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The fast-food location that brings more than 2 million dollars of sales per month
What are we going to talk about?
1. Shake Shack’s Growth
2. Location Flows Matter
3. Competition Helps (sometimes)
4. Do expensive real estate premises mean more sales?
1. Shake Shack Growth
Shake shack stores worldwide statistics. Source: www.barchart.com
Growth
🏪📈
32% locations growth per year
Shake Shack and the fast-food industry have been growing all over the world. According to data from the last 5 years, the company has doubled the number of stores that have opened worldwide. Today, we are going to focus on one of its most successful locations in Latin America: Mexico City. Among its 7 locations in the city, the Roma Cibeles location stands out in terms of order volumes and sales, with more than $2 million in monthly sales (estimated calculation based on detailed research). Moreover, a significant part of its success is due to its strategic location in the city, which will be explained in detail here, using the power of data to illustrate the massive success of this specific store.
Shake Shacks Roma Cibeles in Mexico City. Source: https://gastroranking.mx/
2. Location Flows Matter
One of the most important factors for the success of a fast-food restaurant is the presence of people. Stores typically seek out locations with high flows of vehicles and pedestrians. This holds true for the locations of Shake Shack Roma Cibeles. Roma is one of the best neighborhoods in Mexico City due to its central location and the influx of people and tourists.
Google Maps traffic Map.
Moreover, there are numerous places with these characteristics. The key here is to measure the quality of pedestrian and vehicular flow. In this case, the location has a high score in terms of pedestrian and vehicular flows. With these scores, it’s clear to see why these locations are experiencing so much success in Mexico City.
Walk Flow Score
🚶
0.9 / 1.0
Transit Flow Score
🚘
0.7 / 1.0
3. Competition Helps (sometimes)
However, another important factor contributing to the success of the Shake Shack Roma Cibeles location is its proximity to numerous fast-food restaurants, a result of the high population density in the area. In this case, the Roma zone boasts a restaurant density of 233.33 restaurants per km² (estimated calculation based on detailed research), one of the highest in all of Mexico City, a metropolis with over 10 million residents.
Competitors density
🔢📍
233 per km2
As the title suggests, competition sometimes helps. In this case, Shake Shack is situated near stores such as Subway, Lucky Sushi, Moshi Moshi, Cerveceria del Barrio, and others. Being located close to other restaurants is key because it attracts people seeking similar products, in this instance, similar food. The key to Shake Shack’s success in this scenario is that their quality surpasses that of their closest competitors, enticing some of their clients to switch to Shake Shack. This illustrates why being close to competitors can be a strategic decision, but only when you can capitalize on it. In this case, Shake Shack ensures they do just that.
Shake Shack and a nearby competitors from pois database.
4. Expensive Real Estate: Does it Mean More Sales?
Lastly, with a good location comes an important factor to take into account: the cost of real estate, whether buying or renting. High prices often indicate potential for great sales because the market typically has a better understanding of the city’s dynamics than any other study. However, the key to Shake Shack’s success lies in their careful evaluation of the impact these costs have on their operations. Real estate expenses rank among the highest costs for fast-food restaurants and retail stores, sometimes accounting for up to 30% of all operational expenses.
In Roma Cibeles, we find one of the most expensive zones in all of Mexico, with prices reaching $7200.00 per square meter for buying and $34.00 per square meter for renting. This is crucial because a location like Shake Shack’s could cost them at least $12,000 per month or more in rent alone (estimated calculation based on detailed research). While this represents only 7% of their total sales, which is relatively low considering their sales volume, for other restaurants, this budget could be an expense that guarantees the failure of their business due to a miscalculation of operating costs.
Property efficiency ratio
🏪💲
13.88 (high)
Shake Shack Mexico .Source: Facebook Shake Shack page
The key insight here is that the success of the Shake Shack Roma Cibeles location is not merely a matter of luck but rather a result of proper calculations involving flows, competitors, and pricing, making it the perfect location for the success of this brand. This same playbook has been used for recently opened Shake Shack stores around the world with great success, and it is likely to continue being used for their future locations, leveraging the power of data.
What other case would you like to observe in the future? Leave it in the comments.
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