>Location Analysis of a Franchise Resturaunt > >Kristoffer Eyvindson <email@example.com> >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
>The center barrier on 8th Street makes Boston Pizza accessible to vehicles >traveling west only. After large events at >Saskatchewan Place. > One problem remains. This >street is also much more accessible to families. In the evening. Thus. Instead Treliving and Mwlville wanted to look after the other >people's stores so that there would be no favouritism. >People working at the nearby businesses Bank of Montreal and Jubilee Ford. >may decide to eat lunch at Boston Pizza. Traffic flows to and from >the Airport and Saskatchewan Place are much larger on this street. however. > According to Treliving. 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. Treliving didn't want to compete with franchisees that were >recruited. > Business success can be attributed to the use of a franchising system. 81) > Boston Pizza uses the business format franchise: >
. Many employees who work at nearby industrial facilities eat >lunch here. "the two men owned 16 of >the 36 existing outlets. a proven business system and ongoing support" ("30 years". but sold them all to new franchisees" ("recipe is >simple".>service area is being constructed similar to other Boston Pizza restaurants. the restaurant was >packed. Treliving and Melville created a "management >consulting firm" ("recipe is simple". Usually. a market will already exist . The problems which a franchisee may experience have >already been encountered by the franchisers over the years. > When the 8th street location opens its door. Boston Pizza is not close to any hotels or motels and >so only a limited number of travelers come to eat. 16). provided transient customers >on weekdays. "The system [franchising] provides franchisees w ith >a brand name. Vehicles traveling east would find it difficult to >access Boston Pizza. The 50th street facility has not been a very successful operation >since its opening. 16). after work these >same people may stay and relax at BP's lounge. After Billy >Graham spoke at Saskatchewan Place in late October. and it is a problem that Boston Pizza can not chang e. Its location has. However. In order to >concentrate on franchising. >It is shaped and colored in a way that will grab the attention of vehicular >traffic. W hen >Treliving and Melville bought Boston Pizza in 1983. > 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. An alternative location for a Boston Pizza in the >north end of the city would be on Idywyld Drive. this location has only a few late evening visitors. Boston Pizza is a popular restaurant. >81). Families looking for a >convienient place to eat quality food may decide to eat here. The Airport and Saskatchewan Place have >also provided some of Boston Pizza's customers. It >has not been very successful at attracting families because of its >inconvienient location. > The 50th Street Boston Pizza is located relatively close to the Saskatoo n >Airport and Saskatchewan Place. Therefore many potential customers will pass by and >find another place to eat. 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". The building has an angular bright red roof and will have a bright >red and blue sign when construction is complete. although it is >close to the airport.
> Treliving has attributed his success to the use of a franchising system. "Franchising businesses account for 42 >cents out of every dollar spent on retail goods and services today. 72). compared with >18 percent of independent businesses ("30 years". > Franchising has proven itself a strong system that works. Ma and Pa are either forced to generate a higher >quality product or go out of business. in a restaurant where people sit down and have a meal. 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. 81-2) . Boston Pizza has always prided themselves on using only fresh >ingredients when making their gourmet pizza. >The restaurant "offers exotic pizza flavors and a broad menu of pastas. 81). Because Boston Pizza >also delivers pizza. > Boston Pizza provides plans for a building. >salads and grill fare" ("Boston Pizza says. but a package or >'blueprint' containing all the elements necessary to establish the business >and run it profitably on a predetermined basis. >In order to provide training. 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".50 0 >franchised establishments were operational in Canada. In 1989 16. "There are two months training and two >meetings each year attended by all franchisees. In the >past. 16). >thereby minimizing the risks involved in setting up a conventional small >business (Felstead. > A person with no previous experience who opens a new business runs a >considerable risk. 16). >However. and that number grew >in 1992 to 20. In 1986 Boston Pizza went one >step further and introduced salad into their menu. and provides training for franchisees before they begin >to operate their new franchise. This addition was found >to attract female customers (Cameron. because they have invested >their own money and therefore are more likely to succeed. > Advertising a diverse menu has been one way Boston Pizza has drawn >customers. 81) . with the methods used by other successful restaurants. and diverse menu (Cameron. a lower quality of delivered pizza was accepted because the person >responsible for making the pizza was far away. "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." ("recipe is simple". They have reflected this >diversity in their latest broadcast campaign which was released in late 1994
. 24). Boston Pizza uses >the franchising system exclusively and believes that franchisee >entrepreneurs are more motivated than managers. >gourmet pizza. "one company-owned unit in Richmond serves as >a classroom and training headquarters" ("only way". they >complain to the server if the food is sub-standard. 3). as a >business system. and the delivery person was >gone by the time you began to eat so there was no one to complain to. Customer complaints can be used as >opportunities to learn about customers problems.. 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. 36-7). which is exclusively >franchising. 16). helps the franchisee to >choose a location. Quite simply.. >"Restaurant chains like McDonald's. and that >number is expected to grow to 50 cents by the year 2000. Burger King and Pizza Hut have a mix of >franchisees and corporate managers" ("30 years". 48). These complaints are >inevitable because nothing is perfect. franchising works" ("30 years".200 ("30 years". 79). 16). > Treliving also compares his franchise method.>[The] business format franchise involves the use of not merely goods and >services identified by a trade mark or invention. The package or blueprint is >carefully prepared from the company's wholly-owned and/or pilot operations.
.. The franchising system is the only way to go >because the owner lends his or her personal touch depending on the >location. > The newly released broadcast campaign also featured television star John >Ratzenberger. >Boston Pizza serves 3 distinguishable markets: business lunch.". > >"Boston Pizza splits with agency. 37). > >"Confucius say.. and a salad >bar would be available. 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 three parties made an arrangement to >share the profits ("Boston Pizza. "Ratzenberger's klutzy mailman evinced a >certain 'humor and humanity' the restaurant would like to project." ("only way to go".. Treliving and Melville both remark that this location is >responsible for making Boston Pizza "known internationally" ("pans out". The publicity that was attained through Expo 86 spawned interest from >businessmen in other countries which would later result in growth. Treliving has spoken for >Boston Pizza: "Our plan is to develop the Asian market through joint >ventures with Asian partners" ("30 years". > In August 1992. 1988: 7.. or post-ball game >crowd ("only way to go". Taiwan in the year 1988.64(1) January 1986: 10.K. > >"Boston Pizza opens new headquarters. Boston Pizza were fortunate to have three outlets on the site o f >Expo 86. > >Bibiliography. >D7). 3) making him a fine choice to speak to Boston Pizza's diverse >market." Canadian Hotel & Restaurant v. By developing through >joint ventures with Asian partners. and a smaller pizza size." Marketing v. a family >enjoying a dinner together. 1993: 1. Boston Pizza can "tap into the local >culture"("30 years". The >restaurant took its first steps to expand into the international market when >the first Asian outlet was opened in Tai-chung. and a late night post-cinema. 79). Boston >Pizza can then become familiar with the differences between the foreign >market and markets in Canada and the United States. > The restaurant franchise has proven that they can overcome cultural >differences by opening many successful facilities in Southeast Asia. T. Boston Pizza opened the "first pizza restaurant in >Guangzhou. > >"Boston Pizza exclusive. China. A new slogan ." Vancouver Sun. January 22. The agreement was a joint venture >between Boston Pizza International. The new markets can be >treated accordingly. 3)..conveys the >message that Boston Pizza serves more than pizza. D2) . > In 1986. who is known as Cliff the mailman from the Cheers television >series. 'Mama mia!'" Marketing v. >but the menu had to be changed in order to suit the culture better: no >alcohol would be served. The Boston city location of the Cheers bar was one connection which >helped in selecting this character." (Mishima. 1992: B5. 37).98(42) October 18. the Chinese Government and a local >franchise operator."(Boston Pizza says. The Chinese like the style of the >restaurant because it possesses a "North American concept" (Mishima. Wong. B17). but there was also another factor.>across western Canada. D2). [and] >the character also appeals to viewers across generational lines" >(McCullough. corn soup.
. 79) as it moves into the foreign markets."'Come and get it all'. 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. > Further development of a stronger network of Boston Pizza restaurants >throughout the Pacific Rim is of primary interest.93(32) August 22.
1991: 4. Bob. "Boston Pizza moves $1m AOR business to Glennie Stamnes. Toronto: Pergamon >Press. > >Jones. The Guide to Franchising. Alan. July 5." Marketing v. >1992: D2. Location. The Corporate Paradox: Power and control in the business >franchise. Jim. Location. > >Mendelsohn." Marketing v. "Boston Pizza expands to untapped Chinese market: >Guangzhou Restaurant opens this summer. Matin. Location: analyzing the >retail environment. Jr. "Expo 86 keeps pizza order coming. > >Hogben David..> >Felstead. 1987: 16. Ken & Simmons. > >Mackin. 1982." Vancouver Sun.92(7) February 16. > >
. Bob. > >"New account for Grey. > >Mackin.96(45) November 11. Jr." >Marketing v.97(6) February 10. 1993. 2nd Edition. 3rd Edition. London: Routledge. >1991: D2..