Managing Your Business


03 16 2017

Choosing a restaurant location

03 16 2017

How To Choose A Prime Location For Your Restaurant Business

Restaurants can thrive when they're in a good location and suffer when they're in a less-than-optimal one. Changes ranging from the preferences of customers to downtown development and the closure of nearby businesses can all have an effect on the number of tables a restaurant serves each day. The influence of those factors means you may need to choose a different location. Of course, there's also the possibility of expansion - another important reason to consider a new location, even though your existing one will stay open.

No matter the specific reason, selecting a new location can increase exposure and foot traffic, which means more guests eating at your restaurant. Let's look at how to choose a new location that offers your business the best chance for success.

What to Think About When Choosing a Restaurant Location

Visibility and access

One reason restaurants suffer in terms of sales is a lack of visibility. While innovations ranging from free directions to review sites has made it much easier to get a business to get noticed, a location that's difficult to find can make things very difficult. CNBC said a poor choice in location is among the most cited reasons for restaurant closures.

What should you look for in a new place for your restaurant?

Entrepreneur said an understanding of the area immediately around the potential property is key, in terms of who lives there and how frequently people visit other nearby businesses. If an area heavily skews toward customers driving up instead of walking, then you need a decently sized parking lot to accommodate diners - and avoid discouraging them due to a lack of spaces. If few people live near a possible location and there aren't many other shops around to attract them, the low rent on the building likely isn't worth it.

One important consideration to make is how close you are to other restaurants that you consider direct competitors. It may sound counter-intuitive, but it's backed up by data. Greg Kahn, founder of Kahn Research Group and a specialist in location research, told Entrepreneur that being near competitors - especially those targeting similar types of customers - can attract business. This is especially valuable in regard to chain restaurants, as these businesses tend to do plenty of market and demographic research to find the best spot possible.

You also want to make sure the restaurant itself is visible. A large, easily seen sign can attract a lot of eyes despite being a relatively modest, fixed investment. A location where you have minimal outdoor signage or exposure is often a bad bet, unless there's a lot of foot traffic inside a larger property, like a mall.

Be reasonable and understand your resources

Speaking with chef and restaurateur Dale Talde, American Express Open Forum emphasized the importance of a strong budget when choosing a location. Talde said a restaurant owner should be able to make its monthly rent off of one day of sales. This isn't always possible, but it's always a good idea to consider the long-term implications of rent as a continual, monthly expense. A great location will turn out to be more trouble than it's worth when it's difficult to pay the rent on time.

Rent is an ongoing expense, but many of the costs associated with a new restaurant are fixed and can represent a very substantial investment. If you want to move to a more profitable location but aren't sure about how to pay for new equipment, remodeling and other concerns, consider alternative business financing. A quick approval process and fast access to cash mean you can move to a spot you know will attract more customers without spending lots of capital all at once.

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