What is a Trade Area for Quick Service Restaurant?

A trade area for Quick Service Restaurant is the geographic area that contains 75 to 90 percent of your customers. According to Groupon 80 percent of disposable income is spent within 2 miles of a person’s home.

The geographic area can take many shapes and is determined primarily by the distance or time required for your customers to access your place of business.

A trade area is primarily comprised of a combination of residents, employee’s, commuters and shoppers.

Quick Service Restaurants (QSR’s) are typically convenience driven concepts. Their success depends more on convenience to their customer compared with a destination business such as a new car dealership where customers typically plan in advance to visit the business for a specific reason.

For this reason, the trade area for quick service restaurant is usually 1-2 miles or 3-10 minutes in 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 employee’s working within a few blocks and receive limited sales from residential customers.

Ideally the trade area for a quick service restaurant will provide a good mix of residential, employee’s, and a strong 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 who match your customer profile, the right amount of competition, your position in relation to your competition and 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