Less competition or greater purchasing power? Attractiveness of São Paulo’s districts for restaurants

Abstract

There is consensus in the management literature on the influence of the external environment on organizations, whether in their planning or in their results. Demographic, economic and competition variables are usually part of a package of information analyzed to interpret the attractiveness of a given business environment. This study analyzes the attractiveness of districts in São Paulo for food retailers, combining household purchasing power and market concentration. The information collected was the number of competitors per district, average price of a standard product, household income and district population, consolidating primary and secondary data and using integration packages with Google maps for geolocation information. The districts were separated into three clusters by purchasing power and competition, and the behavior of prices per district and the presence of store chains indicate that purchasing power is predominant in the attractiveness of the analyzed sector. Although there is greater competition per inhabitant, the group that concentrates the districts with greater purchasing power records a greater presence of store chains and also a greater variability of prices, suggesting less hostile competition. Therefore, the results show important trade-offs for localization strategies and are useful for understanding the decisions of companies in the sector.