Coffee Shops Customer Report, San Francisco
Coffee Shops Customer Report, San Francisco
Michael Lewis
March 3, 2017
Table of Contents
Introduction 3
Market Analysis 4
Customer Analysis 5
Maps 7
Conclusion 9
Introduction
In the San Francisco area, two coffee and doughnut shops want to maximize their profits, while not competing with each other. With 305 other coffee or doughnut shops in San Francisco, both offer an intimate experience and a personal relationship with their respective customers. To better help analyze the situation, we must first understand the location. The city of San Francisco is home to 840,763 residents (Census, 2015). The proper city limits comprise of 231 square miles. A vibrate and youthful city, San Francisco attracts various different groups of people and diverse businesses. The two store owners understand these facts and would like to learn more about what is the market like for their respective stores. They would like to know if one is better than the other, and how they relate to their competitors. Lastly, they would like to further understand who their clientele is and why they come to these stores. To answer these questions, analyzation with be taken from data provided by the businesses, and customer and drive time trade areas, made in ArcMap, using said data.
Market Analysis
Based upon the customer data provided by the coffee shops, analysis of the market can be drawn to better understand each store. First, the total population within both trade areas is 144,136 people. This large amount of people in a small location offers great potential for both businesses. As the area is high in population density, the amount of customers has the potential to reach a diverse group of people. San Francisco has a larger younger presence. Specifically, near 30% of its residents fit into a category cheekily named “Laptops and Latte”. This category is aimed at the trend of young 20-somes who often populate coffee shops and cafes. In addition to that, the city also boasts a high amount of those called “trendsetters”. These two categories often go hand in hand, and are a great target audience for these two coffee and doughnut shops.
Second, compared to the rest of the coffee shop market, they are in prime geographical locations, towards the middle of the city, easily accessible from each direction. These two stores compete with 305 coffee or doughnut stores in the trade area. This is only counting stores that sell coffee, doughnuts, or both. This doesn’t account for businesses like diners, restaurants, gas stations, or other various places to find these products. In a city of this size, coffee and doughnuts are everywhere.
Third, both shops are located on major roads. These offer easy access of to the shops, better visibility in the community, and a less drive time to reach the shop. All three of these helps give both stores keen advantages over competitors. Location plays a key role in the success of each business.
All in all, both stores are towards the front of the pack when it comes to competing coffee/doughnut shops in the region. With advantages like geographical location, high surrounding population density, and access to major roads, both stores are convenient, popular, and easy to find. The market outlook looks good for both stores.
Customer Analysis
Breaking it down further, store 1 has a total number of registered customers of 352. Furthermore, store 2 has a total number of registered customers of 425. In relative terms, both stores are of the same size and similar customer bases. The main difference in customers is geographical location. A majority of each stores respective customers, are located around the coffee shops, only on a few occasions do customers live in the opposite locations of the shops they go to.
Comparatively, store 1, or the store in the northern part of the city, draws its customers from a closer radius around the store, while store 2 draws from a larger region of the city. This causes store 1 to have a smaller trade area than store 2. Note, as state above, store 2 have more customers, making it understandable that its area it pulls from to be larger. Now, a larger area is not always better. Increased area means more distance to travel to the store. Store 1’s high density of customers surrounding the store provides easy access and less of a travel time for many customers.
By looking at the drive time map, it is clear that the customers of store 1 have a lesser distance on average than those who go to store 2. This gives store 1 a distinct advantage due to convenience. Theories like Central Place Theory or intervening opportunities argue that the store that is closer should attract more customers, and while this is true for the majority of the map, on some occasions, we can see that some customers will travel a great distance to get their fix.
To summarize, each store pulls from a unique customer base that share certain similarities. It is the differences that give us insight to their respective customers. Store 1’s customers likely go there out of convenience. The vast majority live within 1 mile of the store, while very few live farther than 1.5 miles. These customers probably are commuters who stop in for their fix on the go and do not stay long. This is very different of the customers of store 2. Store 2’s customers often travel longer distances for the end product. They probably appreciate the quality of the products and stay for the atmosphere. Referring back to the two categories San Francisco has a lot of, they would fit in the coffee shop well. Those who are willing to go farther are more likely to not settle put of convenience.
Maps
Conclusion
Based upon the situation in question, the data presented, and the analysis drawn, I can say happily that the two stores are highly successful and already maximize their profit without competing with each other. It is apparent that their customer bases, while both very loyal, are fundamentally different. They have different tastes, attitudes, and driving forces. While not competing with one another, they both prove to be competitors with other coffee or doughnut shops in the region. Each having their own appeal, they have signature features that attract their clientele. Their successes can be partly attributed to a number of things including geographical location, proximity to customers, and easy access to major roads. Additionally, by analyzing drive times, and trade areas, both stores will continue to be successful in the current environment. Each store could further maximize their profits by using this information to strategically advertise to key groups and in key locations. This report showcased their strengths, and if acted upon, could prove to be very valuable. Both stores should be profitable for the foreseeable future.
Comments
Post a Comment