One critical part of the market planning process is to know the ‘scalability’ of your business. Are you going to share the pie with other businesses in your cuisine or is there something special about your restaurant that would classify it as a disruptor? Understanding your competition is a very important component of the scalability analysis as it forces one to not only study the playing field, it allows you to refine your overall business model to enable you to go from a small fish in a big pond to a big fish in a small pond.
There is a saying out there that cannibalization is only good when you are the cannibal. There is a lot of truth to this statement in multi-unit restaurant development. The scalability analysis takes into consideration the overall market holding capacity of your business in a certain geography as well as how fast the brand should develop (I.e., the velocity rate). If properly orchestrated, the overall scalability analysis will take market share away from the competition during its critical path of establishing market presence and then ease the restaurants capacity constraints through self-cannibalization at a later date (i.e., the Starbucks approach).
A well vetted market plan will include the market holding capacity for the concept as well as a scalability analysis that determines the proper velocity rate for development based on factors such as uniqueness, business model, market conditions and competition. This is not some algorithm that creates ‘heat maps’ for potential development opportunities. We are talking about a complex procedure that forces you to think and behave as a consumer with unlimited options to spend your dollars as well as behave as a responsible business owner that wishes to develop restaurants with long term sustainability. Anyone can flood a market with a concept if they have enough discretionary cash and a good sales pitch but few can sustain market dominance for years to come.
For more information on our unique market planning methodologies, or to find out more about scalability analysis and market holding capacity, please do not hesitate to call us direct anytime or shoot us an e-mail with your questions and we will be sure to promptly respond.