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Video Tip: Where to Put the Next Red Lobster

February 7, 2012

Jay and I have developed two video case studies to accompany Chapter 8, Location Strategies. In the first, Where to Place the Hard Rock Cafe, we describe how Hard Rock makes its future location decisions. At that company, the Director of Development has significant personal authority, using his decades of experience and “feeling” about  a city and a location in that town. Of course, he also employs demographics, but not nearly to the extent that Red Lobster and Olive Garden (both owned by Darden Restaurants) do.

In this 10 1/2 min. video, we see that Red Lobster uses trade area characteristics (like income, population density, racial makeup, average age, competition, nearby hotels, etc.), site characteristics (parking, signage, visibility, traffic flow, etc.), and real estate availability –all run through a geographic information system . The GIS (by MapInfo) provides interesting psychographic profiles for potential locations. What used to take Rob Reiner, the director of market development, 8 hours to analyze, now takes 5 minutes.

MapInfo (illustrated at the end of the chapter) segments the US into 72 “clusters”  of customer profiles, based on income and buying behavior. One such cluster, called Equestrian Heights, is detailed in the case study. The software takes into account competition, projected sales volume, cannibalizing from existing stores, and sets a minimum distances between Red Lobsters.

A great guest speaker when showing the video would be a local or district Red Lobster or Olive Garden manager.

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