4.4 Locating a Coffee Shop in Atlantic City

Read the following carefully—you may wish to print this page out to use as a checklist as you complete items.

In this semi-scripted activity, you'll have a chance to practice some of the research skills you have developed so far and practice presenting your results clearly and concisely to your classmates. In addition, this activity should serve as good practice for the term project you will complete during Lessons 5-10 of the course.

Activity Scenario: Locating a Coffee Shop in Atlantic City

You are a geospatial analyst for a small consulting firm based on the East Coast--"Retail Research" with experience in location intelligence studies. Clients Jay and Kay contacted you about starting a coffee shop business in Atlantic City, NJ. They are targeting the seaside resort of Atlantic City and would like to open a franchise. The entrepreneurs have been loyal customers of the specialty coffee chain "Campfire Coffee," a cowboy-themed coffee shop which has successful franchises located primarily in the western cities of Denver, Phoenix, Albuquerque, El Paso, Austin, and San Antonio. They are friends with the Campfire Coffee V.P. of Franchise Marketing. All think the time is right to attempt a location on the East Coast and agree that the raucous gaming town of Atlantic City might be a good place for a location, especially considering the flashy or gaudy nature of Atlantic City. Your job is to perform the initial phases of market research and analysis for Jay and Kay.

To help direct your research, the entrepreneurs have already done some legwork. Having spoken to both the local chamber of commerce and the region's business development office, they are considering two possible areas of location in and around Atlantic City:

1. a walk-in style coffee house in the central business/tourist district of Atlantic City
2. a drive-through location in adjacent Pleasantville. (Local residents and long-term vacationers either live in or drive through Pleasantville regularly on their way to the core of Atlantic City.)

Campfire Coffee is not ready to choose a specific site, so you needn't consider site characteristics such as strip mall or stand alone, lease options, or the like. Rather, they want to make sure that the location meets their basic trade area criteria. While they are not ready to make a site-specific decision, the group is willing to consider any specific sites if an obvious candidate shows up in your research.

Guidelines

The following guidelines MUST be incorporated in your analysis.

• Campfire Coffee has had equal success with both walk-in and drive-through coffee shops, so either concept type is an option. Consider both possible areas of location.
• Campfire Coffee prefers locations where relevant market potential indices (MPI) are, for the most part, greater than the US average.
• Campfire Coffee is generally only interested in locations where there is a market demand (Esri BAO calls this "leakage").

First, you must decide before continuing if you’re recommending a location:

1. close to direct competitors in a clustering approach [ICIC ], leveraging economy of scale and concentrations of customers, or
2. at a distance away from competitors to gain a competitive advantage, drawing coffee drinkers to your site.

Then, are you recommending a walk-in location or a drive-through location?

For a possible walk-in location:

• will only consider along Atlantic Boulevard or to the south (towards the ocean/beachfront) in the boardwalk/casino district, roughly bounded by Albany Ave to the west and New Jersey Ave to the east.
• should be located at least .25 miles (0.4 km) away from any competitor (Starbucks, Dunkin Donuts, etc.).
• should be located at least .25 miles (0.4 km) away from any Atlantic City casino/hotel. (The chamber of commerce informed us that all Atlantic City casinos/hotels have coffee shops/espresso stands located inside, hence casinos/hotels are also competitors in this scenario.)

For a possible drive-through location:

• will consider anywhere in Pleasantville City (proper, within the municipal boundaries or immediately adjacent).
• must be located at least 1 mile (1.6 km) away from any direct competitor (Starbucks, Dunkin Donuts, etc).
• must be located on or very near (around the corner from) an arterial street with an average daily traffic volume (ADT) greater than 15,000.

Suggestions/Hints

• While YOU are the consultant working on this analysis for Jay & Kay, you're welcome to ask any of your colleagues (e.g., your classmates!) for thoughts/help/suggestions. There's not a Discussion page to post a comment. If you wish, you can email All Students and Instruction in this GEOG 850 Section.
• Don't forget about the very helpful, and easy to navigate "Help" for BAO, accessed in the upper right-hand corner of your BAO interface.
• In searching geographies, you may find it easier to draw a polygon when you have an imposed trade area (such as the "boardwalk/casino district" indicated above).
• You can practice by following the instructions below for creating a polygon (and managing your sites) for State College, PA (Fig. 4.1):
  • Log into Esri's BAO site.
  • Create a new "Project."
  • Select the "Maps" tab.
  • Choose the tab "Define Areas for Reports."
  • "Find location" and search for State College, PA.
  • Again choose the tab "Define Areas for Reports", then "Draw a Polygon" (if you have a basemap other than streets, it may not allow you to zoom in to an effective scale).
  • Select the "Polygon" button and draw a polygon around the Penn State campus (see Figure 4.1 below). There is an instructional video available on the BAO webpage if you need assistance.
  • Name the polygon as "Penn_State_Univ" when you finish closing the polygon.
  • Open your Project and all of the files will be in that project.
  • Note: There are a number of help documents and instructional videos throughout the BAO site. Be sure to take a few minutes and look them over as they are very helpful.

Figure 4.1: Polygon for State College Campus

Credit: Esri Business Analyst Online

• "Retail Market Potential" and "Restaurant Market Potential" reports are great sources for market potential indices (MPI).
• The "Traffic Count Map" report is a great resource for determining average daily traffic (ADT) volume.
• Use "Custom Data Setup" after selecting the "Add Data" tab to locate your competitors. By zooming your map in to only your area of interest, your competitor search will be limited to the viewed extent. In the search bar, you have many options for example InfoGroup July 2016. NOTE: Under "Advanced Search Options" you can search by NAICS Code or keyword. Lastly, your search may produce some results (especially if you use keywords) that you may not wish to consider as competitors—make sure you uncheck those before adding a point layer to your research.
• You can practice by following the steps below for "Business Search":
• Let's examine the competitive business sites using Esri’s Business Analyst Online (BAO). In particular, we will look at coffee shops in and around Penn State University Main Campus.
• The Census Bureau uses the North American Industry Classification System (NAICS) to classify businesses for the purpose of collecting and analyzing data. Additional information can be found on the NAICS site.
• Log into Esri's BAO.
• Go to the " Penn_State_Univ" Project.
• Proceed to the Maps tab, create maps from data, Business and Facility Search, show more options. 
• In the “Search Extent” field, choose “Current Map Extent” to get a better image of the area around campus.
• Now we need to search for a type of business. For this exercise, it will be coffee shops.
• To search for the NAICS number for coffee shops:
  • Select the NAICS Code directory link within “Search for a business or a facility.” (Please note that the US Census site provides the NAICS codes for different years in case you have old codes that need updates.)
  • Choose (72, Accommodation and Food Services).
  • Coffee shops would fall under the “Snack and Nonalcoholic Beverage Bars” category so the NAICS number would be 722515.
  • Select (722515, Snack and Nonalcoholic Beverage Bars) to show additional information and a breakdown of business types within that category are available by selecting the “722515” link.
  • Continue with the search, for NAICS Code, enter 722515.
  • Select the “Go” button (See Figures 5.2 and 5.3 below).
• From this point, you can further filter out your search results by unchecking categories from the search results, limiting by the number of employees, or by sales volume.  
• Click next and give your search a name to save it for future reference.
• Suggestion: You may want to think about building rings around your competitor points to help you visualize possible sites.
• If you do locate a desirable site, building rings, drive-times, or donuts around a candidate site could provide further insight.

Caveats

• There isn't a single "correct answer." Your results will depend upon how you chose to evaluate the market (level of geography, variables, etc.).
• Any case study is bound to contain some obstacles unlikely to be encountered "in the real world"—in the real world, you could ask questions of the entrepreneurs, and hopefully you would have access to some kind of comparative store data. Don't let this deter you—make the best recommendation with the information at your disposal. And don't hesitate to be creative—you're welcome to use functions of BAO beyond the aforementioned.