San Francisco Coffee Shops

Assignment 2

Summary & Findings:

                The objective of this project is to help two local coffee shop owners in the San Francisco area who do not want to compete against one another and have asked me for help in trying to figure out how they could not compete against each other. These two business owners have asked if I would help them by looking at different variables that would impact their businesses. The variables that are being looked at are; Customers, Competitors, Customer Derived Trade Areas, and Drive/Walk times. 

                In order to get this project started we first need to find all of the data that pertains to these certain variables. The store owners have sent us all of the data for their customers, below is a map comparing the two coffee shops and the customers that shop at either coffee store. 

Figure 1: Customers for both Coffee Shops

                After looking at the map above we can see that each coffee shop has customers that derive from the opposing coffee shops area. This of course means that there are some customers that travel immense distances just for a cup of coffee and some that prefer one coffee shop over another. Since these two coffee shops have customers in the opposing coffee shops area this means that the two coffee shops are competing for the same customers. Another aspect that is on the map is the mean center of each coffee shops customer base. The mean center helps us discover where the majority of their customers are coming from. Looking at both mean centers one would see that they are both very close to their corresponding coffee shop meaning that most people who spend money at these two stores live nearby to them. The next step of this project is to find out where their competitors are and if they are taking customers away from them and whether or not they should be more worried about other coffee shops than each other. Below is a map representing the original two coffee shops which are being compared to other coffee shops in the area.

Figure 2: Competitors for Coffee and Doughnut Shops

After looking at the map above one can see that there are a lot of more competitor coffee and doughnut shops near the coffee shop that is most north on the map. Meaning that one coffee shop has made a much better choice when trying to decide where to put their coffee shop. Once you look at both maps and see where the customers are compared to the other competing coffee and doughnut shops one can see that they share similar competitors. This of course means that some of their customers might be visiting other stores making the competition for coffee shops even more intense in the San Francisco area. The next step of this project was to create maps for both the customer derived areas for each coffee shop and the drive/walk time in order to get to either coffee shop. In order to create these two maps we would need to create two trade areas, one for each of them. Below is a map that shows the information of the customer derived areas in correspondence to the location of their coffee shops. 

Figure 3: Customer Derived Trade Areas

After looking at the map above you can easily see that one of the coffee shops has a much larger trade area than the other. Meaning that this particular coffee shop has a wider area for their customer base, which in the end means that more customers will end up coming to their shop for coffee than the other. The reason why one map has a larger trade area is because if you were to take a look at figure 2 you would see that the coffee shop with the larger trade area also has less competing coffee and doughnut shops surrounding it, making a more likely place to have coffee bought from since there are less choices to choose from. The other trade area that was asked to be made was that of the drive/walk times from each coffee shop. Below is the map representing the drive/walk times in correspondence to each coffee shop. 

After looking at the map above one can see where their customers are located in correspondence of their coffee shops location. Both coffee shops have an abundant amount of consumers within walking distance of their shops making it hard to tell which shop is better located by only looking at this map. But what we can tell is that both coffee shops are in great locations since there is such a large amount of their customer base within walking distance of their stores.

Conclusion:

                After looking at the results of all the maps the owners can tell how to maximize their stores profit with their trade areas. The market for both stores is explosive since both coffee shops have a majority of their customer base within 1.5 miles of their location meaning that most of their customers walk to their coffee shop. One Coffee shop is in a much better location than the other, because while both have large customer bases one has less competitors in its vicinity making most of that shops customers to visit their store more frequently since there aren’t as many shops nearby that serve the same product. After looking at the report for the customer derived trade area we can safely say that most of their customers are of the age of 25 to 34. Another aspect of the report that was quite noticeable was how many people use laptops and this is a huge area which drives people into coffee shops is a place to write and drink coffee. In order for these companies to maximize their profits they need to realize who their target audience is and what they want.