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Restaurant Management: How to choose the right location?

Location is one of the most important decisions food entrepreneurs can make. Get a checklist of what to consider when choosing a location for your new restaurant.

Location, location, location: It makes as much, if not more, of a difference in the success of a new restaurant as the menu does, yet it's difficult to find practical advice on choosing your location. We've rounded up the top tips for restaurant operators to consider when opening a new restaurant, so you can narrow down the options and select with confidence.

Here's what you need to know about selecting a location for your restaurant.

Demographics

Before you know where you can open your restaurant, you need to have an idea of who will go there. If you're offering falafel sandwiches, your target demographic might consist of vegetarian eaters and hungry college students looking for a healthy meal option. Thus, a location close to a college campus or a health food store would provide easy access to one of your main demographics — meaning the space would be a natural fit.

If you were instead opening a steakhouse, those locations would be a poor fit, because health-conscious shoppers may not want to eat steak frequently, and college students may not be able to afford nice steak dinners.

In addition to demographics, give thought to the psychographics, which refer to the "why" behind the "who."

  • Why are vegetarians and vegans attracted to a falafel restaurant?
  • The food is meat-free and protein-rich. Why do college students like falafel?

It's cheap, portable, flavorful, and filling. Psychographics and demographics provide a checklist on what your target audience needs and wants. Consider that a family restaurant should always have parking, since families are driving to your location. A family restaurant without parking will struggle to attract the target audience. For a falafel shop catering to college students, parking is less important.

Demographics will help you determine who you're targeting and psychographics will add shade and nuance to that picture so you're making all your location and marketing decisions with your target audience in mind. By siting and designing the restaurant so it appeals to your target demographic, you have a better chance of success following the launch.

Visibility

Unless your concept is a "speakeasy," then you probably don't want a basement or alley location. These spaces can be hard to find. The average consumer isn't looking down when they are walking, and they may be nervous about going down a dark alley at night. Poorly placed signs, narrow store fronts, or adjacent buildings that limit visibility make it harder for restaurants to succeed.

The best locations are readily seen by people as they walk or drive by. When people notice your restaurant, they will get curious about it and plan a visit. In fact, the curiosity factor will be one of the biggest drivers in the early days of your restaurant. You might think that a well trafficked road would be the ideal location, as it's constantly full of commuters.

That may be the case, however, busy drivers may be too busy trying to navigate a tricky turn to notice your restaurant. Before you commit, visit the area throughout the day and night, both during the week and the weekend. If the area is deserted after certain hours, then a dinner service is unlikely to succeed, no matter how enticing the concept is.

Accessibility

Your restaurant needs to be accessible to patrons thanks to their their fair prices. If it's tricky to access the parking lot, or if you only have a handful of parking spaces, many drivers will give up and dine elsewhere if they can't get a convenient parking spot. Think about all the different ways people might access your restaurant: public transit, walking, bicycle, and car.

Then consider how accessible a location is to those types of visitors. Simple tweaks, such as adding a bike rack in your parking lot, make your restaurant more accessible and have a better return on investment in the long run.

Take inspiration from coffee chain Dunkin Donuts. When siting new locations, they study the roadways and figure out which side of the street has the most drivers during the morning commute, when people are more likely to pick up a coffee. They locate their stores on the morning commute's side of the road, because they know drivers won't want to park and cross the street to grab their morning cup.

Competition

While you probably don't want to be the only restaurant in an area, if your concept is too similar to the competition, it could backfire. If you have your heart set on a pizza restaurant, but there already are three pizza restaurants in the neighborhood, yours faces an uphill battle to win over loyal customers from each of the other pizza places.

On the other hand if you're selling falafel, being near pizza places (which may attract the same target audience) and offering something different works well, because even the biggest pizza fans want a break from their cheesy slices every now and then.

When you're similar in tone and different in substance, then other business owners are likely to welcome you, and won't see you as a threat.

Safety and Crime Data

If a location seems perfect but has a high crime rate, people who may otherwise visit will stay away due to fears over public safety. Municipalities list crime data, so you can drill down to the precise location to see how many crimes there are in the area. As you spend time in various locations, pay attention to the look and feel of the neighborhood and ask yourself how potential customers will feel.

If the majority of stores are barricaded and covered with graffiti, then the area gives the impression that it is neglected. Whether or not there are many crimes in the area, bystanders may feel at risk due to the way the neighborhood looks.

While neighborhood demographics change over time - and indeed, the perfect site when you open can become less safe years down the road - don't set yourself up for an uphill battle by selecting a location where public safety is a concern.

Proximity to Suppliers

Just as you want your restaurant to be accessible to patrons, you also want to be accessible to suppliers, since you rely on them for your fare. A location that is friendly for suppliers will have a parking area that is accessible (rather than expecting suppliers to pull over on the shoulder of a narrow road and unload supplies in a pedestrian zone).

If you select a location that is far from suppliers, such as a remote countryside, then you may pay more for deliveries. Likewise, you may have a more limited pool of suppliers that are willing to work with you. While proximity to suppliers should not be your main consideration when selecting a location, it shouldn't be something you overlook either.

Size and Space Requirements

The size of your restaurant affects the size of your kitchen and dining room, the amount you will pay for a restaurant lease, and your typical expenses for utilities, among other things. A smaller kitchen space may lead to more accidents, from falls to burns, as employees try to work in a congested space.

A larger space can be safer, but will cost you more. As a general rule, you should plan for five square feet of kitchen space per diner, and your kitchen should take up no more than 30% of your overall square footage.

There are ways to do more with less, depending on your concept, but you should be honest with yourself about what you need (and what you can afford) before signing papers.

Zoning Regulations

Area zoning laws are an important factor in selecting your ideal restaurant location. You'll need a space that is zoned commercially, rather than residentially. Some areas are zoned as mixed-use, for both residential and commercial enterprises; if you are looking at a mixed-use zone, you want to understand what is allowed within the area and how it affects your concept.

Zoning is tricky, but you cannot afford to overlook it. Drill down to the lowest possible level of zoning (for instance, city rather than county or region), then look at the laws. If they don't negatively impact your restaurant, then you have a green light.

Affordability

Last but certainly not least, affordability affects your choice of location. If a space ticks all the boxes yet exceeds your budget, then it's not going to work for you. The safest locations to rent are those you know you will be able to afford from the opening days going forward.

Stretch locations, that are somewhat out of your budget, can work if you have a surplus pool of money and are comfortable funding the difference between your profits and your rent during the early days.

 

Knowing these factors will help you evaluate restaurant locations for the right reasons, so you can make a smart decision that sets your new restaurant up for success from the start.