “Chuck E. Cheese for adults”. As of February 27th, 2017 the company operates 94 stores in the United States and Canada
Market Requirements:
Dave and Buster's prefers their franchises to be located in sites with a daytime population of between 700,000 and 1,000,000 individuals within a ten mile radius. The preferred location would be between 26,500 and 40,000 square feet with seating room for up to 200 and between 300 and 400 parking spaces which may be shared with another business.
Study Area:
The study area for this analysis is the Madison, Wisconsin metropolitan area. This area has a metro population of 641,385. This falls short of the company's preferences, however the presence of a prominent division one university in the area would likely increase profits to desired numbers. There is currently only one other Dave and Buster’s in the state of Wisconsin located outside of Milwaukee.
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Methods
- Customer prospecting
The first part of the site analysis process is to locate potential customers. The demographic that would be likely to visit a Dave and Buster’s franchise would be individuals between the ages of 25 and 30 who have disposable income and are familiar with electronic games. This type of demographic is fairly easy to reach in a college town. Using ESRI Business Analyst customer prospecting analysis a map was created showing where potential customers who fit this demographic would be located in the Madison, Wisconsin study area. The parameters used for the analysis include individuals between the ages of and 25-30, individuals who visited a bar or nightclub within the past 12 months and individuals who have played video games within the past 12 months. The 25-30 year old demographic was selected because individuals in this demographic are likely recent college graduates who have more disposable income.
Figure 1: Locations of potential customers within the study area.
The results of the analysis indicated that the most likely locations for potential customers are in the suburbs surrounding the city rather than in the center of the city itself.
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II. Locations of competitors
The second factor to consider when selecting a site for a business is the location of any potential competitors. There are not many franchises that follow the Dave and Buster’s business model if combining an Entertainment center with a full service bar and restaurant. The direct competitors would be other restaurants that cater to a similar demographic. The best example of this would be a restaurant similar to Buffalo Wild Wings. Using ESRI Business Analyst, several competitors were located within the study area based on certain search criteria. Among these criteria were chain restaurants that had 50 or more employees. In terms of geography and the study area, the majority of these restaurants were located in close vicinity of Madison’s two malls. Notable competitors include Buffalo Wild Wings and Applebees. Another potential competitor would be Chuck E. Cheese’s, however this business caters to a much younger demographic and would likely not draw away too much business.
Figure 2. Locations of competitors within the study area.
III. Optimal Store Locations
Using the “Find Similar Sites” analysis tool in ESRI Business analyst, three potential store locations were found. The analysis was performed based on the locations of other larger restaurant chains within the study area. According to the analysis, the best locations to build a restaurant franchise in the Madison area within a half-mile radius of either the East or West Towne malls. Three potential locations were ranked in order of most to least ideal. These include
- 430 S. Gammon Rd. 53719
- 2001 Zeier Rd. 53704
- 4802 Amcenter Dr. 53718
Each of these locations would be ideal due to their close proximity to a highway or major road as well as being located close to several prominent businesses that could potentially draw in customers. Additionally, the sites could utilize nearby mall parking as some of the 300-400 required parking spaces, as is allowed in the Dave and Buster's market requirements.
Figure 3: Locations of Potential Stores
IV. Drive Time Analysis.
In order to narrow down which location would be best, a drive time trade area was established around each potential location. These trade areas divide drive times into 5, 10 and 15 minute segments showing how long potential customers would need to drive to reach that store location. The majority of the study area is within a 15 minute drive of each proposed locations. The location on Gammon Rd, however, is in a slightly better location as it has a shorter drive time to downtown Madison and the UW-Madison campus than the other two locations.
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Figure IV: Drive Time Trade Areas
V. Gravity Model/Point of Indifference
Related to drive time is the concept the point of indifference. This represents the furthest point that customers would be willing to travel to visit a site that was between two cities. The Dave and Busters franchising website states that customers on average are willing to travel 20 minutes to reach their stores. A more accurate point of indifference may be calculated using Reilly’s Law of Retail Gravitation, or more simply the gravity model. The formula for the model is seen below.
Figure V: Gravity Model Formula
For this analysis the point of indifference has been calculated for three communities close to Madison, WI. They are as follow
- Middleton, WI (2010 Pop. 17,442) Point of indifference= 6.3 miles
2. Sun Prairie, WI (2010 Pop. 31,752) Point of indifference = 18.48 miles
3. Verona, WI (2010 Pop. 10,619) Point of indifference = 11.4 miles
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Conclusions
It has been concluded that the best site to locate a Dave and Buster’s franchise within the Vicinity of Madison, Wisconsin would be at 430 S. Gammon Rd. 53719. The reason for this decision are as follows
1.Based on the customer prospecting analysis, this site is centrally located between several areas that contain customers who fit the target demographic of the business.
2. Based on the location of competing stores, they are very few businesses in the area that would be considered direct competition. The only store that would be considered a competitor would not likely draw away business as they cater to a much younger demographic.
3. This site was the topped ranked prospective site in the site ranking analysis.
4. Based on the drive time analysis, this site is within a reasonable drive time of several suburbs as well as the University of Wisconsin campus which would be a larger source of potential customers.
5. Based on the gravity model, this site is within the point of indifference of two major suburbs that are included in the prospective customer analysis.
Based on the above criteria, the geographically advantageous location close to a mall and major highway, and the larger number of nearby individuals who fit the company's target demographic, I believe that 430 S. Gammon Rd, Madison, WI 53719 would be the best site for a new Dave and Buster’s franchise.
Sources:
2016 ESRI Business Analyst Data
Dave and Buster’s franchise requirements webpage
