In a recent conversation with Max Sheets, VP of Real Estate at Freddy's Frozen Custard & Steakburgers, he explained how his perspective has changed during his more than 30 year career in the retail real estate business. Freddy’s, based in Wichita, KS, is a 12 year old fast-casual restaurant chain that has over 120 stores in more than 20 states and is growing rapidly.
Wichita is home to dozens of successful franchise chains, spawned from folks who trained and worked at Pizza Hut, the mother of all restaurant franchises. Max also got his start at Pizza Hut where he began in the kitchen of a family friend’s restaurant at the age of 14. During his career he has worked with brands like Lone Star Steakhouse, Fox and Hound, and Ted's Montana Grill.
I asked Max what the process of site selection was like when he started in the business. "Back then we used basic demographic information from Equifax, traffic counts, and that was about it in terms of data,” he said. “There was no mapping software and, in any event, computers were expensive and not very powerful. We would look at where major national chains had located - we figured an intersection that worked for them would work for us. And, we would spend a lot of time talking to locals, walking the site, getting to know the market." He noted, "The market for QSRs was new and not highly developed and so there was a sense that if you put a solid concept on a busy corner, you would do ok."
Max has watched the industry revolutionize. "Competition made us get sharper, smarter and more analytical and, of course, more tools became available as the computer age took hold. We started using psychographics to understand our target customer better and then began building sales forecasting models. The biggest step was adding GIS software: the ability to visualize a trade area and understand a site via a map was incredible. Mapping started as something pretty simple but became complex in a relatively short amount of time." Max continued, "At Freddys, I think that we have developed a very good understanding of our guest and that helps us locate stores that will perform well."
Max has witnessed the evolution of forecasting models. "No model is perfect but I think a good model helps you avoid mistakes. Locating a store is an expensive proposition and, first and foremost, you want to spend that money wisely." He continued,
"It's all about competing to provide the guest with the best possible dining experience at his/her price point. Site selection specialists are going to have access to more and better quality data - from loyalty card programs, mobile networks, and mystery shoppers’ surveys. We use these tools to locate restaurants that meet our guests most conveniently."