Experts Share Why Location is So Important

Beata Grace Beatty

Beata Grace Beatty

Beata is a Florida-based freelance writer. When she’s not researching and pitching story ideas, she’s reading, walking on the beach, fiddling with home projects, and keeping up with her two daughters.

Picking a high-quality location for your new restaurant is a crucial step to success. Tyson Cole tells Inc. that selecting the perfect location is one of the top three things a new restaurant owner can do to guarantee a successful run. The other two important choices are a great chef and a great concept.

Industry experts and established restauranteurs agree that customer demographics, restaurant-style, accessibility, visibility, and convenience are some of the top considerations when deciding where to hang your sign. Once you’ve determined your needs, there is ample research to confirm that you are making the right decision.

People walking down an avenue picking a restaurant location with good foot traffic.

Define your concept and its demographic

The type of establishment you are planning to open dictates the customer demographics you need. These demographics include income level, age, and gender.

Evan Tarver at FitSmallBusiness.com says that you can define all restaurants as one of four styles:

  1. Fast Food: A spontaneous group aged 15-35 that eat out in conjunction with other activities. Crucial data includes a lower-income profile, location in a high-density population area, and heavy foot traffic areas.
  2. Bar & Bistro: This type of establishment attracts ages 25-45 with a higher disposable income. This group often spontaneously goes out after work and drinks alcohol in a relaxed environment, and the price point depends on the neighborhood.
  3. Casual Dining: For mid-income families with children aged under 16 years. Patrons often plan these outings, drive to the restaurant, and eat these meals around other planned activities. Safety is an important factor for this group.
  4. Fine Dining: Older, high-income couples who are willing to pay a higher price. This group has high expectations and usually makes reservations. These patrons will regularly travel by car, often up to 30 minutes from home, and they expect convenient parking.

Susan Callahan, chef and lecturer at the University of Maryland Eastern Shore, reiterates two of these tenentsincome and distance to travel. She writes, “people come to a location that is within a 1-mile radius at lunch and a 5-mile radius at dinner.” She adds that the community near your target location must have the income to support your price point.

Samir Changela, the owner of the Tilted Kilt Pub & Eatery in Boca Raton, Florida, tells Inc. that knowing your customers and observing their habits can solidify your decision to choose to settle in a specific area.

Think carefully about buying versus leasing

Changela also advises buying your building if you are planning long-term and can afford it. Although, “if you’re thinking short term, you’re better off leasing.”

Advantages of leasing. When you lease, you can deduct all the costs associated with leasing. Leases also only require a small security deposit, often only one month’s rent. That makes your cash investment lower.

Advantages of buying. Buying a commercial property usually requires a considerable downpayment; however, if you decide to sell, you can sell both the business and the property.

Do the research and don’t ignore the statistics

  • Seek information from organizations like the US Census Bureau to determine demographics or to find areas that will fit your restaurant profile.
  • Contact your local chamber of commerce and the economic development council in your city.
  • City government often has traffic flow information like car counts. Check those out.
  • Research plans of major employers in your area. Are companies coming or going?
  • Accessibility and Visibility  – Spend some time driving and walking the area during different times of the day.
  • Remember that corporate chains have location scouts; therefore, if there are no chains in your area, that may tell you something about viability. This leads experts to consider the competition. As you do your research, notice the other restaurants in the area. Are they consistently busy? Is there a restaurant that poses competition?

Additional factors impacting location

There are several other factors to consider:

Parking. It’s always a bonus to have plenty of parking if you are not looking for a location in an urban area with great public transportation and pedestrian routes. If you are in a metropolitan area, consider access to free parking around the locations you’re scouting.

Location history. Sometimes there are locations where you see restaurant after restaurant open and close within months. Perhaps it’s a curse, but more than likely, the failures stem from mismanagement, poor marketing, or even locals not giving a new eatery a chance due to past failures. Consider the strength of your restaurant concept and business plan before you take a chance on such a property.

Naming your restaurant. Stephanie Godke, chef at Mississippi River Distilling Company and Cody Road Cocktail House says never to name a restaurant after an address. If you have to move, it becomes an issue.

It’s essential to consider a variety of factors as you search for the perfect restaurant space. Poor visibility and accessibility, a neighborhood with the wrong demographic for your concept, inadequate parking, and light foot traffic are factors that make it difficult to turn a profit. Picking a restaurant location is one of the most important decisions to make when planning for your new venture.

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