Choosing a Restaurant Location
The classic real estate saying “location, location, location” that emphasizes location certainly applies to choosing space for a restaurant, but other factors also influence success or failure. Unfortunately, many restaurants fail within three years, and lack of planning contributes to this hard reality. Sometimes, restaurants that would be otherwise successful go out of business because they are inaccessible or unknown by their potential customers.
The basic requirements of running a successful restaurants are simple: supply good food and service. The practical details stymie many entrepreneurs, as they do not consider that getting people in the door is necessary for them to enjoy your food and service. As an owner, you want to choose a location that makes your restaurant convenient and desirable to customers.
Few factors have more impact on culinary success than restaurant location, but many beginners choose spaces for the wrong reasons. Location ties cuisine to local demographic composites of residents and people who work in the area. You should choose the right area by studying the region before committing to any plan. Common market targets include business professionals, urban hipsters, families with children, sports enthusiasts, culture aficionados and fast-food customers.
Growing older changes people’s dining preferences, so restaurateurs need to research foot and vehicle traffic of possible restaurant sites. Families prefer nearby restaurants with easy parking, relaxed atmospheres and extracurricular activities for active children. Other considerations include the following criteria divided into community and demographics:
- Total population, customer affluence and nearby competing restaurants influence chances of success.
- Fast-food restaurants need high visibility and easy access to vehicles. Most of these eateries build drive-through windows, so possible locations need driving lanes and roomy parking lots.
- College graduates and young professionals embrace current trends such as sustainable sourcing, lighter menus and vegetarian diets
- High crime rates in risky neighborhoods could discourage customers.
Older diners like convenience, nearby parking, affordable meals, roomy dining spaces and places to meet their friends. Restaurants in neighborhoods with aging residents might have trouble with slow turnover rates or selling modern dining concepts.
Analyzing Potential Sites
Visibility, access to foot and vehicle traffic, easy parking and delivery access for suppliers prove crucial to success, but creative problem solvers could finesse certain problems if they find locations that are ideal in other ways. Restaurants with challenging delivery logistics could schedule deliveries during off-peak hours. Restaurants in busy urban areas might not need parking because of high foot traffic and public transportation. Some restaurants succeed in residential neighborhoods despite parking problems. These restaurants could increase the number of nearby parking spaces by requiring employees to park further away from the premises or offering free taxi or shuttle services. Other key considerations include the following research:
Real Estate Value Trends.
Find out whether real estate values are trending up or down. Higher rents could impact cash flow, but residents with higher disposable incomes might justify higher rents.
Nearby Construction Projects.
Consult local chambers of commerce or city managers to discover whether any construction is scheduled in the area. Detours and construction sites could make it difficult to reach certain locations in the near future.
High traffic doesn’t always mean easy access. Congested traffic might block entrances and exits, defeating the purpose of highly visible locations. Observe traffic patterns to anticipate potential problems. Investigate the chances of getting dedicated traffic lights or left-turn lanes and signals.
Affordability of Space.
Lease or sales price of restaurant spaces plays an important role in overall profitability. If rents run too high, then certain types of cuisine might make it hard to earn enough profits. It is always sign of danger when a restaurant’s rent takes up a disproportionate amount of its budget.
Property condition might make the cost of repairs and alterations unacceptably high.
Character of Neighborhood.
Study the neighborhood and see how many people and cars pass the property. Pay attention to the ages and dress of passersby. High traffic could consist of gangs of hoodlums, business diners looking for lunch or urban hipsters taking leisurely strolls.
Possible Fixed Customer Bases.
Nearby customer sources, such as hospitals, factories and apartment complexes, could provide ready-made customer bases.
Business History of Location.
Investigate the property’s past to discover what experiences previous tenants had in attracting customers. Areas can change, but knowledge of former obstacles or benefits could help to increase chances of success.
Studying restaurants in the area gives clues about local trends, but new concepts could become immensely popular, and following the strategies of other business owners could generate frosty receptions from their loyal customers. If three successful fast-food restaurants operate nearby, a fourth might challenge the market.
Even great spaces with awesome benefits could prove problematic if the rents are outrageous. In the restaurant business, gross receipts for one day should cover monthly rent in most markets. Other factors to study include the local unemployment rate, median household income and public parking for restaurants without their own parking facilities.
Location is as crucial to success as food and service, so do the due diligence before writing a business plan, committing to a concept or signing a lease. Make sure the neighborhood supports the concept and has the necessary population and demographic profile for success.