This paper investigates the entry decisions of chain restaurants, by using thedata of starbucks coffeehouses in the U.S. The empirical results suggest thata potential entry is deterred by a large number of branches in a local market,but promoted by high population. However, the competition among thebranches can be less important in the top 10% chain restaurant markets. Theestimation results are robust, even when other chain stores are considered.The contribution of this paper is showing that the entry decisions of chainrestaurants is influenced by local demand shifters and competition among thebranches, and that those results can be sensitive to market potentials.