Success Strategies for Choosing the Best Restaurant Location

Revel Blog | Sydney Kida | March 5, 2020 |


Where to start with choosing the best restaurant location?

When it comes to choosing real estate, we’ve all heard the old adage “location, location, location.” Choosing the best restaurant location is no exception. 

With over one million restaurants operating in the United States last year, competition is fierce. While there’s no set formula for ensuring success with your restaurant, having the right location can make all the difference.

Here are our essential success strategies for choosing the best restaurant location. 

Consider Convenience 

Consumers are all about convenience. Having a location that is easy to access is a critical factor in the overall success of your restaurant. After all, it’s no coincidence that so many Quick Service Restaurants (QSRs) are located near highway exits. 

For example, Dunkin Donuts identifies the “morning” and the “evening” side of a road based on traffic patterns. They choose to be on the morning side to make it easier and more appealing for customers to stop for coffee on their way to work. 

Determine the Visibility of the Potential Location 

Visibility goes hand in hand with accessibility. While choosing a location in a downtown or entertainment district is one of the easiest ways to ensure visibility, many times it’s cost-prohibitive for restaurants just getting off the ground.

If you decide to go with a location in a less obvious area, you’ll need to address this in your marketing plan. When you can’t rely on people just seeing your restaurant, you’ll need other options for grabbing their attention. As part of your marketing plan, consider multiple channels for outreach. Examples include search engine advertising, social media, and various promotions to get the word out about your new location. 

Investigate Parking and Transit Options 

Both parking and transit are big considerations when choosing the best restaurant location. The goal is to make it as convenient as possible for customers to come to your establishment. 

If you’re in an area where the majority of customers will arrive by car, there should be ample parking available for your location. In the event that your location is in a dense or urban area where parking is less readily available, look for alternatives. Consider partnering with other businesses around you, such as hotels or office buildings, to provide parking.

Finally, if your restaurant location won’t be easily accessible by car, having transit close by will be critical. Bus, train or subway stops should be within a reasonable walking distance to attract customers.

Evaluate Foot Traffic for the Best Restaurant Location 

When choosing a location that will be heavily dependent on walk-in business, evaluating foot traffic in the area will help you set realistic expectations.

For example, if you’re considering a location in a business park during office hours, the foot traffic is extremely high. However, you also need to consider what happens during the evenings and weekends. Can you generate enough sales during peak hours to make the location worthwhile? If the answer is uncertain, it may not be your ideal location.

Research Population and Demographics

The population and demographics of an area can make a huge difference in your restaurant’s success. You want to choose a location that’s full of people in your target market. 

For example, Goodwill stores are well known for stocking their shelves with a wide variety of donated household goods. However, in 2018 Goodwill NYNJ opened a boutique location on the Upper West Side of New York City targeted at budget-conscious buyers looking for great fashion. While operating a curated fashion-only location is a departure from the typical Goodwill model, the organization saw an opportunity to increase revenue by setting up in a high traffic location. 

Conducting research on different customer profiles enables you to build a picture of your ideal customers and understand their commonalities. Check the census, as well as your local chamber of commerce and business associations to help gather information to build your customer profile. 

A key demographic to consider is age. If the area you’re looking at has a large population of retirees or young singles, a family restaurant targeting children may not be an ideal fit.

Also, the average income of the area you’re considering can make a significant difference. A median income area filled with families and children may not be the right spot for a high-end fine dining restaurant. 

In addition to looking at demographics, psychographics should also be considered.

Psychographics refers to the study of consumers and their opinions, activities and interests. This data is used by marketers to better understand the motivation of their target audience. It helps inform how they can personalize messaging to make it more appealing. This can help provide deeper insight into who your potential customers are and what will appeal to them. 

Recognize the Location’s Legacy 

Understanding the history of a location can go a long way to determining whether or not it has the potential to be a successful restaurant location.

If you’re considering a location that has previously housed restaurants that have failed, do research to understand why they weren’t successful. Was it due to poor service or products? Or was it the result of challenges getting enough people through the doors?  

If you’re considering a location that has seen a high turnover for restaurants,  potential customers may have a negative opinion of the space, not the actual restaurant. A good way to research the location’s legacy further is to search out online reviews. That way you can find out what people had to say about the previous business and consider what impression they left. 

Analyze Your Competition

Taking a close look at the competition for a potential location can provide you with valuable insight. Use this approach to confirm whether or not the right demographic exists in the area.

If restaurants targeting a similar clientele are doing well, this is an indication that there’s a demand. This is why you’ll often see multiple QSRs concentrated in one geographic location. They know the demand is there. 

By choosing to open in an already established area, you’re creating choices for customers. As a bonus, you could benefit from overflow from your closest competitors at peak times. The potential downside is that greater competition with established restaurants may not draw more customers. Instead, you may find that you’re simply splitting the same number of potential customers. 

Customers are often loyal to their favorite place. A close competitor with a similar menu may be problematic. If you want to stand out, you need to have something unique to offer. 

Conversely, choosing a location with less competition may seem appealing. While it’s a bigger risk (there may be valid reasons nobody has chosen to open a restaurant in this location), the potential reward is likely greater. 

Determine Operational Costs 

Before you commit to a location, get a full picture of what you’re committing to in terms of long-term costs. 

First, find out the leasing requirements for your potential location. A long-term lease has pros and cons which should be considered. On the pro side, you may get a better rate if you consider a five-year term instead of a two-year term. However, if you commit for a longer period, you’re locked in and buying out the lease would likely be very expensive. 

Next, consider what utilities you’ll need to cover. Find out what’s included in the lease and what you’ll be responsible for over and above your rent. Certain things like garbage collection may be additional line items you need included in the budget.

You’ll also want to determine if the location you’re considering is within the delivery area of your potential suppliers. Depending on what you’re buying and where it’s coming from, there may be incremental costs to get it to your restaurant. Food costs are one of the biggest expenses for a restaurant and can quickly eat into profits. 

Remember, the bigger the location, the higher the utility and operational costs will be. A smaller location can be a viable option. Or, it may be worth considering a flexible footprint in order to lower costs and maximize your profit. 

Decide on the Best Restaurant Location 

The location you choose for your restaurant can be one of the biggest factors contributing to long-term success. Doing your research to fully understand who you want to serve and where to find them, your new restaurant location will be better positioned to be prosperous for years to come. 

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