Question:
Your website is excellent! You have sold me on Business Plan Pro.

My question is in regard to market research. I am researching opening a sports theme pizza restaurant. This will be located across the street from a new supercenter Wal-Mart that is going in.

Do you think a traffic flow study and a market analysis should still be done? Or could I make some reasonable asumptions based on the fact that I'm sure Wal-Mart did research before they chose the same location?

What are your thoughts? Thank you for your input.

Answer:
I'm sure you've heard it before ... Location, location, location ...

In most cases, location plays some type of a role, if not a critical one, in the success of a business. For example, you wouldn't necessarily think a manufacturing company would have to worry about location, but they do. Even manufacturing companies need to worry about their location relative to shipping infrastructure, raw materials, and human resources. Typically, when you hear location, location, location, you start thinking about retail businesses and foot traffic.

Location plays an obvious role in the success of a retail business. The importance of location to a restaurant is even more apparent. The assumption that your pizza restaurant will be successful because it sits next to a Wal-Mart may be flawed. Are there other restaurants in the area? The two Wal-Marts in our area aren't surrounded by restaurants. I'm not sure that your typical Wal-Mart location is a high-traffic evening location.

It's commonly known that McDonalds does fantastic location planning for their restaurants and often times you'll see a Burger King appear down the road from a new McDonalds. Burger King saves the research buck by piggy-backing McDonalds locations. I remember one scenario where McDonalds destroyed a location only to re-build on the other side of the street simply because the other side of the street had more vehicle traffic. Your logic isn't flawed, but I'd feel more comfortable if you were building your pizza restaurant next to a McDonalds ;-). I haven't heard anything about the success of small businesses surrounding local Wal-Marts. I have heard that Wal-Mart tends to make it difficult for small businesses to compete. Hopefully, they won't start selling pizza at their snack bar.

I think you should probably move forward with your traffic-flow study and market analysis. It doesn't hurt to play it safe in this situation. Location will be critical to the success of your restaurant business and you don't want to be the only restaurant proprietor adjacent to the local Wal-Mart that becomes a ghost town after 6 p.m.

Thank you for a good question,

Cale Bruckner
Bplans.com - Ask the Experts
Director of Product Development
cale@planningpeople.com