April 25, 2023
If you are looking for foot traffic data for your business plan, competitor and market research or just because you are curious, you have come to the right place.
For a decade I have been a small business lender making SBA loans to retail business startups and I have owned ProjectionHub which helps entrepreneurs create financial projections for their startup. One of the biggest assumptions that business owners make when starting a retail business is how many customers they can expect each day, month and year. With a web based business there are tons of data sources that can help you estimate website traffic that you might be able to capture through advertising, SEO and social media marketing. You can find website traffic data on your competitors in great detail, but with a physical retail business I have not had a solid source of data.
It is so important to have potential customer traffic data for a startup because your entire financial model depends on it. Many of our financial models have an assumption for store traffic that the user must enter like our Retail Store Financial Projection Template below:
I have always felt terrible when clients ask me how they should come up with these assumptions because they are so important. The success or failure of the business literally depends on it, and in the past my best suggestion was simply to sit in the parking lot of a competitor for a day or a week and count how many customers enter the store and how many come out with a product in hand.
Obviously there has to be a more scientific way to do this which is why I am really excited to be partnering with Advan Research to be able to bring this much needed data to our clients. Advan Research provides location data and insights that can truly help our business owners make more educated assumptions, data driven assumptions when estimating customer traffic for a new business.
In this article I am going to do a deep dive on foot traffic data and show all of the cool things you can get access to and utilize in your business. I plan to cover:
With that as our outline, let’s dive in!
What is Foot Traffic Data or Footfall Data?
Foot traffic data is information collected about the number of people passing through or stopping at a particular location, such as a retail store, restaurant, or event venue.
Foot Traffic Key Terms
Just to make sure we are all on the same page, some of the key foot traffic terms you should know include:
Footfall data is synonymous with foot traffic data. It is simply information about the number of people passing through a certain area. Retail stores will often report an increase or decrease in their footfall data.
Mobility data is information about the movement patterns of people and vehicles in a certain area. Not only can you get information about how many people or vehicles pass by a certain location, you can understand how long a person might stay at a restaurant or retail store on average using smartphones, GPS devices and other sources of mobility data.
POIs - Points of Interest
A point of interest, often referred to as a POI, is a specific geographic location or address where it is possible to collect and analyze foot traffic data such as a retail store, restaurant, public park or event venue.
How is Foot Traffic Data Collected?
Foot traffic data can be collected through various methods, such as:
Manual counting: Individuals stationed at specific locations count the number of people passing by during a set period.
Video surveillance: Cameras record the movement of people, and software algorithms count and analyze the foot traffic data.
Wi-Fi and Bluetooth sensors: Devices that detect Wi-Fi or Bluetooth signals from smartphones can help track the number of visitors and their dwell time within a location.
Geolocation data: Smartphone apps and GPS devices can track user location and movement patterns, providing insights into foot traffic in specific areas.
Why is Foot Traffic Data Important?
By analyzing foot traffic data, businesses can identify trends, optimize store layouts, adjust staffing levels, and plan targeted marketing campaigns. Urban planners can use this information to design public spaces, transportation systems, and manage crowd control during events.
For the rest of this article I am going to focus on how a business can use foot traffic data to make reasonable, data driven assumptions about where to locate a small business, and to help ensure that the business will have enough foot traffic to potentially reach profitability.
How to Use Foot Traffic Data in Business?
I think there are a number of critical ways to utilize foot traffic data in the business planning process. A few of the ways I want to demonstrate include:
- Using foot traffic data for competitor analysis
- Using foot traffic data for market research
- Using foot traffic data for site selection
- Integrating foot traffic data into your financial projections
Foot Traffic Data for Business Planning
One of the biggest challenges with starting a retail business that is situated in a specific location is that once you make that investment into the property, you are stuck. If the customer traffic is not high enough to allow you to reach profitability, there isn’t much you can do to change that. For business owners that are putting it all on the line investing their life savings and often signing a personal guarantee for an SBA loan or other loan, it seems like you must spend some time gathering foot traffic data on your proposed location, analyzing your competitors foot traffic and understanding whether there is a big enough market to support your business.
Business Plan Competitor Analysis
One of the best ways to analyze your competition in a business plan is to get foot traffic data on your competitor’s locations. With our foot traffic data report you can get monthly traffic counts for your competitors, see the seasonal trends so that you can plan for the cash flow impact, and visualize where your competitor’s customers are traveling from to visit. Here are some examples of the data that is available and how you can use it.
Let’s assume you are going to open a fine dining restaurant, a steakhouse, that is going to compete with Ruth’s Chris Steakhouse in Indianapolis, IN. I pulled up a foot traffic data report on the Indianapolis Ruth’s Chris and was able to see the following data:
Monthly Foot Traffic Data
In the graph below you can see that this Ruth’s Chris location has roughly 5,000 visitors per month. You can also see the dip related to COVID and that visitor traffic has never quite recovered to pre-COVID levels.
Daily and Hourly Foot Traffic Data
In the graphs below you can see which days of the week and hours of the day are the busiest for the restaurant.
Customer Location Data
In the heat map below you can see where this Ruth’s Chris customers live. If customers are traveling a long distance to your competitor you might be able to visualize a good location to establish your business and take some of the customers for your own business.
Annual Revenue Estimate and Revenue per Square Foot Data
For many businesses, the foot traffic report can even provide an estimate of the number of square feet that the competitor is leasing and the estimated annual revenue and per square foot revenue for the business. You can utilize this information to help you determine how large of a facility your business might need and how much revenue you might be able to generate if your business was equivalent to this competitor.
Business Plan Market Research
You can use the data in the report to make a case for why your proposed market can support your business. For example, let’s say you wanted to start an ice cream shop in a city of 5,000 people that did not have an ice cream shop. You could look up an ice cream shop in a comparable city and review their foot traffic data to make a case that your proposed city could support your shop. You could also visualize the seasonality of the proposed business by reviewing a comparable businesses foot traffic seasonal impacts as seen below with this popular ice cream shop:
Site Selection and Foot Traffic
Foot traffic data can also be helpful with site selection. Let’s assume you are looking to rent a restaurant location where the former restaurant has moved. If that move was recent, you should be able to see how much traffic that location had prior to moving. As an example, I have looked up a Ruby Tuesday restaurant location that shut down during COVID and never reopened. If a new restaurateur wanted to open a new concept in that location, the foot traffic data below could be helpful in demonstrating the level of customer traffic that the location had in the past.
In this example the Ruby Tuesday was on a slow downtrend prior to COVID, but it was seeing roughly 5,000 monthly visitors which can be informative to a new potential restaurant.
Integrating Foot Traffic into your Financial Projections
Once you have relevant foot traffic data on your competitors, similar businesses in a comparable market, and potentially foot traffic data on your specific proposed location or a nearby location, you can utilize this data to help you make assumptions about the number of customers per month that you might be able to expect at your business.
Many of our financial projection templates have a customer traffic assumption for you to fill out, now you can make sure that your assumptions fall in line with your competitors and comparable businesses. For example, our coffee shop projection template will ask for your expected new customers each month, repeat customers, and average number of visits per repeat customer to forecast a total number of monthly visits which you can now compare to the data from your foot traffic report.
Where to Find Foot Traffic Data?
There are a few providers of organized foot traffic data that can be licensed for different use cases. Below are a couple of the top foot traffic data providers.
Foot Traffic Data Providers
Advan Research - We have partnered with Advan Research to make foot traffic reports available to our small business clients. Advan Research allows customers to analyze foot traffic data across multiple sectors, including retail, hospitality, consumer services, energy, technology, healthcare, REITS, financials and others.
Placer.ai - Placer can provide foot traffic data for those in the commercial real estate industry as well as retailers, urban planners and more.
Foursquare - Foursquare can provide location data to enterprise customers for a variety of use cases.
What Types of Foot Traffic Data is Available?
The following types of foot traffic data is available:
- Store Traffic Data
- Restaurant Traffic Data
- Mall Foot Traffic Data
- Average Revenue per Square Foot Estimates
Let me show you some examples of each and explain how you might use the data.
Store Traffic Data
With our foot traffic data report you can get access to certain store traffic data. For example, you can see the visitor traffic for a specific Walmart store. I pulled an example of store traffic data that is available for a local Walmart store below:
This particular Walmart store had foot traffic of 161,000 in the prior month.
Restaurant Traffic Data
You can also access foot traffic data for restaurants, coffee shops, bars, etc. Let’s say you wanted to start a coffee shop and wanted to see what kind of traffic the local Starbucks is getting, you can do that. Here is an example of a local Starbucks with foot traffic of 9,500 last month:
Mall Foot Traffic Data
You can also see foot traffic data for a mall. This could be for a traditional mall, or for a strip mall which could be really helpful in determining what kind of rent you might be able to charge tenants if you are a strip mall developer. Some malls have the ability to show the foot traffic for individual stores and some might only show foot traffic for the mall as a whole.
Average Revenue per Square Foot Estimates
One of the really useful data points that can be estimated specifically for larger corporate companies or publicly traded companies is average revenue per square foot. Of course this is going to vary depending on geographic location. The minimum revenue per square foot in New York City is going to be much higher than in rural areas.
So one of the cool things you can do is look at data for certain types of businesses or specific businesses across a state. Since I live in Indiana, I looked up the average revenue per square foot for the following in Indiana.
Coffee Shop Average Revenue per Square Foot
In Indiana, across 254 Starbucks, the average revenue per square foot was estimated to be $770 per year.
Average Revenue per Square Foot for a Restaurant
Looking at a diverse group of 260 restaurants, the average revenue per square foot was $402 per year.
Remember this can vary dramatically based on your specific concept and your geographic location.
Average Revenue per Square Foot for a Pizza Restaurant
The average revenue per square foot for a pizza restaurant can vary dramatically based on the concept. To demonstrate this we looked at the average revenue per square foot for 130 Papa John’s pizza restaurants and found that it was $338 per square foot per year.
Papa John’s operates small footprint restaurants with carry out and delivery only, so they can achieve more revenue per square foot than a sit down restaurant.
In comparison, we looked at 186 Pizza Hut restaurants and found an average revenue estimate of just $60 per square foot per year. This is due to the larger footprint and square footage of most Pizza Hut restaurants.
Average Revenue per Square Foot for a WalMart
Looking at 125 WalMart stores, the average revenue per square foot was $834 per year.
Obviously, WalMart is a best in class retailer, so to estimate revenue per square foot for a retailer that might be more comparable to your specific concept, we can help you find that data with our Foot Traffic Data Report.
Foot Traffic Data Report
Hopefully with this information I have convinced you that it is incredibly useful to be able to pull foot traffic data for your startup business. A report would allow you to analyze competitors, your market potential, compare different potential sites for the business and ultimately integrate your findings into a financial model to demonstrate whether your location can generate a positive return on your investment. We hope you will check out our Foot Traffic Data Report offering, or let us know if you have any questions at all!