Please watch the Red Lobster video https://www.youtube.com/watch?v=vHEPFM4vkGY and answer the questions below: Think about your local Red Lobster or similar restaurant. Where was it located and why? How was demographic data used to choose locations? How can a chain like Red Lobster gather the information to know the sales impact for each of the cluster types? Does the organization need to interview actual customers, send out surveys, or perhaps conduct phone interviews? And is the firm sure that a cluster will have the same sales impact in one part of the country as it does in another? Finally, the video only glossed over the issue of competition, but competition can have both positive and negative effects on restaurant sales. Research has shown that when several restaurants locate near each other, total customer volume over all those restaurants is greater than it would be if the restaurants were located far apart. (In other words, customers want to go out to eat, so they drive to the location with many good choices—the same concept applies with food courts in shopping malls.) So should Red Lobster be looking to locate near its competition? Why or why not? Also, what if the choice comes down to two cities with similar demographics? City A has, say, 6 similar restaurants while City B has, say, 3 similar restaurants. Is the answer definitely that Red Lobster should locate in City B? Do customers have a fixed number of times that they will eat out per month, or might that number vary if there are more choices?
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