Stephen Young
Building a Comparable Store Model for Sales Estimation through Trade Area Delineation and Market Classification for a Major Quick Service (QSR) Chain in Canada © 2010
The Quick Service Restaurant (QSR) industry, formerly known as ‘Fast Food’, is highly competitive with significant growth by the top chains and a large number of casual dining chains entering the market. The increasingly competitive nature of the industry creates a situation where any one QSR must act quickly on new opportunities and estimate new store sales with accuracy. To estimate new store sales, the chain must understand the existing customer base, trade area and corresponding market type. This research process has enhanced the sales estimation process for one QSR, by delineated the trade areas and segmenting all existing locations into market classification types. From there, site specific; demographic; and socio-economic data has been extracted and built into an analogue model (Canadian Comparable Store Model). This model is used to compare the attributes of the new location with all existing locations. The foundation of the comparative model suggests that the sales at a new location should be similar to existing locations that are deemed comparable in terms of site attributes, trade area size and corresponding demographic/socio-economic, business and competitive data. The Canadian Comparable Store Model is a low-cost, user-friendly analogue approach to sales estimation, which takes minimal training and will enhance the sales estimation procedures utilized by a major QSR in Canada.