CREJ - Retail Properties Quarterly - May 3, 2017
When evaluating sites for Larkburger, we look at three critical areas – trade area demographics, density and psychographics. Given target demographics often are viewed as the first and most critical hurdle in the site-selection process, let’s start there. First and foremost, we require a trade area that is populated by highly educated and affluent consumers. We don’t look at a site unless at least 50 percent of the 3-mile radius is college educated (associates degree or better), with 63 percent or greater being our sweet spot. And typically, 30 percent of the population has some graduate school experience or holds a graduate degree. When it comes to affluence, while the average fast-casual consumer has a household income of over $65,000 per year, the Larkburger customer has an average household income of $100,000 to $150,000 annually. Why is this the case? We play at the top end of fast-casual with our culinary-driven, premium burger menu – all entrée pricing currently falls between the signature Larkburger at $6.59 and the sushi-grade ahi tuna burger at $9.29. We provide limited service, where the customer orders at the counter and the food is delivered to the table. We are deeply concerned with sustainability – 100 percent of our packaging is compostable; trash, compost and recycling is offered in our restaurants; and our interior walls are clad in reclaimed Cyprus wood. We also recycle our frying oil for automotive fuel and we utilize LED lighting and energy-efficient kitchen equipment. Our core customer understands and values culinary cooking techniques and fresh premium ingredients, and they are educated in and supportive of our sustainability practices. The key is they are willing to pay for it with little to no price sensitivity because of our shared value system. Here’s where we get into the crux of our site-selection process – psychographics. Given the nuance that can occur within the seemingly narrow lane of the fast-casual category, psychographics is just as important as demographics, if not more. Basic census data is no longer the determining factor; it’s merely the starting point. How people spend their day, what they value in a consumer experience, how they move around the trade area and how they spend their free time is critical to how a site, trade area and customer base are evaluated. When reviewing an immediate trade area, we look for tenants that will attract a similar consumer. We want other nonburger, fast-casuals around us. We want reputable, well-known boutiques and big boxes that offer premium products/services and value social responsibility. Our customers enjoy outdoor activity and maintaining a balanced lifestyle. They seek out high quality, fresh-ingredient menus that provide healthier options because they are mindful of what they are putting in their bodies. For example, natural grocery stores, personal fitness gyms and active wear outlets offering these types of products and services are welcome and important neighbors to our business. Together, we can create a remarkable draw for one another based on the numerous benefits we collectively offer our shared customer base. Beyond the ideal demographics and psychographics, density is the final piece to the site-selection puzzle. Population size plays an important role in driving the frequency our business requires for success. We look for a 3-mile density of at least 60,000 people. We also look to be adjacent to, if not on, a main road delivering more than 35,000 daily traffic counts. From there, we have facility needs. We are interested in in-line or end-cap opportunities ranging from 1,900 to 2,300 square feet. We require a minimum of 25 feet of store frontage highly visible from the street, with 60 to 80 seats inside and patio seating for 16 to 24. In terms of infrastructure, we need 1 ton of heating, ventilating and air conditioning per 150 sf, a 2-inch gas line with 2M BTU, a 2-inch incoming water line, 400-amp, three-phase electric and a grease trap sufficient to local code. On the exterior, we require 15 parking stalls per 1,000 sf and the ability to permit our standard Larkburger sign package and exterior trade dress.