Built to Order

TaMolly’s, a small but growth-focused Tex-Mex restaurant chain operating in Texas, Arkansas and Louisiana, puts a premium on freshness — for both its food and its restaurant locations.

“We start from scratch every day and use the highest-quality ingredients and the freshest available produce and offer them to you at the lowest possible price,” the chain proclaims on its website. When seeking out new locations in the secondary markets in which it competes, the Texarkana, Texas-based chain seeks a similar level of freshness as it builds its stores from scratch.

But developing a restaurant from the ground up in new markets can be a problematic venture if all the pieces of the puzzle — site selection, direct real estate investment, attracting new customers — don’t fit.

“We build to own,” says Night Keyes, TaMolly’s general counsel. “We actually are making an investment in real estate, not just a restaurant. When we go to a place, obviously, we want to be successful with our restaurant and we try to find the best locations for us. It may not be the most expensive place or the most desirable site for some chains, but we want to go to where our customers are most concentrated.”

Keyes says TaMolly’s offers a unique, family-friendly restaurant model — thus the need to build “fresh” instead of converting existing structures.

“Everything is prepared on site,” he says. “A lot of restaurants have commissaries and buy package goods that are bagged and frozen. But we need a lot of prep space. Most restaurant kitchens are not designed for that. It works better for us to build and have control over the design and size of our kitchens.”

For TaMolly’s, locating a community and a site to support a new location is an elaborate undertaking, based on strategic site selection and customer analysis, Keyes says. The privately-held chain, founded two decades ago and sold to new owners in 2005, is intent on adding three to five stores a year. Immediate expansion plans center on its familiar locales, as well as Oklahoma.

To better focus its plans, TaMolly’s collaborates with Fort Worth, Texas-based Buxton, a provider of customer analytics and retail site selection technology.

Better than guesswork
Retailers will spend big dollars to perfect their products, enhance manufacturing, refine distribution systems and train personnel, only to find that their pursuit of the customer amounts to guesswork, says Buxton senior vice president Bill Stinneford.

Customer analytics identifies the spending behaviors and buying habits of potential customers to advise retailers on key business decisions that lead to site selection, product launches and marketing and promotion.

Buxton leverages customer “data trails” – how potential customers use credit cards, what they watch on TV, if and how they are registered to vote – to build and manage more than 250 separate databases offering “psychographic” information about a location. Buxton can drill down to specific locations in a city or town and give the company a detailed snapshot of customer and site variables.

While standard demographic information offers nuts-and-bolts identity data about broad categories like gender, race, age, income and educational level, that information does little to define what motivates potential customers and sets them apart from others, Stinneford says.

With its CustomerID Benchmark Model, Buxton performs data analysis on more than 116 million U.S. households and up to six people in any household, providing views into how potential customers live their lives, how they spend their money and what things are important to them.

“What it boils down to is efficiency in site selection and marketing in identifying customers,” Stinneford says. “Once you know where they are and who they are, you are able to use your investment in the best possible way so you are not just blanketing the area and paying for real estate in places that may not produce.”

Keyes says critical to TaMolly’s expansion plans is replicating its family-oriented customer base that has been successful in other locations. “We want to go where we are known and where we have much more similar customers,” he says. “We build relationships: A lot of our customers have been coming to us for years, and we’re starting to see that second-generation customer popping up.

“Capital at this stage of the market can be expensive, and you want to make sure that … you’re not spending your money on a site that may not be where your customers are,” he says. “For us, it is very important to know exactly.”

Tom Buxton founded the company in 1994 after working as a corporate vice president in the real estate, design and construction division for Radio Shack. In the past, retailers would rely on “smelling the dirt” at a location to site stores, Stinneford says. While value remains in that qualitative, gut-feel approach, companies must be more precise.

Home run advice
“It’s kind of like in baseball,” he says. “You’ve got your scouts and you’ve got your statistical guys. You still need to look at the site and ask does it feel right, is there good access, all those kinds of things. That’s the qualitative.

“What we do is ask, ‘Are there enough of the right kinds of customers, enough of the right other variables in the trade area for you to have a successful location?’ When both of those agree, then you can have supreme confidence in opening up those sites.”

Keyes agrees. “We didn’t want to just rely on visiting a town and talking to a Chamber of Commerce or the city council,” he says. “They’re obviously going to want you to come there, but it may not be the best town for us. When we are able to look at the data we can actually see if this type of community has the make-up that will give us a better return on our investment.”