When it comes to location, location, location, embarking on site selection before optimizing the market is akin to putting the cart before the horse.
According to Rudy Nadilo, CEO of Woburn, Mass.-based GeoVue, which provides location-optimization software to retailers, launching the real estate process with optimization puts retailers in the driver’s seat—and moves brokers over to the passenger position. “Too often, the development process within real estate is broker-led,” said Nadilo. “It’s reactive, propelled by brokers who offer up sites that are available and possible, but not necessarily optimal.”
Location optimization—which involves putting together an expansion plan, plotting optimal locations and then pushing the plan out to the brokers in the field to find sites that fit—stands in stark contrast to the more standard site-selection process that sees brokers alerting their retail clients that a spot has opened up near, say, a Home Depot.
“When you optimize a market, you are creating a comprehensive master plan. Not only are you making sure that you are lessening cannibalization, but you are packing in the optimum number of stores you can put in. And you can’t do that randomly,” said Nadilo.
Location optimization has helped Dedham, Mass.-based Papa Gino’s Holding Corp., which owns and operates restaurant chains D’Angelo Grilled Sandwiches and Papa Gino’s Pizzeria, to fuel growth in an efficient and targeted manner. According to Tony Padulo, senior VP of franchise development, current expansion efforts are continuing along an East Coast path.
“D’Angelo has about 180 restaurants throughout New England and [we have now entered] Orlando, Fla.,” said Padulo. “Papa Gino’s has about 160 units throughout New England, in such major markets as Boston; Providence [Rhode Island]; Springfield [Mass.]; Hartford [Conn.]; and Portland [Maine].” The first D’Angelo franchise in Orlando opened last fall, with another scheduled to open in the fall of 2007—which has propelled sister chain Papa Gino’s to follow into Florida and up the East Coast.
“In addition to expanding our D’Angelo program within Orlando, we will also be seeking Papa Gino’s franchisees in the market shortly,” said Padulo. “Within the next five years, both brands will move into most of Florida, as well as the Carolinas and upstate New York.”
That plan wasn’t committed to paper without a lot of research—and location optimization. “It [location optimization] has given us in-sights into which markets to prioritize and why,” explained Padulo. “Additionally, the software assists us in determining how many restaurants we should open in a given market, where they should be located, and how to prioritize them.”
No market model that emerges from optimization is going to work out perfectly every time. Just because software reveals that an ideal site is on Fifth and Main doesn’t mean a space at that intersection is available. “If you find, and qualify, a site that’s nearby, say at Fourth and Main,” said GeoVue’s Nadilo, “you tell the system that Fifth just became Fourth, and everything simultaneously adjusts.” The network shifts to allow for—and optimize—reality. And it puts the retailer right where he should be: in the driver’s seat.