Dayton, Ohio? Really? Really.
“Location, Location, Location.” I can’t count how many times I have heard this phrase quoted, especially in reference to real estate or home buying. Before our class on Thursday, April 12, I had never really considered the importance of location beyond the homeowner world. Now and even back in 1952, the location of the home is one of the biggest drivers of price and desirability. The people want to be near the shops, but I never realized the shops want to be near the people.
This is Black Rock Bar and Grill’s current mindset as they look to expand their restaurant across state lines into Ohio. My first and only experience with the restaurant occurred while vacationing with my family in Tampa, Florida, a few years back. It really was one of the most unique dining experiences I have ever had, as customers cook their own meat on slab of volcanic rock reaching temperatures of up to 755 degrees Fahrenheit. After pairing this fascinating concept with delicious food, it is obvious why the restaurant looks to open their doors to a new target market. Read the story in the link below.
https://www.bizjournals.com/dayton/news/2018/03/30/michigan-restaurant-chain-eyes-beavercreek.html
When I read that Black Rock was looking to open a new restaurant, the first thing that crossed my mind was location. Why are they opening up their restaurant in a shopping center outside of Dayton, Ohio? Shouldn’t they be expanding their popular restaurant idea to somewhere flashy like Miami Beach? I’m sure management had other location opportunities to consider, but they settled on suburbia outside Dayton. They must have had a good reason to do so. Let’s figure out why.
As the article mentions above, the new restaurant will bring along work for new restaurant staff as well as external contractors and suppliers to the area. Compared to Miami Beach, an area saturated with restaurants, waiters, food suppliers, and more, the opening of Black Rock in Dayton would do a lot more good for people looking for work. In terms of cost, it is much less expensive to buy and maintain property in Beavercreek, Ohio, than it is in a place like Miami Beach. It’s not just the property that’s cheaper, it’s almost everything. One pound of chicken breasts in Dayton costs around $2.00. In Miami? That same item costs around $3.70. Property and inventory costs can add up quick for restaurants, and by choosing the Dayton suburb over the hypothetical Miami Beach, Black Rock will save a good amount of money.
But what about the people? Will there be enough foot traffic in Dayton compared the ever-busy nightlife of Miami? A restaurant like this would surely be popular in a busy location like Miami, but I think its distinct features will bring in a steady flow of customers to the Dayton location on a nightly basis. According to FitSmallBusiness (https://fitsmallbusiness.com/choose-a-restaurant-location/), there are four main restaurant types. Black Rock would fit as a Bar & Bistro/Fine Dining hybrid, which means customers will be willing to drive a far distance to dine there. Because new jobs and business will be created, costs will be kept relatively low, and customers should be consistent, Black Rock’s opening in Beavercreek, Ohio, checks out as a smart spot for planning a supply chain.
What do you all think? Should Black Rock consider Miami or other high-profile locations in the future? Did they make the wrong choice choosing Ohio? Are there any other similar stories you can think of?
Additional links: http://www.blackrockrestaurants.com/
https://www.numbeo.com/cost-of-living/in/Dayton
https://www.numbeo.com/cost-of-living/in/Miami
Hi Nick,
Thanks for your post. I really enjoyed reading your take on this Black Rock situation, and it really did make me think. I did a search on ‘Restaurant Turnover’ in Dayton, Ohio. The Dayton Daily News released a very interesting article at the end of January 2018 which I think it extremely relevant to your post. https://www.mydaytondailynews.com/news/local/january-restaurant-highlights-new-coming-soon-and-closing/UDGd441VdpmrTdhSgCBbWN/
As the title highlights, 2018 will see 2 closures, 4 new restaurants, and 10 “in the works” and coming soon. Black Rock must not have even announced their arrival yet as it is not in the article. What was so surprising to me was the imbalance in this turnover. The new restaurants coming into Dayton range from fast food type places to nicer sit-down restaurants to coffee shops. There is also a variety of menus: soup, pizza, fried chicken, steak, sandwiches, bakery items, coffee, breakfast, gyros, and seafood. It is clear that these restaurants also see what Black Rock sees in Dayton.
However, this poses some concerns for me with Black Rock entering a market that is suddenly overwhelmed with new restaurants. What particularly worries me are the upper-scale restaurants that are opening. The Florentine (Prime Rib, NY Strip, Filet Mignon) and Calypso Grill (Caribbean-style cuisine) should be their major competitors. Black Rock will have to be wary that they aren’t the only new and shiny restaurant on the block. Despite the concern of competition, Black Rock looks to have chosen a promising and expanding market to open up in and as long as they can take advantage and capture a large portion of the market share, they will be one of the successors of Dayton, Ohio.
Nick,
Thanks so much for your post about Black Rock. I was super excited to read the title of your post, as I actually grew up in Dayton. I lived in Oakwood (only a few miles from Beavercreek) for about ten years before moving to Charlotte, North Carolina. My mom worked for National Cash Register at their international headquarters before they moved down to Atlanta.
Another major part of Dayton’s economy is Wright-Patterson Air Force Base, which is just outside of Beavercreek as well. Beavercreek is a cool, up-and-coming suburb of Dayton, and is already one of the largest. The city as a whole is pretty small and definitely isn’t what it used to be, but is going through a bit of a revival and I think Black Rock would be getting in at a point where property value and population are both growing.
I know there is definitely a market for nice restaurants in the area, because my uncle owns a very popular Italian restaurant downtown named Franco’s (it opened in 1976!). Though Dayton is small in comparison to Miami Beach or other cities in the region, I definitely think the restaurant could succeed, and your point about lower costs holds true.
http://www.francos-italiano.com
Nicholas,
I found your post to be very interesting. The idea of “location, location, location” brings me to think about my own experiences. I started my own pet sitting business when I was 14 years old. As the company started to grow, I needed to find more employees to work for me. Not only was it pertinent that I find qualified and trustworthy employees (since taking care of someone’s dog is a huge liability), but also that they were stationed in an area that would be useful and profitable for the business. We would need clients to be around that new employee and would be hiring our services. The link I have attached at the bottom discusses the importance of not just location for profitable areas, but also finding where the best workers are. Not only that, but I had to find somewhere that had workers that were not too expensive for me. In some areas, people may require a higher pay than another area.
In regards to your post, maybe they felt that the employees they were hiring in Dayton would work better than in a place like Miami. Not only that, but Miami is extremely expensive compared to Dayton. It most likely would generate a lot of foot traffic being in Miami compared to Dayton. However, profits could be higher in Dayton due to the huge costs of owning property in Miami. Not to mention, Dayton is a college town; leading to many people from many different places being concentrated in that area.
https://www.citylab.com/life/2014/02/what-cities-really-need-attract-entrepreneurs-according-entrepreneurs/8349/
Nicholas, much like you I did not think about location in the sense of supply chain planning and operations management until discussing the topic in class. When I thought of a location for a new business or company, I always found that I would think of a location choice in terms of relative nature to a city or hot location. I guess I assumed that the location choice for an entity was determined by factors that did not include those of the supply chain location. However, you present an interesting topic regarding the location choice of Black Rock Bar and Grill. This got me thinking about a few topics. First, I think of the labor that will be required to keep a restaurant like Black Rock running in an area that may not be as enticing for employees as a place like Miami Beach. However, this is an interesting consideration to look at when planning a location for a business. I spent this summer playing baseball in the small rural town of Liberal, Kansas, where upon looking back I see this theme of the labor supply chain become present in regard to location. A manager for a travel center/gas station in the town received a much higher salary than that of individuals with higher level positions in larger areas. So, location in terms of labor requirement from your staff is definitely a consideration. I looked at this article from Supply Chain Digest which discusses how to manage the labor supply chain: http://www.scdigest.com/assets/reps/Exptert-Insights-RedPrairie_05-04-08.cfm. In determining a new location, management must consider factors such as time and attendance, performance measurement, incentives and rewards, as well as analytics in their choice since the labor chain will be a key component of the operation. I encourage you to read more about those measures at the link above. Another thing that I thought of when reading through this post was how this topic could integrate in my area of discipline: marketing. It happens that this is actually something that a marketer would likely look at in conjunction with a supply chain location manager. Utilizing data from the target market, we can look at the tendencies and profiles of consumers in the area and recommend that a new location is beneficial or that it is not. We actually did this exact type of analysis and recommendation in one of my other marketing courses. I find it interesting that so many areas in different disciplines seemingly intermingle. As far as your question, I believe that Black Rock has made a secure choice since they have done the proper research and provided due diligence in their decision. Thanks Nicholas!
Thanks for your post, Nick!
While I do find it interesting that the company is considering Dayton, Ohio as the next location to open another restaurant, I do think there are some strategic benefits for the company.
For one, smaller and more rural areas offer uniquely experienced workforces as well as a unique excitement for such unique and specialized businesses. With such a unique concept, Black Rock Bar and Grill might be the only restaurant of its kind in the area. New concepts and businesses stimulate the economy and encourage other industries to expand to these locations. In addition, the company will experience lower real estate and advertising costs as well as lower levels of restaurant competition.
One of the previous comments mentioned that as a tourist traveling through a new city, he plans where he wants to go eat beforehand. However, Black Rock Bar and Grill might not have had the interest of ‘tourists’ in mind when opening the restaurant. Instead, they could have the interests of the locals in mind, and thus, be able to plan for more steady levels of growth.
Although surprising, I think the company made a strategic decision to expand to Dayton, Ohio. After reading this and thinking about your question, I thought about how luxury stores have locations in malls across the country, especially in areas not typically know for their appreciation of high fashion.
Nick,
I first want to start by thanking you for informing me about this awesome restaurant. The next time I go to Tampa, Florida or Dayton, Ohio, this may be the first thing I have to do. So thank you for adding to my bucket list.
Secondly, my initial reaction to Dayton was somewhat confused. I have driven through Dayton, Ohio three times in my life. Each time, I had no desire to stop and explore the area. The town looked relatively small and not very “touristy”.
Despite this, after reading your article, I may agree with you. Maybe Dayton isn’t so bad after all. In addition to the things that you have mentioned (such as lower cost of property and food), Dayton is also located near a major highway that a lot of people use to travel across the country. Maybe the restaurant could become a place that is known for its unique dining experience—making people really want to stop and take a break from their long road trip. Personally, when I have a long road trip, I plan out places to stop before I leave. Most of the time these are famous restaurants that are unique to the area I am driving through. Therefore, my initial reaction to Dayton, Ohio was completely wrong. After giving it some thought, I feel like this is the most practical option for Black Rock.
Daniel, I completely agree with you on your feelings towards Dayton. I have only been to the city one time, but I concur that there is seemingly not much to do and is not a destination on my road trip list. However, like I mentioned in my reply to Nicholas, if the company has done its research and there is promise to this market, perhaps it will be very beneficial to the company.
Nick,
I enjoyed your post about Black Rock Bar and Grill’s expansion into Ohio. I think you shed light of some of the motivations which pushed Black Rock to open their location in Ohio. Cost is obviously a huge driver in this decision. It is much easier to lower costs than it is to raise prices when you are in such a customer-facing industry. The reduced costs of running the restaurant in Dayton will allow Black Rock to produce a higher contribution margin without upsetting customers by having any higher prices. Black Rock may even be able to lower prices and attract more customers while still maintaining a higher margin.
With that in mind, I wonder why they specifically chose Dayton, considering the dozens of other large cities which can provide higher traffic in the region. In class we discussed the six aspects of location: suppliers, customers, community, labor climate, government, and environment. During the lecture last week, we talked about those in regards to their present status. For example, Dayton is a good option because it currently has good ties to cheaper suppliers, a rather large customer base, a blooming community, and a strong labor climate.
In today’s business climate, however, I think companies are looking to the future with these decisions. Businesses want to beat the competition to the best locations and establish their presence ahead of the rush. Looking at trends in recent years, businesses want to be in on the ground floor for the boom of small to mid-sized cities. I think that has played into part of Black Rock’s decision here. Cities like Nashville, Charlotte, and Austin have all boomed in the last decade to become powerhouses in attracting the rising generations, with food and social life at the core of the development. Maybe Black Rock is putting some of their chips in Dayton, Ohio and hoping that the customers, community, and labor climate will boom like other cities have in the past decade.
Perhaps its a bit of a stretch for to call Dayton, Ohio the next Nashville or Austin, but I do think companies are looking at these things in considering where to expand.
Joe,
I definitely agree with you that companies, particularly in the restaurant industry, are looking to the future and want to enter in emerging and growing cities such as Nashville, Raleigh-Durham, and Austin. As I was looking at Black Rock’s website, I noticed that they run a franchise model, licensing Black Rock’s know-how, procedures, intellectual property, use of their business model, and brand as well as and rights to sell their branded products and services to a franchisee. In general companies need to be extremely careful when operating a franchise model. Just because someone wants to open a franchise in their town doesn’t mean that there’s actually demand for it or the right decision for the franchiser. Companies need to be strategic about where they choose to open locations and Black Rock will need to be careful about this as they continue to grow and expand across the country.
Lily,
That’s an interesting piece of this puzzle which I did not know. Thanks for bringing it up. I agree that upper management must watch their step as they navigate through their expansions. They will also want to ensure that their processes and IP are being responsibly used by these franchisers and that their brand name is not being tarnished by sub-par operations.