Picking the perfect location for a restaurant is a nerve-wracking, stressful task. It’s your chance to (quite literally) set your vision in stone, so you should be well-prepared when selecting your restaurant’s location. While there’s a first time for everything, that doesn’t mean you have to go it alone. We’re here to provide the tools to build a restaurant location strategy; a means to carefully pick the perfect building for you, rather than the first (or second, or third) you find.
Understanding Restaurant Location Strategy
You may have noticed that I used the term “restaurant location strategy” in the opener — that was on purpose! Before we dive into the more nitty-gritty numbers stuff, it’s important to understand this term.
What is Restaurant Location Strategy?
Restaurant location strategy is a fancy term for a simple concept. The idea is easy; when you invest in a business, you want it to be in an ideal location. In other words, restaurant location strategy is a term for thinking about what you want for your business before you find its space.
Why is a Restaurant Location Strategy Important?
Your location (and, by extent, its demographics) will play a large role in your success, and that’s the entire concept behind having a restaurant location strategy. Where your business is physically located will define who comes into your establishment, when, and why. The people who live and work nearby are (ideally) going to become your regulars — so think about what that entails.
If you’re trying to open a brewery, you don’t want to buy or lease property (as nice and new as it may be) that’s far away from the heart of your town or city. Instead, try to find space (even if it’s smaller) closer to the action. It’s far easier to get just about anyone in for a bite and a drink when you’re “just down the street.”
Similarly, a diner or breakfast spot will do far better nestled a bit farther into inset neighbourhoods, and a fish and chip shop will make a killing on the boardwalk — but not so much inland.
Key Factors in Developing a Restaurant Location Strategy
The most important factor to consider when building a restaurant location strategy is your ideal customer demographic or target market.
If you’re trying to open an affordable, trendy spot, you’re likely going for the 18-24 age bracket. On the other hand, a more upscale fine dining joint would likely aim for customers who are a bit more mature, ranging from 25+. Another part of why knowing your demographic is so important is that it helps you to narrow down a location.
As mentioned previously, location is huge — so having a ready-to-go restaurant location strategy (with your ideal demographics in mind) is a must.
Conducting a Restaurant Location Analysis
Market Research and Analysis
Market research and analysis is incredibly important when selecting a restaurant’s location, yet it’s surprisingly one of the things we see aspiring restaurateurs overlook the most. Knowing who you’ll be serving and who will be your main competition is incredibly handy information to have when finalizing a menu, setting prices, and, generally, running the business as a whole.
This is where we do have to recommend that you hire professionals in your area to help. A market analysis is actually pretty complicated, and having a guiding hand to handle things while you do your dailies is a quick way to live a less stressful life. With that said, keep the following in mind when choosing a location for a restaurant:
- When does the area you’re considering tend to get busy? Is it rush hour? Early mornings? Late nights and evenings? Most neighborhoods have “busy” and “slow” periods, so make sure you’re not opening a late-night bar in a relatively quiet “coffee and brunch” type of area.
- Who primarily works and/or lives nearby? Is it a blue-collar area or is it in the middle of downtown next to offices and apartments? If it’s the former, a higher-priced restaurant may not fare as well as it would in the latter, but a deli or brewery may make a killing.
- How much does your competition charge? Can you afford to beat them on pricing? If not, what do you offer to justify that increase in price?
Competitor Analysis
That last point above leads us to our next — competitor analysis. Knowing who else is on the block is crucial when establishing what, specifically, you have to offer. Sure, you’re selling fried chicken, but Popeyes and KFC are down the corner. What makes you different?
Even if you know you’re better run and higher quality than they are, can you beat them on pricing? Can you afford to be open for as long as they are? Specifically, ask yourself what makes your restaurant stand out.
If you’re a farm-to-table Nashville chicken restaurant, that’s pretty specific. Lean into that with your marketing, plan for that with your menu design and pricing, and accept that you may lose some customers to the chain shop down the street, but know that you’ll gain regulars with proper marketing.
Similarly, if you have two options for a restaurant’s location when trying to open a pizza joint, you’ll want to see how many other pizza spots are within your range. If you can go downtown and compete with 15 other spots (plus chains), or open a bit farther out of town with little to no competition, the choice should be obvious.
Factors to Consider when Deciding on a Restaurant Location
With that out of the way, it’s time to talk about the more practical side of selecting a restaurant’s location. We’ve lightly covered a few of these already, so they should be familiar by now.
Demographics and Target Audience
Your restaurant’s location should be directly impacted by your desired demographic and target audience. You should know to whom you’re catering, when they will likely want to visit your business, and pick your location accordingly.
Accessibility and Visibility
Accessibility and visibility go hand-in-hand with your restaurant’s success or failure. The harder you are to find, get to, and park at (more on that later), the harder people will have to fight just to get in the door. We want easy access, clear visibility from the street, and (ideally) regular foot traffic.
Proximity to Suppliers and Services
This is less of an issue in larger cities, but when trying to pick a location for a restaurant in a smaller town, distance can be a really important point. The farther your suppliers have to go to get to you, the more you’ll be charged.
Beyond that inconvenience, though, you may be entirely unable to get some products if you can’t find a supplier that provides service in your area. The same can go for more maintenance-related services, off the beaten path trash and oil pickups will be more expensive than if you’re just another address on a regular route.
Local Competition and Market Saturation
Your competition can make or break your success. If you’re able to outshine the competition — without getting bogged down in too many similar operations, you’ll do great. But if you’re just another pizza joint in the neighborhood with ten, fifteen, or twenty? It will be incredibly difficult to prove yourself, regardless of how great your food and service certainly are.
Cost and Budget Considerations
And now the obvious thought on everyone’s mind — rent. Unless you own your building outright, you’ll always have the cost of the building to keep in mind. If you find a great deal on rent in a bad part of town, chances are that you’ll likely not make enough to truly break out. Similarly, if you put out excellent service, but not enough of it, in a gorgeous new build, you’ll be out by the end of next year. It’s not a fun reality, but that’s the simple truth; when picking a restaurant’s location, you need to be confident that what you pay is manageable before diving in.
Safety and Crime Rates
Remember how I mentioned the “bad part of town?” If your potential new location for a restaurant is actively dangerous for your employees or customers (or their belongings), then it’s going to be hard to hire and retain employees. Similarly, you may lose out on customers that may have otherwise visited, were you in a safer neighborhood.
Parking Availability and Public Transportation
Ah, parking, the bane of every person to ever visit any downtown district of any city. Parking is a cruel mistress, as is public transit, but both are necessary for any successful restaurant. If you have a massive building that can seat 200+, but can only park a dozen, you’re in trouble. This is more of an issue in larger cities, but poor parking can be worked around via public transportation. Having a bus or train stop near your business can be a lifesaver when you’re low on parking space.
Selecting the Perfect Location for Your Restaurant
Types of Restaurant Locations
Restaurants can go just about anywhere you desire. I’ve seen repurposed Ford factories turned into breweries, gas stations that became diners, and more — as long as you make it clear to your agent that you’re going to be building a restaurant, go crazy. Just… keep your budget in mind.
Leasing vs. Buying Property
There are obvious bonuses to buying property: no need to worry about rent, do what you want (within legality) with your business, the sky is yours.
But leasing is actually a great option, especially for up-and-coming restaurants. Leasing a location for a restaurant comes with rent, yes, but it also comes with a guarantee of a landlord that’ll deal with any issues the building may have and the ability to upgrade down the line without a potential loss.
Legal and Zoning Considerations
Beyond the obvious “can I build a restaurant here” question, the legal and zoning side of things is actually more important than some may realize. Let me give an example: I worked with a brewery that was expanding its restaurant. They had all of the equipment bought and ready, only to be told that they needed a larger dishwasher to be up to code, and that would require them to tear up all of the concrete flooring in their brewery.
Had they looked into the requirements beforehand, they could have saved the money on the equipment that’s now sitting in storage.
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