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01-09-2008 | Original Paper

Location strategies of multiunit service businesses: spatial differentiation and agglomeration among hamburger restaurants in Paris, 1984–2004

Authors: Sébastien Liarte, Bernard Forgues

Published in: Service Business | Issue 3/2008

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Abstract

In this article, we study how multiunit service businesses locate their units, choosing between two opposite spatial strategies. Whereas, locating one’s units close to competitors’ brings positive agglomeration externalities, locating one’s units far away from others’ allows local monopolies through spatial differentiation. We examine location strategies of the two biggest hamburger restaurant chains—namely McDonald’s and Quick—in Paris between 1984 and 2004. Results show that competitive standings impact locational strategy choices. The market leader favors spatial differentiation, thus preempting premium locations. Conversely, the challenger favors locations close to the leader, thus aiming at agglomeration externalities.

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More precisely, one can trace McDonald’s restaurants in Paris back in 1971. However, these were units franchised to R. Dayan, before the company decided it should control and manage its international expansion. McDonald’s restaurants operated by the company under direct supervision do not appear in Paris before 1984, the date of the end of the trial allowing McDonald’s to dismiss Mr Dayan and take back its brand.

We do not intend to mean that nobody outside of Paris enters the city and vice versa. However, people in the suburbs with a McDonald’s next door will obviously not go to Paris to have a hamburger.

SIRENE stands for «Système Informatique pour le Répertoire des Entreprises et de leurs Etablissements»; INSEE stands for «Institut National de la Statistique et des Etudes Economiques».

We replicated the analysis with different distances and obtained qualitatively similar results.

Here again, we replicated the analysis with the 2 and 4 closest competitors and obtained similar results.

An arrondissement is an administrative division. There are 20 arrondissements in Paris.

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Title: Location strategies of multiunit service businesses: spatial differentiation and agglomeration among hamburger restaurants in Paris, 1984–2004
Authors: Sébastien Liarte
Bernard Forgues
Publication date: 01-09-2008
Publisher: Springer-Verlag
Published in: Service Business / Issue 3/2008
Print ISSN: 1862-8516
Electronic ISSN: 1862-8508
DOI: https://doi.org/10.1007/s11628-008-0038-2

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