Big data and tater tots: How Sonic chooses where to open restaurants
Chain restaurants have been doing this kind of work for decades – the margins in the industry can be fine, so big chains work hard to minimize the risks involved in any investment they make in new locations. In the past, according to Sonic Geographic Information Systems (GIS) analyst Bradford Zygmontowicz, that meant boots on the ground.
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“A long time ago, it used to be scatter-plot maps out on a giant piece of paper, and people having to drive through markets to be able to plot out trade areas,” he says. “You had to have a million boots on the ground to be able to analyze even just a single market.”
Companies would scout trade areas, seeing which competitors were present, how far they were from major intersections, what kinds of foot and car traffic there was, and so on. Information had to be collected and collated more or less manually.
Today, rather than an army of analysts, a combination of free government data, paid market research and heavy automation means that Sonic can do a great deal of the intelligence work on sales and expansion plans with just a few experts working at their computers.
“That just streamlines work, that allows our guys out in the field to be able to really focus on finding new locations, working with brokers, meeting new franchisees and signing deals, rather than the tedious task of carving out a trade area and doing market analysis that could take a week,” he said.
Zygmontowicz detailed some of the setup that Sonic uses for its analytical operations. The first part is a mapping and visualization solution called Sitewise, made by market analysis service provider Tetrad, which also operates Sonic’s private cloud.
“That really helps our team out in the field, because they could be driving along with a franchisee and have their iPad up,” he noted.
The second major piece is a sales forecasting model provided by business intelligence consultant Intellytics, which integrates with Sitewise to provide richer data for any given geographic location, according to Zygmontowicz. Finally, the company uses a data blending and analytics service called Alteryx to incorporate information from many sources and serve as a hub for Sonic’s big data.
“We don’t have a centralized location that says ‘here’s everything that incorporates a store’ – financials, construction, address location, franchisee information, I have to pull that from multiple different sources,” he said. “To do that outside of Alteryx would honestly be a nightmare. You’d be doing v-lookups across multiple different workbooks, plus trying to incorporate databases – it’d take forever.”
Sonic has more than 3,500 restaurants in the U.S., located in 45 states, and both of those numbers seem likely to climb in the near future.