The right location to set up a business, the analysis of the market environment and the respective target group are decisive for the economic success of a company. The main objective of our use case, which is not meant to be entirely serious, was to demonstrate our expertise in spatial optimization through the prediction of especially favorable business locations.
On the basis of a fictional example, locations were to be found for an entrepreneur who would like to establish himself in the kebab business. Ideally, it would attract a particularly large number of hungry nightclub visitors. The city of Berlin was chosen not only as the headquarters of Supper & Supper GmbH, but also as the official kebab capital.
The aim was to identify vacant shops in the immediate vicinity of nightclubs that could be acquired by the entrepreneur, to make sure after entering the market with his new kebab business he could achieve at least 30% market share of the Berlin kebab market.
Three datasets were used in total. One that contained the coordinates of vacant properties in Berlin, another one the locations of other kebab shops and finally a third dataset included the coordinates of nightclubs in Berlin.
Challenges & Solutions
This use case was a spatial optimization task. As part of the solution process, the geographic information system ArcGIS was used.
It was required to optimize the location of the future kebab shop in order to achieve the desired market share of 30%. This was done taking into consideration the following parameters: pre-defined budget for the property acquisition, property location and distance to nightclubs and competing kebab shops as well as market share of the competition. Subsequently, all possible locations for new kebab shops that represent the optimum of these parameters could be identified.
With this model two spots were identified as the best kebab shop locations in Berlin - one is situated in Friedrichshain and one in Moabit. By defining vacant real estates and combining those findings with the given entrepreneurial specifications, the businessman could gain a sales network with a market share of 30% with only two acquisitions.