The Importance of Restaurant Location – A List of Location Selection Criteria For a Restaurant

Once you’ve decided to start a restaurant business you will have to choose a location where your new venture can thrive. Location is of great importance to the viability of a restaurant business. While you know you need a good restaurant location with plenty of space, there are a lot of other things to consider. The following offers a list of selection criteria that can be used to assess how good a specific location is.

Local Zoning Regulations

One of the first things to check out when you are selecting a location for a restaurant is exactly what uses the building is permitted to be used for under the local zoning scheme.

A Trade Off Between Restaurant Location and Rent

It is obvious that a restaurant should try to be in a prime location that has good exposure and good nearby traffic flows. However these types of locations come at a price and that is the high rent that you will have to pay. A good alternative can be to have a less prominent location such as down a side lane or on the second or third floor of a building. You will then be able to save a fortune on rent and negotiate more favorable leasing terms with the building owner. However you do need to compensate for a poor location by having a top notch marketing plan as well as food and service that encourages customers to return.

Operation Size

You should have a pretty good idea of the size of the restaurant operation that you want to establish. One of the basic requirements with a location will be that it is large enough for you to set up a restaurant of your desired size and concept. Health and safety laws will dictate how many people can occupy the building so you should find out about these requirements before you start looking at locations. You may end up deciding that the property that you thought was perfect is too small for the clientele you need to attract.

Accessibility

You will notice that restaurants are usually located in areas with good accessibility and are close to business districts and residential areas. Being accessible will ensure that you can attract the volumes of people that you need to sustain your business. Stand outside the building that you are considering using to open your restaurant. Count vehicle and foot traffic flows and compare them with other locations that you are considering.

The exception to the rule here is if you have an ‘out of the way’ location such as at a beach or a vineyard for example. Sometimes the unusual location of a restaurant can become a selling point. Keep in mind that under the right circumstances people value features such as a beach view or mountain scenery over convenience and accessibility.

Lease or Buy

You need to decide if leasing or buying premises for your restaurant would be the best move. Both options have their advantages and disadvantages. Most restaurant entrepreneurs start out leasing and preserve their capital for startup costs and business growth rather than investing in property at the same time.

Have some preliminary discussions with building owners and try to get an idea of how flexible they are going to be on the terms of a lease. Reaching an agreement over a lease can be a lengthy process so it helps if you can deal with building owners that you can communicate well with. The should be open to some negotiation and discussion.

Area Demographics and Market Research

Think about what kind of neighborhood your proposed restaurant space is located within. Then think about the kind of restaurant that would be suitable for the surrounding residents. Take some time to study the demographics of the area to try to find out the age, ethnic background and socio-economic status of the local population.

The Local Economy and Location Selection

People will only be eating out in restaurants if they have jobs and discretionary income to spend. Give some thought to local economic conditions before setting up your restaurant. How is business sentiment in the local area?

The local economy will also affect your choice of concept. Fast food typically remains popular in a poor economy but higher priced menu offerings will probably not work well in a town where there have been factory closures.

Competition and Other Businesses

Before deciding on a restaurant location one of the criteria that you must consider is the other businesses that are in the area. A lot of competition is not necessarily a bad thing as it means that the market is healthy and can support a lot of restaurants. However you obviously want to minimize the competition that you will have nearby your restaurant as much as you can. At least make sure that you choose a restaurant concept that is unique in the area so that you have few direct competitors.

Secondly, you should find out if there are other businesses nearby that might be complementary to a restaurant. For example, if there is a movie theater across the road from your restaurant then you may see good business from movie goers as they come in to dine before watching a film.

Parking

You should have a fairly good idea of how customers would arrive at a restaurant at your proposed location. A great restaurant will ideally have its own parking lot. Depending on your concept, nearby public parking may also be acceptable. However, keep in mind that many people will simply drive on to another restaurant if they have nowhere to park there car. Note that in some cities, proximity to public transport can be more important than parking.

Exterior and Surroundings

Take a good look at the sidewalks and other buildings that are around the location that you have in mind. They can sometimes affect a prospective diners impression of your business. You will have little control over your neighbors so you want to choose a restaurant location with surroundings that are neat, tidy and well maintained.

Renovation Costs

Different locations will have different costs associated with converting an available space into a restaurant. One big factor affecting the scale of renovations will be the buildings previous use. If the previous owner also ran a restaurant on a site then remodeling requirements should be minimal.

You should keep remodeling costs to a minimum if you are leasing a space for your restaurant. You could consider spending more if you are able to negotiate with the building owner and have them contribute to these costs. The length of your lease will also be a factor in determining how much to spend.

Take along a building inspector or some contractors who have had experience remodeling buildings for restaurant owners and ask them for their ideas on renovation costs.

When you decide to start a restaurant keep in mind that location is one of the most important factors that will determine your success. Consider the above criteria as you work through the selection process. The building that you choose should not only be in a prominent location but it should also be practical and functional to allow your restaurant to run smoothly.

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