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Successful and Unsuccessful Location Strategies – What is Trade Area Analysis? Chapter 4

This report analyses the Japanese market.

Chapter 3: The Essence of a Successful Noodle Business Location Continued from now on.

I have learned a lot about the importance of location in my own business through the location strategies of our locations.
The Dream Studios at each of our locations are not businesses that receive as many customers every day as udon, soba, or ramen restaurants because of the high unit cost of the machines.
Even so, we have never compromised on the location of each Dream Studio.
We have eight locations in Japan, all of which are easy to find and not too inconvenient for customers to visit.

For example, the current Tokyo branch in Shinagawa is our third location in Tokyo, the first being in Morishita and the second in Kiyosumi Shirakawa. However, the second branch in Kiyosumi Shirakawa was the most difficult to find, and the building was an old warehouse, so we decided to build the third branch in a convenient location for our customers.

The third and current Tokyo branch is the result of our many experiences in the past, and it has been well received by our customers and has become a very convenient location for us.

In our case, our selection criteria were proximity to a station and plenty of parking, both of which are difficult to achieve in Tokyo. However, we finally decided on our current location after inspecting many properties without making any compromises.

However, in our case, we had to install a large kitchen with a large electrical capacity, so we had to solve the problem of electrical capacity in the current property that we finally found.

We had to invest a large amount of money for those electric capacity improvement and renovation works, relocation costs, and key money for security deposit. Compared to this, the second Kiyosumi Shirakawa was cheaper to rent a property, but when you calculate the costs and other expenses associated with the subsequent inconvenience, there is no substitute for money.

I think location is not only a financial issue like this since it is used for a long time, but also a long-term perspective such as efficiency, convenience, customer impression, and time is also important.
In short, it is a question of which will be more profitable in the long run.
Next, I will discuss the successes and failures of actual students or customers of our noodle schools in acquiring locations.

1. Sanuki Udon Motoki, an udon restaurant in Tokyo that never compromised on location

Motoki’s husband, Mr. Iwasaki, opened his restaurant in Sengoku, Bunkyo-ku in 2006 after graduating from our udon school, and I have a special attachment to Mr. Iwasaki’s property because I went with him to look at a number of properties with him for property research.

Mr. Iwasaki also initially asked the real estate agency for information and received a total of about 400 property information.
He judged the 400 properties by their information and looked around the remaining 100 properties.
From those 100 properties, he finally narrowed it down to 4 properties, and after thoroughly comparing the pros and cons of the 4 properties, he decided on his current property.

Therefore, he devoted a lot of time and energy without making any compromises in order to obtain the current property.
This is truly a precious case where he risked his life to decide on a property, and we can say that he is an exemplary student among our graduates in terms of his business condition.

2. The following are reports from our staff of various failures.

1. Noodle store opened in a narrow building facing the roundabout in front of the station

It was opened on the first and second floors in an old narrow building often found in front of train stations.

The kitchen and seating area are on the first floor, and the second floor is for customers only. The second floor was not particularly spacious either, with only counter seats facing the wall and window, and the aisle was barely wide enough for one person to pass.

This was not a graduate of the noodle school, but a person who had trained elsewhere. When he came to us for advice on opening a restaurant, he had already signed a contract for this property, and there was no turning back.

This restaurant is struggling to get in because the adjacent restaurants are all standing restaurants or restaurants with more spacious interiors that are easy to get into.
The property was considered to be in front of a station = good location and was decided upon.
If we had had any contact with Yamato before signing the property contract, we would have done everything in our power to stop the property.

We always talk about the importance of property selection in our management lectures and seminars at events, and we always talk about the results of our trade area analysis and the consultation based on it, but I realized once again that there are some people who have never come into contact with such information.
We also reaffirmed the importance of property selection. (According to our staff)

2. A couple of former noodle store owners who were not our users but came to our noodle-making class

He opened a ramen restaurant in a local city in the Kanto region, which was reasonably popular and thrived, but because the parking lot could hold only 4-5 cars and the number of seats was larger than that, visitors to the restaurant began to park inconveniently on public roads, causing trouble with nearby residents, who reported him and forced him to leave the restaurant. (According to our staff)

3. Stores closed within 8 months of opening

We had analyzed the trade area several times, but the tenant kept failing the screening, and perhaps out of impatience, the tenant decided on the second floor of a building near a station without consulting us or conducting a trade area analysis.
Even though we told him that the second floor was not a good location, he said, “I already signed the contract,” and opened his business.
He told us that it was in a good location and had good foot traffic, but the station was not very crowded except during commuting hours, and inexpensive pubs seemed to be popular at night.

The restaurant was priced high, and although he said, “There are no similar restaurants in the area, so I am sure it will be successful even on the second floor,” he did not see a need for it.
Besides the disadvantage of being on the second floor, the area was not a good fit.
We felt the importance of a trade area analysis. (According to our staff).

4. The property was adjacent to a pachinko parlor.

According to our trade area analysis, there was not enough population within the trade area and the parking lot was shared with a pachinko parlor.
The trade area was along a large arterial road with two lanes each way, and not only was the arterial road dividing the trade area, but the store was located slightly off the road and difficult to find.

We were told to start with the customers who come to pachinko parlors.
The target customers were not the same as those who come to pachinko parlors, and the business area was bad.
He overcame the opposition and opened the store, but it was closed soon after.

5. Example of forcibly opening a restaurant despite insufficient parking space

The store opened with only two parking spaces available, even though it was primarily in an automobile trade area.
After opening the store, they realized the importance of parking and approached the owners of the surrounding vacant lots, but they were unable to rent them, so they had no choice but to relocate.

The property was located along a road and the speed of cars was fast, so it was a location that took time to be recognized.
The new location was in an urban area with many banks and trading companies around, and the number of meals served on weekdays but almost none on weekends. (According to our staff).

These are just a few examples.

Unfortunately, there is no end to the number of people who open a restaurant without considering the data obtained from a trade area analysis, such as parking, space, number of seats, and so on.

In the next section, “Chapter 5: Explanation of Trade Area Analysis, How to Identify a Good Location,” we will clarify what results can be obtained from our trade area analysis.

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