To understand the market demand for restaurants in any university-dominated college town, it is necessary to understand the underlying economic “engines” that drive it. To properly gauge that demand, you must understand the known demographics provided by the U.S. Census in 2000 and projected out by Claritas. This will form the base for the supply and demand for full-service restaurants within the 30-mile radius of State College. In addition, you have to factor in the hidden economic engines in college town economies and how they affect demand for full-service restaurants. In State College, PA, there are two hidden economic engines – the 42,700 undergraduate and graduate students at Penn State’s main campus – University Park – and the 2 million plus “direct visitors” drawn to State College/Penn State for athletic, academic, cultural and entertainment events.

Opportunity Gap – Full-Service Restaurants

According to the RMP-Opportunity Gap exhibit for a 30-mile radius of State College, there is a $44 million greater demand for full-service restaurants than there is a supply. At $500 per square foot in sales, this would represent an 88,000 square foot deficiency of full-service restaurant space in State College, only taking into account the population included in the U.S. Census, which does not include PSU students or direct visitors.

PSU Students & Direct Visitor Impact – Full-Service Restaurants

Through the 2003 PSU Economic Impact Report, we are able to quantify the spending patterns of both the PSU students and the direct visitors on the restaurant category. In PSU’s 2003 Economic Impact Report, it quantified the direct visitors’ annual impact on State College’s economy to be $356 million. The breakdown of that spending was 30 percent on lodging; 28 percent on meals; 26 percent on drinks and entertainment; and 16 percent on general merchandise. Projecting the direct visitor impact on restaurants by 2010, it would be $128 million in restaurant sales and $119 million in drinks and entertainment or a total of $247 million. The $128 million in restaurant sales would support another 128,000 square feet of restaurant space. Assuming that 50 percent of those sales are quick service restaurants, full-service restaurant demand would be 64,000 square feet.

In the same 2003 Economic Impact Report, PSU estimated that PSU students had a potential non-academic spending impact of $315 million or $400 million by 2010. Assuming PSU students spend 5 percent of this amount on full-service restaurants, the potential in 2010 would be an additional demand of $20 million or 20,000 square feet for full-service restaurants.