How I Would Use Data To Open A Restaurant.

I’m a big fan of data driven decision making. In my job as a marketer it’s extremely important to separate myself from my work. After all if I’m trying to advertise a product that is clearly not aimed at my demographic, going with the kind of messaging or work I would like is just submitting to personal cognitive bias. Instead, I have to put myself in the head of the consumer. You have to do this at every step of the process, and even at the phase where you’re deciding what kind of company you even want to start.

I love the City of Denver. After moving here 4 years ago I still excitedly call it my home. One of the things that I love most about Denver is the diverse and growing culinary scene. From Rosenberg’s Bagels to Lo Stella Ristorante to Zengo, there’s so many great restaurants that have broadened my palate in many ways.

Want to know a secret though? If I was going to open a successful restaurant in Denver tomorrow, I wouldn’t base it on the foods I like but rather data.

Restaurants after all are a business. Personal preference doesn’t always translate to professional success. It may seem boring, but by using some simple quantitative and qualitative data we can make an informed decision about what is actually an underserved market in the Denver metro area.

So let’s first see where people are moving from. According to Zillow, 65% of newcomers to Denver are in fact from Colorado. Of the 35% of people not from Colorado the largest county that people immigrate from is Cook County, Illinois. (City of Chicago).

Now, qualitatively speaking there’s a few foods Chicago is known for. 1. Deep Dish Pizza. 2. Italian Beef. 3. Chicago Style Hot Dogs. The question becomes how does one decide which of these are the most popular? Well using social data we can infer some things.

We’re going to start off by using the world’s greatest free market research tool. The Facebook ad builder. Yes I am 100% serious. If you go into Facebook and begin to build an ad, before you pay for anything, you’re taken to an audience builder that will estimate the size of your audience in a geographic location before you buy on literally millions of data points. Now not everything will be on there, but this can help quickly see if there is a market available. For example, here’s the audience I’m going to start with for Deep Dish Pizza:

Here’s Hotdogs:

Finally, here’s Italian Beef:

As we can see, Deep Dish Pizza is quite popular, but Italian Beef is just on it’s heels. (I’m using Estimated Daily Reach). Let’s check out the competition in the area. According to yelp there are:

1. 141 places with “hotdog” on the menu

2. 71 places with “Italian beef”

3. 187 place with “deep dish”

Finally, we’re looking for qualitative data. I’m going to search on Twitter for the following keywords: Chicago, Denver, (name of food). Since I want relevant results, I’m going to accept items that appeared this year.

1. “hotdog”

There are no results during 2016.

2. “deep dish”

4 results of people asking for deep dish. Here’s an example:

3. “Italian Beef”

1 (very enthusiastic) result.

The results:

With audiences that are within 1500 people of one another, but with half the competition, I would personally choose to open an Italian Beef Restaurant. As the pace of migration from the Chicagoland area only increases, and with a lack of a Portillo’s or other iconic Chicago brand in the market, there is ripe opportunity to build and grow a restaurant that not only uses Chicagoans as a base audience, but also expands to Coloradans from other walks of life.

In the future, I’ll show you how to use just a few hundred dollars to test and validate whether these assumptions are true, again, using social media.

Tell me your thoughts in the comments!

How I Would Use Data To Open A Restaurant. was originally published in Marketing Experimentation.

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