locational analysis of boston pizza

In 1963 the first Boston Pizza and Spaghetti House opened.. Ron Coyle, the original owner, named the restaurant 'Boston'>because the Boston Bruins NHL hockey team was the favorite of the

>Location Analysis of a Franchise Resturaunt>>Kristoffer Eyvindson

<peter@the.link.ca>>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>service area is being constructed similar to other Boston Pizza

restaurants.>It is shaped and colored in a way that will grab the attention

of vehicular>traffic The building has an angular bright red roof and will have a bright>red and blue sign when construction is complete > When the 8th street location opens its door, a market will already exist.>People working at the nearby businesses Bank of Montreal and Jubilee

Ford,>may decide to eat lunch at Boston Pizza In the evening, after work these>same people may stay and relax at BP's lounge Families looking for a>convienient place to eat quality food may decide to eat here > One problem remains, and it is a problem that Boston Pizza can not change.>The center barrier on 8th Street makes Boston Pizza accessible to vehicles>traveling west only Vehicles traveling east would find it difficult to>access Boston Pizza Therefore many potential

customers will pass by and>find another place to eat.> 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 The 50th street facility has not been a very successful operation>since its opening Its location has, however, provided transient customers>on weekdays Many employees who work at nearby industrial facilities

eat>lunch here > The 50th Street Boston Pizza is located relatively close to the Saskatoon>Airport and Saskatchewan Place The Airport and Saskatchewan Place have>also provided some of Boston Pizza's customers However, although it is>close to the airport, Boston Pizza is not close to any hotels or motels and>so only a limited number of

travelers come to eat After large events at>Saskatchewan Place, Boston Pizza is a popular restaurant After Billy>Graham spoke at

Saskatchewan Place in late October, the restaurant was>packed

Usually, this location has only a few late evening visitors It>has not been very successful at attracting families because of its>inconvienient

location An alternative location for a Boston Pizza in the>north end of the city would be on Idywyld Drive Traffic flows to and from>the Airport and Saskatchewan Place are much larger on this street This>street is also much more accessible to families.> Business success can be

attributed to the use of a franchising system When>Treliving and Melville bought Boston Pizza in 1983, "the two men owned 16 of>the 36 existing outlets, but sold them all to new franchisees" ("recipe is>simple", 16) Treliving didn't want to compete with franchisees that were>recruited Instead Treliving and Mwlville wanted to look after the other>people's stores so that there would be no favouritism In order to>concentrate on franchising, Treliving and Melville created a "management>consulting firm" ("recipe is simple", 16).> According to Treliving, "The system [franchising] provides franchisees with>a brand name, a proven business system and ongoing support" ("30 years",>81) 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 The problems which a franchisee may experience have>already been encountered by the franchisers over the years Thus, 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", 81)> Boston Pizza uses the business format franchise: >>[The] business format franchise involves the use of not merely goods

and>services identified by a trade mark or invention, but a package

or>'blueprint' containing all the elements necessary to establish the

business>and run it profitably on a predetermined basis The package or blueprint is>carefully prepared from the company's wholly-owned and/or pilot operations,>thereby minimizing the risks involved in setting up a conventional small>business (Felstead, 48).> Boston Pizza provides plans for a building, helps the franchisee to>choose a location, and

provides training for franchisees before they begin>to operate their new franchise "There are two months training and two>meetings each year attended by all franchisees " ("recipe is simple", 16).>In order to provide training, "one company-owned unit in Richmond serves as>a classroom and training headquarters" ("only way", 36-7).> Franchising has proven itself a strong system that works In 1989 16,500>franchised establishments were operational in Canada, and that number grew>in

1992 to 20,200 ("30 years", 81) "Franchising businesses account for 42>cents out of every dollar spent on retail goods and services today, and that>number is expected to grow to 50 cents by the year 2000 Quite simply, as a>business system, franchising works" ("30 years", 79) > A person with no previous experience who opens a new business runs a>considerable risk 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, compared with>18 percent of independent businesses ("30 years", 81) > Treliving also compares his franchise method, which

is exclusively>franchising, with the methods used by other successful restaurants.>"Restaurant chains like McDonald's, Burger King and Pizza Hut have a mix of>franchisees and corporate managers" ("30 years", 81-2) Boston Pizza uses>the franchising system exclusively and

believes that franchisee>entrepreneurs are more motivated than

managers, because they have invested>their own money and therefore are more likely to succeed.> Treliving has attributed his

success to the use of a franchising system,>gourmet pizza, and diverse menu (Cameron, 16) 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, 16) In the>past, a lower quality

of delivered pizza was accepted because the person>responsible for making the pizza was far away, and the delivery person was>gone by the time you began to eat so there was no one to complain to.>However, in a restaurant where people sit down and have a meal, they>complain to the server if the food is sub-standard These complaints are>inevitable

because nothing is perfect Customer complaints can be used

as>opportunities to learn about customers problems "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, 72) Because Boston Pizza>also delivers pizza, Ma and Pa are either forced

to generate a higher>quality product or go out of business.> Advertising a diverse menu has been one way Boston Pizza has drawn>customers Boston Pizza has always prided themselves on using only

fresh>ingredients when making their gourmet pizza In 1986 Boston Pizza went one>step further and introduced salad into their menu This addition was found>to attract female customers (Cameron, 16) 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", 24).>The restaurant "offers exotic pizza flavors and

a broad menu of pastas,>salads and grill fare" ("Boston Pizza says, 3) They have reflected this>diversity in their latest broadcast campaign which was released in late 1994>across western Canada A new slogan ,"'Come and get it all' conveys the>message that Boston Pizza serves more than pizza "(Boston Pizza says, 3) > The newly released

broadcast campaign also featured television star John >Ratzenberger, who is known as Cliff the mailman from the Cheers television>series The Boston city location of the Cheers bar was one connection which>helped

in selecting this character, but there was also another factor.>Boston Pizza serves 3 distinguishable markets: business lunch, a

family>enjoying a dinner together, and a late night post-cinema, or

post-ball game>crowd ("only way to go", 37) "Ratzenberger's klutzy mailman evinced a>certain 'humor and humanity' the restaurant would like to project [and]>the character also appeals to viewers across

generational lines">(McCullough, 3) making him a fine choice to speak to Boston Pizza's diverse>market > In 1986, Boston Pizza were fortunate to have three outlets on the site of>Expo 86 Treliving and Melville both remark that this location is>responsible for making Boston Pizza "known internationally" ("pans out",>D7) The publicity that was attained through Expo 86 spawned interest from>businessmen in other countries which would later result in growth The>restaurant took its first steps to expand into the international market when>the first Asian outlet was opened in Tai-chung, Taiwan in the year 1988 >Further

development of a stronger network of Boston Pizza

restaurants>throughout the Pacific Rim is of primary interest Treliving has spoken for>Boston Pizza: "Our plan is to develop the Asian market through joint>ventures with Asian partners" ("30 years", 79) By

developing through>joint ventures with Asian partners, Boston Pizza can

"tap into the local>culture"("30 years", 79) as it moves into the foreign markets Boston>Pizza can then become familiar with the differences between the foreign>market and markets in Canada and the United States The new markets can be>treated accordingly.> In August

1992, Boston Pizza opened the "first pizza restaurant in>Guangzhou, China." (Mishima, D2) The agreement was a joint venture>between Boston Pizza International, the Chinese Government and a

local>franchise operator, T.K Wong The three parties made an

arrangement to>share the profits ("Boston Pizza.", B17) The Chinese like the style of the>restaurant because it possesses a "North American concept" (Mishima, D2),>but the menu had to be changed in order to suit the culture better: no>alcohol would be served, and a smaller pizza size, corn soup, and a salad>bar would be available.> The restaurant franchise has proven that they can overcome cultural>differences by opening many successful facilities in Southeast Asia 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 franchising system is the only way to go>because the owner lends his or her personal touch depending on the>location." ("only way to go", 37) 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 >>Bibiliography >>"Boston Pizza exclusive." Canadian Hotel &

Restaurant v.64(1) January 1986: 10.>>"Boston Pizza opens new

headquarters." Vancouver Sun January 22, 1992: B5.>>"Boston Pizza splits with agency." Marketing v.98(42) October 18, 1993: 1.>>"Confucius say, 'Mama mia!'" Marketing v.93(32) August 22, 1988: 7.>>Felstead, Alan The Corporate Paradox: Power and control in the

business>franchise London: Routledge, 1993.>>Hogben David "Expo

86 keeps pizza order coming." Vancouver Sun July 5,>1991:

D2.>>Jones, Ken & Simmons, Jim Location, Location, Location:

analyzing the>retail environment 2nd Edition >>Mackin, Bob, Jr

"Boston Pizza expands to untapped Chinese market:>Guangzhou

Restaurant opens this summer." Marketing v.97(6) February 10,>1992: D2.>>Mackin, Bob, Jr "Boston Pizza moves $1m AOR business to Glennie Stamnes.">Marketing v.96(45) November 11, 1991:

4.>>Mendelsohn, Matin The Guide to Franchising 3rd Edition Toronto: Pergamon>Press, 1982.>>"New account for Grey." Marketing v.92(7) February 16, 1987: 16.>>