What is a Trade Area for Quick Service Restaurant?

 

What is a Trade Area for Quick Service Restaurant?

A trade area for Quick Service Restaurant is the geographic area, with 75 to 90 percent of your customers.

According to Groupon, a person spends 80 percent of disposable income within 2 miles of their home.

The geographic area is determined primarily by the distance or time required by customers accessing your place of business.

A trade area is a combination of residents, employees, commuters, and shoppers.

Quick Service Restaurants (QSRs) are typically convenience-driven concepts.

Their success depends more on convenience to their customers than a destination business, such as a new car dealership where customers typically plan to visit the store for a specific reason.

For this reason, the trade area for quick-service restaurants is usually 1-2 miles or 3-10 minutes in the distance from their primary customer in a major metropolitan area such as Los Angeles.

Many quick-service restaurants rely on residents living within the surrounding neighborhoods for 40%-60% of their business.

Other concepts, such as those located in a Central Business District may rely almost entirely on employees working within a few blocks and receive limited sales from residential customers.

Ideally, the trade area for a quick-service restaurant provides a right mix of residences, employees, and a robust retail draw attracting shoppers.

The key to determining which trade area is right for your quick service restaurant is a combination of :

• the total number of people matching your customer profile,
• the right amount of competition,
• your position to your competition
• the perceived convenience of visiting your business in the eyes of your potential customers.

 

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Cheers!

Mark Chase

Restaurant Real Estate Advisors