Car-dependent metros have fewer independent restaurants
Chain restaurants and cars go together
Yesterday, we used data compiled by Yelp on chain and independent restaurants to compute the market share of chains in the nation’s largest metro areas. Overall, about a quarter of all restaurants are part of a chain, but that fraction varies widely across metro areas. We think that a high market share of independent restaurants is likely a good indicator of a thriving and diverse food scene, and is a strong amenity for many metro areas.
We also noted that there’s a strong correlation between places that have more restaurants per capita and places that have a larger market share of independent restaurants. Consumers in metros with a higher share of independent restaurants have both more varied dining choices and more total dining choices, on average, that consumers living in metros with a higher share of chain restaurants.
We’re not sure what the driving factors are that contribute to the more robust health of independent restaurants relative to chains in some metros, but we had a hunch that we’re investigating today.
Metro areas vary widely in their level of car dependence, something that we’ve explored in a number of ways at City Observatory (through our report on the Sprawl Tax) for example. One key marker of a metro area’s car dependence is the average number of miles driven per person per day. In the typical large metro area, that figure is about 25 miles per person per day, but is far lower in compact, transit served metros, and noticeably higher in sprawling, car-dependent metros.
So we took US DOT estimates of the number of miles driven per person per day in large metro areas and compared it with Yelp’s data on the market share of chain restaurants in those same metros.
The data show a strong positive relationship between miles driven and chain restaurant market share. Metros where people drive more have a higher fraction of chain restaurants. For example, New York, Portland and New Orleans all have a very low share of chain restaurants (less than 20 percent), and also have very low rates of driving per capita. Places where people drive a lot (Atlanta, Charlotte and Orlando) tend to have very high proportions of chain restaurants (more than 30 percent). Overall, each additional mile driven per day is associated with an 0.6 percentage point increase in the share of chain restaurants in a metropolitan area.
We can conjecture why this might be. If people travel more by car, then it may be more important for restaurants to be visible and accessible by car, whether located along highways or in strip malls. National brands and advertising may be relatively more important to gaining consumer awareness than they are in cities where people drive less. If people spend less time driving in cities because they are more compact, or more accessible by transit, biking and walking, that may provide more niches for smaller scale independent restaurants, compared to formula-driven chains. Often times traffic levels on streets and arterials are location factors for national chains: unless a site has so many thousands of cars passing per day, they won’t consider opening a restaurant. That kind of rationale may lead to more chain restaurants in places where people drive more.
Car travel poses an information problem for people choosing restaurants. This is clear when we think about our behavior traveling on a road trip, versus going out to dinner in our own neighborhood. Behind the wheel of a car, the only information you have about restaurants in a town (unless you’ve done a yelp or google search in advance) is by a quick glance at a restaurants sign (or if you’re on the freeway, a tight cluster of tiny logos). Chances are you’re much more likely to visit a chain restaurant in an unfamiliar place because you know what you’re going to get, even if it isn’t great. At home, you’ve got a lot of local knowledge (yours, and a network of friends) to tell you what’s good and what isn’t, and its less likely that you choose a restaurant because of its signs or advertising. What is true of us as individuals on the road, is likely also true of our behavior across communities: people who drive a lot probably choose their restaurants more based on what they can see through the windshield than in places where people are walking, a dynamic that works to the advantage of national chains as opposed to local independents.
This could also be more evidence for our Green Dividend: People who drive less spend less money on cars and gasoline, and have more money to spend on food, including supporting their local independent restaurants.
Regardless of the exact reasons, the strength of this finding is striking. It suggests that if you want to have more consumer choice and more independent entrepreneurship in your local restaurant scene, you want to have a less car-dependent transportation system. Our auto dependency may be on of the things fueling the banal sameness typically associated with chains.