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Location Analysis Of A Franchise Resturaunt

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Problem Statement:
Boston Pizza International Inc. is a Canadian owned and operated
restaurant. It has many facilities in Canada and has opened facilities in the
United States and in Southeast Asia. Boston Pizza is penetrating further into
the Canadian market and is opening at a new location on 8th Street in Saskatoon.
The chosen location has been the home of many previous restaurant failures. It
seems odd that any restaurant would want to open in a location which has proven
to be unsuccessful. What characteristics does Boston Pizza have that other
restaurants don't have that may allow this location to be successful? This new
location will be the second Boston Pizza franchise in Saskatoon, complimenting
the facility operating on 50th Street. Will the market areas of these two
restaurants overlap? * * * * *
The early beginnings of this restaurant occurred in Edmonton,
Alberta. In 1963 the first Boston Pizza and Spaghetti House opened. The name
of the restaurant is seemingly odd because Boston is the name of a city in the
United States, and has nothing to do with a pizza restaurant located in Edmonton.
Ron Coyle, the original owner, named the restaurant 'Boston' because the Boston
Bruins NHL hockey team was the favorite of the Edmonton area in the 1960's and
he wanted his business to use sports as a promotion. Another reason, which may
have been more of a coincidence, was that his accountant's surname was Boston
("only way", 37).
Boston Pizza and Spaghetti House became a popular restaurant and in 1968
it began to operate as a franchise. In mid-1968, Jim Treliving, a former drum
major for the RCMP, and his friend Don Spence bought the franchising rights for
British Columbia with the exception of Vancouver. They opened their first unit
in Penticton, British Columbia, and in the first year of operation the pizza
restaurant grossed $52,000 and the nightclub which was co-located with the
restaurant grossed $80,000 (Cameron, 16).
Meanwhile, franchise units opened in Edmonton, Winnipeg and Vancouver.
As the pizza chain grew, Treliving and George Melville (who had become involved
with Treliving's restaurants as a financial planner) became involved in real
estate ventures in Hawaii and the Okanagon Valley and also in oil investments in
British Columbia (Cameron, 16). In 1983, these two men purchased Boston Pizza
Spaghetti House from the original owner Ron Coyle for $3 million. This money
was raised from private lenders ("recipe is simple", 16). During that same year,
the headquarters of Boston Pizza was moved from Edmonton, Alberta to Richmond,
British Columbia where it is found today.
In the past decade, #1601 8th Street East has not been a very successful
location from which to operate a restaurant. Since 1985, four different
restaurants have occupied the facility. This location originally housed
Ponderosa Steakhouse from 1975 until 1984. The restaurants which occupied the
facility over the past decade were: Geno's Pizza (1985-87), East Side Sids (mid-
1987-88), Taster's Whole Earth1(1989-1990), and Just Buffets (1991). Since 1992,
the facility has been vacant.
In 1994, Boston Pizza became interested in this location. Although the
location had been unsuccessful in the past, a new Boston Pizza facility will
more likely operate successfully. The previous building, torn down only a few
months ago, was a dull brown color which didn't attract attention. The new
Boston Pizza building will use the kitchen of the old facility, but the service
area is being constructed similar to other Boston Pizza restaurants. It is
shaped and colored in a way that will grab the attention of vehicular traffic.
The building has an angular bright red roof and will have a bright red and blue
sign when construction is complete.
When the 8th street location opens its door, a market will already exist.
People working at the nearby businesses Bank of Montreal and Jubilee Ford, may
decide to eat lunch at Boston Pizza. In the evening, after work these same
people may stay and relax at BP's lounge. Families looking for a convienient
place to eat quality food may decide to eat here.
One problem remains, and it is a problem that Boston Pizza can not change.
The center barrier on 8th Street makes Boston Pizza accessible to vehicles
traveling west only. Vehicles traveling east would find it difficult to access
Boston Pizza. Therefore many potential customers will pass by and find another
place to eat.
The location of this new Boston Pizza will not affect or be affected by
the operation of the 50th street location which has been in operation since 1987.
The 50th street facility has not been a very successful operation since its
opening. Its location has, however, provided transient customers on weekdays.
Many employees who work at nearby industrial facilities eat lunch here.
The 50th Street Boston Pizza is located relatively close to the Saskatoon
Airport and Saskatchewan Place. The Airport and Saskatchewan Place have also
provided some of Boston Pizza's customers. However, although it is close to
the airport, Boston Pizza is not close to any hotels or motels and so only a
limited number of travelers come to eat. After large events at Saskatchewan
Place, Boston Pizza is a popular restaurant. After Billy Graham spoke at
Saskatchewan Place in late October, the restaurant was packed. Usually, this
location has only a few late evening visitors. It has not been very successful
at attracting families because of its inconvienient location. An alternative
location for a Boston Pizza in the north end of the city would be on Idywyld
Drive. Traffic flows to and from the Airport and Saskatchewan Place are much
larger on this street. This street is also much more accessible to families.
Business success can be attributed to the use of a franchising system.
When Treliving and Melville bought Boston Pizza in 1983, "the two men owned 16
of the 36 existing outlets, but sold them all to new franchisees" ("recipe is
simple", 16). Treliving didn't want to compete with franchisees that were
recruited. Instead Treliving and Mwlville wanted to look after the other
people's stores so that there would be no favouritism. In order to concentrate
on franchising, Treliving and Melville created a "management consulting firm"
("recipe is simple", 16).
According to Treliving, "The system [franchising] provides franchisees
with a brand name, a proven business system and ongoing support" ("30 years",
81). A franchisee takes a smaller amount of risk than starting his or her own
business because he or she buys into a system for which the unexpected has been
planned. The problems which a franchisee may experience have already been
encountered by the franchisers over the years. Thus, the franchiser has
learned how to overcome the obstacles which may come about and the franchiser
can provide answers to all the important questions: "What type of location is
successful? What size trading area will ensure a large enough customer base?
What are acceptable labor costs? What lease cost is acceptable? How much
parking does a location require? What upcoming demographic changes will affect
the business?" ("30 years", 81)
Boston Pizza uses the business format franchise:

[The] business format franchise involves the use of not merely goods and
services identified by a trade mark or invention, but a package or 'blueprint'
containing all the elements necessary to establish the business and run ...

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Keywords: location for a restaurant, restaurant location analysis, restaurant location analysis pdf

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