Application of Gravity Model for Restaurants in Lowndes County, Georgia

Abstract

ABSTRACTSite selection for dine-in restaurants in a competitive market is crucial to their success. Research has shown that different forms of gravity models can empirically predict the effectiveness of retail and restaurant locations. However, there is limited application of gravity models in the restaurant industry and the research done in the past focuses on restaurants in large or medium-sized metropolitan areas. There has been minimal research as to whether site selection of restaurants in small metropolitan areas has similar patterns, and if a gravity model can effectively evaluate the site selection. This research attempts to bridge the gap in the literature by evaluating the effectiveness of gravity models in Lowndes County, Georgia, centered around a small city, Valdosta. The hypothesis is that gravity models can empirically evaluate the effectiveness of locations on the success of restaurants. Gravity model prediction and correlation analyses were conducted on a sample of restaurants to determine if any statistically significant relationships exist between the prediction by the market potential model or complex gravity model and the surveyed customer volumes at the restaurants. The results suggest that the market potential model and complex gravity model were unable to accurately capture the real market conditions of this small metropolitan area. Applying multiple regression analysis, a new model is proposed to better capture the attraction of the restaurants. The new model stressed the importance of site characteristics and the importance of certain variables in attracting customers.