locational analysis of boston pizza

>Location Analysis of a Franchise Resturaunt>>Kristoffer Eyvindson <peter@the.link.ca>>University of Saskatchewan>Geography 319.3>>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 it profitably on a predetermined basis. The package or blueprint is>carefully prepared from the company's wholly-owned and/or pilot operations,>thereby minimizing the risks involved in setting up a conventional small>business (Felstead, 48).> Boston Pizza provides plans for a building, helps the franchisee to>choose a location, and provides training for franchisees before they begin>to operate their new franchise. "There are two months training and two>meetings each year attended by all franchisees " ("recipe is simple", 16).>In order to provide training, "one company-owned unit in Richmond serves as>a classroom and training headquarters" ("only way", 36-7).> Franchising has proven itself a strong system that works. In 1989 16,500>franchised establishments were operational in Canada, and that number grew>in 1992 to 20,200 ("30 years", 81) . "Franchising businesses account for 42>cents out of every dollar spent on retail goods and services today, and that>number is expected to grow to 50 cents by the year 2000. Quite simply, as a>business system, franchising works" ("30 years", 79). > A person with no previous experience who opens a new business runs a>considerable risk. This risk can be seen by considering the following>statistics: Half of all non-franchise restaurants close within the first>year and the United States Department of Commerce has stated that 90 percent>of franchise businesses are still in operation after 10 years, compared with>18 percent of independent businesses ("30 years", 81). > Treliving also compares his franchise method, which is exclusively>franchising, with the methods used by other successful restaurants.>"Restaurant chains like McDonald's, Burger King and Pizza Hut have a mix of>franchisees and corporate managers" ("30 years", 81-2) . Boston Pizza uses>the franchising system exclusively and believes that franchisee>entrepreneurs are more motivated than managers, because they have invested>their own money and therefore are more likely to succeed.> Treliving has attributed his success to the use of a franchising system,>gourmet pizza, and diverse menu (Cameron, 16). He believes that "Ma and Pa>pizza operations [which specialize in delivery out of a small facility] are>going the way of the dinosaur" because "they can't keep up with our>high-tech society and emphasis on gourmet pizza" (Cameron, 16). In the>past, a lower quality of delivered pizza was accepted because the person>responsible for making the pizza was far away, and the delivery person was>gone by the time you began to eat so there was no one to complain to.>However, in a restaurant where people sit down and have a meal, they>complain to the server if the food is sub-standard. These complaints are>inevitable because nothing is perfect. Customer complaints can be used as>opportunities to learn about customers problems. "Research has shown that>one of the best and most loyal customers is the one who had a complaint that>was satisfactorily resolved" (Lewis & Chambers, 72). Because Boston Pizza>also delivers pizza, Ma and Pa are either forced to generate a higher>quality product or go out of business.> Advertising a diverse menu has been one way Boston Pizza has drawn>customers. Boston Pizza has always prided themselves on using only fresh>ingredients when making their gourmet pizza. In 1986 Boston Pizza went one>step further and introduced salad into their menu. This addition was found>to attract female customers (Cameron, 16). Since then Boston Pizza has>become dedicated to offering and highlighting a diverse menu which can>satisfy a broader range of consumers (Mackin "more than a feeling", 24).>The restaurant "offers exotic pizza flavors and a broad menu of pastas,>salads and grill fare" ("Boston Pizza says, 3). They have reflected this>diversity in their latest broadcast campaign which was released in late 1994>across western Canada. A new slogan ,"'Come and get it all' conveys the>message that Boston Pizza serves more than pizza "(Boston Pizza says, 3). > The newly released broadcast campaign also featured television star John >Ratzenberger, who is known as Cliff the mailman from the Cheers television>series. The Boston city location of the Cheers bar was one connection which>helped in selecting this character, but there was also another factor.>Boston Pizza serves 3 distinguishable markets: business lunch, a family>enjoying a dinner together, and a late night post-cinema, or post-ball game>crowd ("only way to go", 37). "Ratzenberger's klutzy mailman evinced a>certain 'humor and humanity' the restaurant would like to project [and]>the character also appeals to viewers across generational lines">(McCullough, 3) making him a fine choice to speak to Boston Pizza's diverse>market. > In 1986, Boston Pizza were fortunate to have three outlets on the site of>Expo 86. Treliving and Melville both remark that this location is>responsible for making Boston Pizza "known internationally" ("pans out",>D7). The publicity that was attained through Expo 86 spawned interest from>businessmen in other countries which would later result in growth. The>restaurant took its first steps to expand into the international market when>the first Asian outlet was opened in Tai-chung, Taiwan in the year 1988. >Further development of a stronger network of Boston Pizza restaurants>throughout the Pacific Rim is of primary interest. Treliving has spoken for>Boston Pizza: "Our plan is to develop the Asian market through joint>ventures with Asian partners" ("30 years", 79). By developing through>joint ventures with Asian partners, Boston Pizza can "tap into the local>culture"("30 years", 79) as it moves into the foreign markets. Boston>Pizza can then become familiar with the differences between the foreign>market and markets in Canada and the United States. The new markets can be>treated accordingly.> In August 1992, Boston Pizza opened the "first pizza restaurant in>Guangzhou, China." (Mishima, D2) . The agreement was a joint venture>between Boston Pizza International, the Chinese Government and a local>franchise operator, T.K. Wong. The three parties made an arrangement to>share the profits ("Boston Pizza.", B17). The Chinese like the style of the>restaurant because it possesses a "North American concept" (Mishima, D2),>but the menu had to be changed in order to suit the culture better: no>alcohol would be served, and a smaller pizza size, corn soup, and a salad>bar would be available.> The restaurant franchise has proven that they can overcome cultural>differences by opening many successful facilities in Southeast Asia. The>franchising system allows them to do the same at a less significant level>within more familiar markets: "We accept that there are regional differences>that we have to adapt to. The franchising system is the only way to go>because the owner lends his or her personal touch depending on the>location." ("only way to go", 37). If Boston Pizza located on 8th Street in>Saskatoon is to succeed it will probably be due to the fact that it is a>franchise operation which is nationally advertised and is known for its>quality food. >>Bibiliography. >>"Boston Pizza exclusive." Canadian Hotel & Restaurant v.64(1) January 1986: 10.>>"Boston Pizza opens new headquarters." Vancouver Sun. January 22, 1992: B5.>>"Boston Pizza splits with agency." Marketing v.98(42) October 18, 1993: 1.>>"Confucius say, 'Mama mia!'" Marketing v.93(32) August 22, 1988: 7.>>Felstead, Alan. The Corporate Paradox: Power and control in the business>franchise. London: Routledge, 1993.>>Hogben David. "Expo 86 keeps pizza order coming." Vancouver Sun. July 5,>1991: D2.>>Jones, Ken & Simmons, Jim. Location, Location, Location: analyzing the>retail environment. 2nd Edition. >>Mackin, Bob, Jr "Boston Pizza expands to untapped Chinese market:>Guangzhou Restaurant opens this summer." Marketing v.97(6) February 10,>1992: D2.>>Mackin, Bob, Jr "Boston Pizza moves $1m AOR business to Glennie Stamnes.">Marketing v.96(45) November 11, 1991: 4.>>Mendelsohn, Matin. The Guide to Franchising. 3rd Edition. Toronto: Pergamon>Press, 1982.>>"New account for Grey." Marketing v.92(7) February 16, 1987: 16.>> . >Further development of a stronger network of Boston Pizza restaurants>throughout the Pacific Rim is of primary interest. Treliving has spoken for> ;Boston Pizza: . 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