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Permalink Reply by Phil Proteau on January 31, 2011 at 5:26am

Your question about traffic percentages is one that can not be answered by those of us here on the internet.  You would need to have specific demographic information about the area you are looking at.  This can be acquired through the help of demographic consultant.  This can be pricey information to come by, because it is one of the holly grails of business "How much business will I get at this location".  Some people are intuitive about it, or get lucky rolling the dice.  Others pump their life savings into a failing business. 

 

I had a newly opening  shop call me to ask how much coffee they should be ordering in their first couple of weeks, as if I knew their town 150 miles away, knew their customers and their incomes, knew their local tastes and habits.  In response I asked them "what does it say in your business plan?  Surely you have calculated these numbers before opening your doors?!"

 

When you mentioned taking over a business that had failed, my first thought was that you will try to run exactly the same type of business in exactly the same location that had just failed.  When you ask what are some factors in relocating, this is the best one.  In a new location, carefully selected for its demographics and what not, you will be able to re-brand from scratch and hopefully capture more of the market.  There are no easy answers, and no one place or person to turn to who can tell you what you need to know.  Just start with a through vision of what you want, then map a path to it.

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Permalink Reply by Jeremy Perrine on January 31, 2011 at 6:12am

The previous owner failed because he knew nothing about coffee. We've been very successful with taking over. We've made it into most of the papers and have been votes best of in some publications. We are literally going up from here, but the landlord is being too aggressive by asking for a 15% increase in rent. So we started looking for locations so that we had something negotiating power with our current landlord, but once we found this place we're going forward with it. 

Phil Proteau said:

Your question about traffic percentages is one that can not be answered by those of us here on the internet.  You would need to have specific demographic information about the area you are looking at.  This can be acquired through the help of demographic consultant.  This can be pricey information to come by, because it is one of the holly grails of business "How much business will I get at this location".  Some people are intuitive about it, or get lucky rolling the dice.  Others pump their life savings into a failing business. 

 

I had a newly opening  shop call me to ask how much coffee they should be ordering in their first couple of weeks, as if I knew their town 150 miles away, knew their customers and their incomes, knew their local tastes and habits.  In response I asked them "what does it say in your business plan?  Surely you have calculated these numbers before opening your doors?!"

 

When you mentioned taking over a business that had failed, my first thought was that you will try to run exactly the same type of business in exactly the same location that had just failed.  When you ask what are some factors in relocating, this is the best one.  In a new location, carefully selected for its demographics and what not, you will be able to re-brand from scratch and hopefully capture more of the market.  There are no easy answers, and no one place or person to turn to who can tell you what you need to know.  Just start with a through vision of what you want, then map a path to it.

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Permalink Reply by Bob Von Kaenel on January 31, 2011 at 7:12am

Visibility, accessability, and traffic generators are important factors that you'll want to consider in order to make an educated estimate of your share of the traffic count. 

Visibility - Are you tucked away in a strip mall or free-standing? Far away from the street or right at the curb? Can motorists see your location from a sufficient distance in time to make the decision to turn in? Will you have signage that makes your location stand out in all directions?

Accessability- Are you at a corner with four-way access? Is there a traffic light that makes people stop in front? Is your driveway available to traffic coming from both directions or is it a right-turn-in & right-turn-out only? Can people turn in and easily drive to your door or will they have to take a side road and weave thru a mall parking lot? Is this a hiway with cars going 60mph or a downtown street with cars going 25? Are you on the "going-to-work" side of the street or the going-home side? Plenty of parking near your door?

Traffic Gererators- Are there businesses nearby that draw people past your location or onto your lot, (i.e. large office buildings, grocery store, factory with lots of workers, Walmart, medical facilities?).

Once you've determined all the variables you can then evaluate your potential draw more accurately. Most people would be happy to get 1 to 2%, but there's no standard number you can depend on.

 

  

 

   

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Permalink Reply by Benza Lance on January 31, 2011 at 12:32pm

Your local department of transportation and/or city gov should have traffic count information readily available. Not to sound like an asswipe or anything.
One thing to consider is having parking close by, be it a lot, street, or garage. The most recent Temple coffeehouse is located a half-block from three major freeways, while being surrounded with mostly residential and some gov buildings. The factor that makes this store much more successful than our downtown location (which has literally thousands of people walking by it everyday)? Parking lot shared by us and a local winery. The lot has been closed a few times, and its always killed us, regardless of the fact that there's ample street parking (3 hour!)

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Permalink Reply by Jay Caragay on January 31, 2011 at 11:12pm

I once had a landlord ask me for an increase of some ridiculous factor to $6500 for a shop in the Eastern Market district of Washington DC.  This was over the $1000/mo the landlord was charging the previous coffee tenant.

 

To be sure, the increase was drastic and ridiculous, but after analyzing the market, the potential and the previous tenant, I realized that this was a $650-800K location with the definite possibility of it being a $1mil location within a couple of years.  Suddenly, the $6500 wasn't so expensive anymore.

 

 

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Permalink Reply by Brady on February 1, 2011 at 5:42am

How does the accessibility compare to your current location? Do you know your current capture percentage? If so, a decent starting point might be a percentage or multiplier of your current capture percentage.

 

Also, when you say you "have the traffic count" for the new spot, is this a number that you've gathered yourself or one you've gotten from the DOT?  What percentage of that count is "easy access"?  What percentage is during "peak coffee" hours? What are the peak traffic times at this spot? Have you tried driving the route to your potential spot a couple of times, from different directions, at different times, to see how access really is?

 

So yeah, I don't know what a good percentage for you to use would be.  As others have said, so much depends on the particulars of each location.  I'd use your current location as one data point along with a cold and analytical assessment of the new spot.

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Permalink Reply by Jeremy Perrine on February 1, 2011 at 5:56am

Current location:
Shopping Center only directly seen by East bound traffic. We've average a small 48 daily transaction. 

This is enough to pay rent ($2 a square foot) and supplies but leave nothing to take home. Growth curve is small and slow. 

 

New location: 

Right beside a restaurant that I describe as an institution. It is in the older part of town. It's not a strip center. Stands alone. Seen from both West and East bound traffic (I don't know time details of the traffic count). Pretty easy access from both directions. $1 a square. 2200 total. with the potential to rent 1/3 of the space out to another business. Plus option to buy the building in 3-5 years. 

 

We are in a suburb of Houston that has seen expansion. Current location is right in the middle. New location is right in the old part.

 

1% of traffic at new location is 4 times our current daily transaction rate. 

Brady said:

How does the accessibility compare to your current location? Do you know your current capture percentage? If so, a decent starting point might be a percentage or multiplier of your current capture percentage.

 

Also, when you say you "have the traffic count" for the new spot, is this a number that you've gathered yourself or one you've gotten from the DOT?  What percentage of that count is "easy access"?  What percentage is during "peak coffee" hours? What are the peak traffic times at this spot? Have you tried driving the route to your potential spot a couple of times, from different directions, at different times, to see how access really is?

 

So yeah, I don't know what a good percentage for you to use would be.  As others have said, so much depends on the particulars of each location.  I'd use your current location as one data point along with a cold and analytical assessment of the new spot.

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Permalink Reply by Jeremy Perrine on February 1, 2011 at 5:57am

I wouldn't pay a dime more for our current location. There is little potential for growth. 

What did you look at while analyzing to come up with such a potential? 

Jay Caragay said:

I once had a landlord ask me for an increase of some ridiculous factor to $6500 for a shop in the Eastern Market district of Washington DC.  This was over the $1000/mo the landlord was charging the previous coffee tenant.

 

To be sure, the increase was drastic and ridiculous, but after analyzing the market, the potential and the previous tenant, I realized that this was a $650-800K location with the definite possibility of it being a $1mil location within a couple of years.  Suddenly, the $6500 wasn't so expensive anymore.

 

 

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Permalink Reply by Jason Shipley on February 1, 2011 at 6:08am

You may want to try your current landlord on for size at a reduction in rent. If you've got a location that would be a go you have nothing to lose asking for a substantial reduction. The commercial rental market is abysmal and when faced with losing a tenant you may be surprised at what he is willing to do. 

That said we just moved our location less than a 1/4 mile from where we were at into a bigger facility with the same fixed costs. Our exposure is much better and we are again seeing rapid growth. Of course you have to counter the growth with payback of the cost to move. There are no easy answeres.

 

Jeremiah Perrine said:

The previous owner failed because he knew nothing about coffee. We've been very successful with taking over. We've made it into most of the papers and have been votes best of in some publications. We are literally going up from here, but the landlord is being too aggressive by asking for a 15% increase in rent. So we started looking for locations so that we had something negotiating power with our current landlord, but once we found this place we're going forward with it. 

Phil Proteau said:

Your question about traffic percentages is one that can not be answered by those of us here on the internet.  You would need to have specific demographic information about the area you are looking at.  This can be acquired through the help of demographic consultant.  This can be pricey information to come by, because it is one of the holly grails of business "How much business will I get at this location".  Some people are intuitive about it, or get lucky rolling the dice.  Others pump their life savings into a failing business. 

 

I had a newly opening  shop call me to ask how much coffee they should be ordering in their first couple of weeks, as if I knew their town 150 miles away, knew their customers and their incomes, knew their local tastes and habits.  In response I asked them "what does it say in your business plan?  Surely you have calculated these numbers before opening your doors?!"

 

When you mentioned taking over a business that had failed, my first thought was that you will try to run exactly the same type of business in exactly the same location that had just failed.  When you ask what are some factors in relocating, this is the best one.  In a new location, carefully selected for its demographics and what not, you will be able to re-brand from scratch and hopefully capture more of the market.  There are no easy answers, and no one place or person to turn to who can tell you what you need to know.  Just start with a through vision of what you want, then map a path to it.

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Permalink Reply by Brady on February 1, 2011 at 8:11am

I'd be cautious when using any percent that it "seems like you ought to be able to get".  "Surely we can grab 1% of those people" is speculation. "What percentage are WE getting NOW" is data.

 

It sounds like the new spot should give you better capture.  That is an assumption that you are making, but it seems like a reasonable one and is based on something - your assessment of the situation as the business owner.

 

Since that's the case, your 48 current transactions divided by your current traffic count is probably a reasonable "worst case scenario" capture percentage for the new location.  (That said, if your current spot is truly only visible and accessible to the Eastbound traffic, you might even calculate current percentage based on only the Eastbound portion of your current location's count - which may double that existing percentage.)

 

Is your current location's capture percentage greater than or less than 1%?

 

Since you shared number of tickets instead of a current percentage, I kinda think that maybe you don't know what percentage you are getting at your current spot?  Seems like that would be a useful thing to know.

 

Jeremiah Perrine said:

Current location:
Shopping Center only directly seen by East bound traffic. We've average a small 48 daily transaction. 

This is enough to pay rent ($2 a square foot) and supplies but leave nothing to take home. Growth curve is small and slow. 

 

New location: 

Right beside a restaurant that I describe as an institution. It is in the older part of town. It's not a strip center. Stands alone. Seen from both West and East bound traffic (I don't know time details of the traffic count). Pretty easy access from both directions. $1 a square. 2200 total. with the potential to rent 1/3 of the space out to another business. Plus option to buy the building in 3-5 years. 

 

We are in a suburb of Houston that has seen expansion. Current location is right in the middle. New location is right in the old part.

 

1% of traffic at new location is 4 times our current daily transaction rate. 

Brady said:

How does the accessibility compare to your current location? Do you know your current capture percentage? If so, a decent starting point might be a percentage or multiplier of your current capture percentage.

 

Also, when you say you "have the traffic count" for the new spot, is this a number that you've gathered yourself or one you've gotten from the DOT?  What percentage of that count is "easy access"?  What percentage is during "peak coffee" hours? What are the peak traffic times at this spot? Have you tried driving the route to your potential spot a couple of times, from different directions, at different times, to see how access really is?

 

So yeah, I don't know what a good percentage for you to use would be.  As others have said, so much depends on the particulars of each location.  I'd use your current location as one data point along with a cold and analytical assessment of the new spot.

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