Have you been wondering if and when your favorite business, whether it be a fast-food chain or retailer, will come to our community? You’re not the only one! Greater Fergus Falls often hears renditions of “We have a McDonald’s, why can’t we get a Chick-Fil-A?” On the surface, it may seem simple, but a lot of factors go into where a business will establish a new location, and much of that decision comes down to demographic data.
Truthfully, every business has different parameters, and understanding them can be a little tricky. Our goal is to help demystify the process, and our Executive Assistant, NeTia Bauman, recently hosted a Business for Breakfast event on the topic. The response we received was great, and we’ve decided to share some more insight into the site selection process. Scroll below to get the details!
Site Selection Basics
Why is demographic data important? Simply put, businesses can’t afford to open in a specific location without doing their due diligence. Before any decisions can be made, site selectors undergo a lengthy data collection process.
How is Demographic Data Collected?
Though it will vary by state or the organization, a common data collection tool in Minnesota is Minnesota Compass. Led by Wilder Research, Minnesota Compass is a social indicators project that measures progress and provides insight into Minnesota and its communities' data and trends.
Site selectors will typically compile demographic information such as:
Total population within a specified range
Average household income
Cost of living
Available buildings and their condition
In addition to building a demographic profile, they’ll perform focus groups, consumer surveys, and consultations. Only after sufficient data has been gathered and analyzed can a business determine whether or not opening a location in a certain community would be successful to its business model.
It’s important to note here that there is no one-size-fits-all approach to this process. Most retailers will always rely on the Three L Principle — location, location, location. However, that’s not the end-all, be-all, and what appeals to one industry may not appeal to another. For example, McDonald’s focuses primarily on traffic patterns, market statistics, and competition. In contrast, Applebee’s ranks demographics, parking, and visibility much higher on its list of site selection criteria.
The Case of Chick-Fil-A
Chick-Fil-A is an excellent example of how demographic parameters vary from one business to the next. This fast-food giant has one of the most unique business models and site selection processes. Rather than focusing on location demographics, corporate is more concerned with the three Cs: character, chemistry, and competence.
This criterion is unique because it is used to vet a potential franchise operator rather than a location. Before the site selection process even begins, a potential franchise operator has to undergo an extensive application process, including a full-scale character assessment, 12 essays, and 10 rounds of interviews. Only after an applicant is approved will site selectors begin collecting demographic data.
As far as whether or not Chick-Fil-A will come to Fergus Falls, it’s not outside the realm of possibility. The company is currently experiencing growth and is looking to add new locations to Minnesota in the next 12-24 months. The most significant factor will likely be our population. While we have a service area of 25 miles, Fergus Falls has a population of just under 14,000 inside city limits. To put it in perspective, the smallest Minnesota city to get a Chick-Fil-A thus far is Coon Rapids, which has a population of 64,000 people. The only way to know for sure is for someone to begin the vetting process to become a Chick-Fil-A operator.
Supporting Business Growth in Fergus Falls
Our mission at Greater Fergus Falls is to support and grow our business community. With that in mind, we’re excited to share that NeTia was recently selected as a 2020 Minnesota Compass Champion. As part of the cohort, she will be able to access and use the data and resources Minnesota Compass provides to guide programs, planning, and policies that will benefit residents and communities. She plans to use her work to effectively leverage these tools to better define criteria for investment and development opportunities in Fergus Falls.
If you’d like to learn more about the site selection process, you can find a recording of May’s Business for Breakfast event here. Information regarding the demographic profile of Fergus Falls can be found here. Our team is available to answer any questions you may have as well, so feel free to reach out.