Executive Summary
Santa Fe Grill a Dallas-based restaurant has been successful in its operations and is currently planning to open two new restaurants in Texas. The selected cities of Texas are Houston and San Antonio. The company is concerned about different factors which could affect this business decision and the outcome of five years projections which the company has prepared for its expansion program. In this report, different research variables are identified and secondary research is carried out to present findings supporting the company’s expansion decision.
Research Variables
The research variables identified for this market research are listed below:
- Population and expected growth
- Competition
- Wage & regulations
- Suppliers
- Income levels
Secondary Research
The secondary research for this report has been carried out deriving relevant information from different sources including reports published by both government and non-governmental organizations and web sources including online newspapers. Different variables identified in the previous section of the report are further divided into smaller variables and presented in the following table. This data would form the basis for discussion in the next section to determine the viability of the selected markets for expanding the restaurant business for Santa Fe Grill.
Houston – Profile
Houston is the fourth-largest city in the US and is the capital of Texas. The city is considered to be the energy capital of the US as major oil exploration and marketing companies have headquarters in the city. The city has a large working population (See Table 1) which implies that most of these workers eat out during working hours and they could be considered as the potential market for a new restaurant. The location of the new restaurant is important and it is suggested that the new restaurant is located in the Houston Downtown which is the office block of the city and various tourist attractions are nearby. In addition to this, the city business growth has been promising despite the current economic crisis and it has also experienced an increased number of inbound families moving from other cities seeking job opportunities arising from the growth businesses have been able to post. The city also has a large number of restaurants and fast-food outlets which makes it one of the busiest cities for a restaurant business. However, the competition is strong, and existing restaurants have a high customer profile which makes it difficult for new entrants. Santa Fe Grill can build upon its reputation in the Dallas area by and word of mouth will play an important role in promoting the new restaurant. The average income level of Houston is quite high for such a large working population which suggests that the restaurant can expect to keep its similar prices as in Dallas.
There are a number of reputable suppliers in the city from which the company can purchase its daily grocery and prices are reasonable too. As the traveling distance between Dallas and Houston is long, therefore, it is not practical and feasible to deliver material from Dallas where the company has a strong relationship with its suppliers. The labor is abundant however the average wage rates are quite steep which means that the restaurant will incur high operating expenses.
San Antonio
San Antonio is also amongst the top ten largest cities of the US in terms of its population. The city is expected to grow and move up the table as Texas on the whole has high population growth rates. The city profile is similar to Houston however there are major differences in average wage rates and income levels. High-income levels suggest that people would have higher spending strength and restaurants would benefit from this. Furthermore, the city is a vibrant economic hub of the US and can pose as a viable target for a restaurant business. The business growth is slower than in Houston but the city has a large number of restaurants that are doing good business. Suppliers have strong lines with restaurants and Santa Fe Grill can make similar arrangements easily.
Recommendation
It is recommended through this report that both cities have a similar profile and they should be attempted for expanding restaurant business however to be prudent decision it is recommended that Houston is targeted before San Antonio.
References
- ACS. (2007). ACS Demographic and Housing Estimates: 2005-2007. Dallas: US Census Bureau.
- City of Houston. (2009). Demographics.
- Hud User. (2008). FY 2008 Income Limits Documentation System.
- Nivin, S., Perez, A., & Silverman, J. (2008). San Antonio, Texas Economic Indicators and Demographics -Abridged. San Antonio: Economic Development Department.
- Real Estate Center. (2009). Market Report 2009. San Antonio: Real Estate Center – Texas State University.
- US Census Bureau. (2007). US Populest Cities. Web.