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Site Suitability Analysis for a New Franchise India Palace Restaurant in Minneapolis and St

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Site Suitability Analysis for a New Franchise India Palace Restaurant in Minneapolis and St Site Suitability Analysis for a New Franchise India Palace Restaurant in Minneapolis and St. Paul, Minnesota, USA Combining GIS Technologies and the Huff Gravity Model Ritu Shrestha Department of Resource Analysis, Saint Mary’s University of Minnesota, Minneapolis, MN 55404 Keywords: Geographic Information System (GIS), Franchising, Huff Gravity Model, Site Selection, Site Suitability, Geodemographic, India Palace Restaurant, Google Earth Pro, Pythagorean Theorem, Python, ArcMap Abstract The main objective of this study is to determine a new franchise location in the Twin Cities, Minnesota metropolitan area considering the critical factors that affect restaurant success. It is difficult to select the best-suited location to open a new restaurant. Deciding a suitable spot is the most important task for any business owner because it determines the future of the business, i.e. if it can make a profit. A geographic information system (GIS) is one of the most powerful tools currently utilized to assist in the selection of suitable locations. To conduct analysis, demographic information was obtained from the U.S. Census Bureau for the year 2010. Various analyses were conducted through GIS methods and the Huff Gravity model to determine attractiveness and market potential of trade areas. With the help of software and modern techniques, a suitable location was determined. Some discrepancies were observed between existing locations and areas deemed suitable. This may be due to factors unaccounted for this study such as environment, neighborhood, socio-economic conditions, quality and quantity of food, convenience and visibility. Having a broad understanding of site selection, combined with excellence in execution, is a winning combination for opening a new franchise location. Introduction The Uptown location is the newest and opened in 2015. This paper reviews analysis using GIS The India Palace Restaurant has technologies and the Huff Gravity Model opened branches in Indianapolis, IN; to address the question of where is the best Dallas, TX; San Antonio, TX; Provo, UT; place to open a new franchise India Palace Fargo, ND, and other locations. It offers Indian restaurant in the Twin Cities area of North Indian and South Indian food with a Minnesota. Five India Palace restaurants very unique taste. The owner and are among the prominent restaurants in the management team are devoted to make Twin Cities, Minnesota metropolitan area their customers’ visit a truly memorable located in Hennepin, Ramsey, and and remarkable experience with a variety Washington Counties. Initially, India of flavors. Various criteria should be Palace opened their restaurant in considered when opening a new Roseville, Minnesota. Then, it expanded in restaurant. Minimum standards for any Burnsville, Plymouth, and Eden Prairie. given location would depend on different __________________________________________________________________________________________ Shrestha, Ritu. 2018. Site Suitability Analysis for a New Franchise India Palace Restaurant in Minneapolis and St. Paul, Minnesota, USA Combining GIS technologies and the Huff Gravity Model. Volume 21. Papers in Resource Analysis. 16 pp. Saint Mary’s University of Minnesota University Central Services Press. Winona, MN. Retrieved (date) http://www.gis.smumn.edu circumstances including population and fundamental factors influencing store density of surrounding area, volume and are changing over time. demographics, income level of residents, Therefore, franchisors should take into average amount of car and foot traffic, account the dynamic nature of the business proximity to mass transit, businesses, local environment. In addition, changing landmarks, and attractions, zoning demographics induce greater uncertainty requirements, utilities assessment, in how to optimally meet consumer needs accessibility, food varieties, popularity of and wants (Ingene and Lusch, 1980). restaurant, number of nearby competitors, Indian food is both exciting and center size for center of gravity technique, intimidating with its exotic ingredients, etc. Further details include payment plan unfamiliar dishes, and tongue-tingling (e.g., credit cards, cash, check), food plan flavors. A wide variety of flavors can (e.g., vegan, gluten-free, kid’s menu), attract anyone from children to elderly establishment features (e.g., handicap, people and make them satisfied. Indian accessible, smoking), and parking (e.g., restaurants are attracted to open franchises garage, free). in different cities, either in the same state Site selection has a huge impact on or in different states for consistent service almost every facet of the design and and profit. Franchises should maintain construction process, since it handles the recognition of the parent restaurant, interests of the users and the community. franchisor’s trademark, service mark, trade It should be executed precisely because name, and logotype. For a good response the success or failure of a restaurant from the customer, quality customer depends on its location to a great extent. service, ambience, ethics, background All these processes become possible by music, cleanliness, language proficiency, administering new GIS technologies. etc. are very important. Background Site Selection Franchising proposes opportunities for Finding the right location for a restaurant individuals and business firms who want takes time and hard work (Rex and Walls, to expand the number of distribution 2000). A key challenge facing every outlets carrying their products and services franchisor today is how to quickly identify (Khan, 1992), and it is becoming an factors that determine a successful important strategy in the global markets franchise location (Blake, 1993). Good for business growth, creation of jobs and locations allow ready access, attract large economic development. Restauranteurs are numbers of customers, and increase in competition and thinking hard about potential sales. where and how to expand their business According to Nelson (1958) and (Steintrager, 2001). The statistics seem to Great Wall Supermarket’s experience, suggest that franchising a restaurant has location depends upon various factors, for extensive advantages that essentially instance, population density, reputation, increase the chance of success of a accessibility to resident population, franchisee over an independent operator competitor locations, land use, physical (Swerdlow, 1993). Ghosh and Craig desirability, appearance, size, shape, (1983) explained that distribution and neighborhood, other amenities, roads, and composition of population are transportation accessibility. 2 Acquisition of Data extract latitude and longitude information identified in units of degrees minutes For the purpose of this project, Hennepin seconds (DMS), which were converted and Ramsey counties represented the study into coordinate values in meters. The final area. Restaurant information and existing result was a point shapefile representing site addresses were acquired from the the precise geographic location of each restaurants’ websites. Restaurant location restaurant. The census data coordinate helps to determine the size of site, system was set to the World Geodetic convenience, and visibility. Census tract System 1984 (Figure 1). data for 2010 and other required data sets were obtained from the U.S. Census Bureau and the U.S. Census Bureau’s American Fact Finder website. A tract is a relatively small, stable geographic area and a permanent statistical subdivision of a county designed to be a comparatively consistent unit in regards to population characteristics, economic status, and living conditions. Census tracts generally have a population size between 1200 and 8000 people with an optimum size of 4,000 (U.S. Census Bureau, n.d.). Methods Figure 1. India Palace (IP) and other competitive restaurants in Hennepin and Ramsey Counties. Software and Equipment Used Businesses want to open in areas GIS makes it possible to store a vast where there is consumer demand and the amount of spatial data in digital form and consumer is willing to spend. To perform statistical analysis, modeling, and determine these areas, demographics visual display of geographic data. GIS provide an understanding of the potential software and additional technologies were customer. Various demographic criteria used to conduct the study. The following were used to evaluate site suitability software and applications were used: (Table 1). ArcGIS 10.5, PythonWin, Google Maps, In order to perform suitability Google Earth Pro, and Microsoft Excel. analysis, demographic census data were These tools were used for data collection, converted into geodemographic data transformation, manipulation, analysis, through a join operation. Each of the and presentation. demographic datasets were joined to a Minnesota census tract shapefile through a Data Analysis common attribute and then exported as a new shapefile that contained the required The restaurant location records were geodemographic census information. edited and imported into Microsoft Excel, Then, the criteria in Table 1 were used to and latitude and longitude fields were also query census tract polygons. Separate added. Google Earth Pro was used to polygon layers of tracts meeting each 3 criteria were created. The variables in Weighted Sum Analysis vector format were transformed into raster through Point to Raster and Polygon to When performing site selection analysis, Raster tools (Appendix A). GIS software can rate the best
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