How to estimate local demand when a big store or employer comes to town

What you need

• The size of the development: how many jobs, and the typical pay. Use the employer's posted pay or local wage data.
• Your category's share of household spending. The Bureau of Labor Statistics Consumer Expenditure Survey publishes it. In 2024, food away from home was about 5.0% of average household spending ($3,945 of $78,535, our division of the published figures).
• Three assumptions that are yours to make: how much of pay is spent, how much stays local, and how much is genuinely new to the area.

1. Find the new annual pay

Pay = jobs × average annual pay. A planned store with 300 jobs at $35,000 adds $10,500,000 in annual pay. This example is hypothetical.

2. Take out tax and saving

Share spent is the part of pay that is actually spent. Start between 80% and 95% and note it as an assumption. At 90%: $10,500,000 × 0.90 = $9,450,000.

3. Take your category's share

Multiply by your category's share of household spending. At 5% for restaurants: $9,450,000 × 0.05 = $472,500.

4. Keep only what stays local

Many workers spend part of their pay in other towns. If you think 60% stays in your trade area: $472,500 × 0.60 = $283,500. This is a judgment, so run it at a low and a high value too.

5. Keep only what is new

Some of the workers already live and work nearby, and some spending only moves from one business to another. If you think half is genuinely new: $283,500 × 0.50 = $141,750. This is the step most estimates skip.

6. Run a low, base and high case

Change only the two least certain numbers. At 40% local and 30% new, the result is $56,700. At 80% local and 70% new, it is $264,600. If your plan only works at the high end, the plan is fragile.

7. Compare it with what your business needs

Divide the result by the sales your business needs each year. A restaurant that needs $750,000 gets about 19% of it from this payroll in the base case. The rest must come from shoppers, residents and your regulars.

8. Add traffic separately, and only if you can count it

Shoppers drawn to the store are a different source of demand. Do not guess it. Stand at the corner at the busy hours, count how many people and cars pass your door now, and keep that number to compare against after the store opens.

9. Check your competitive exposure

List what you sell. Mark the items the new store also sells. Research on Walmart openings found slower employment growth only at nearby small retailers in the same detailed industry, so the marked items are your exposure. Read the details in our paper When Walmart Comes to Town.

In a spreadsheet

Copy the block twice and change B5 and B6 for your low and high cases. Format B3 to B6 and B9 as percentages.

Check your answer

This is arithmetic on your own assumptions, not a forecast. Three things should hold: the answer shrinks when you lower any of the percentages; it is a range, never a single number; and you can say where each assumption came from. If the plan only works with no help from the new store, you can make the decision with more confidence. Then run your break-even and cash runway numbers.

General information, not business, financial or real estate advice. Figures in the example are hypothetical. Groundwork has no affiliation with any retailer named.

Published by Groundwork Business Advisory. Updated October 22, 2026.