How to Choose a Restaurant Location

/ Foodservice Tips, Restaurant Tips / May 6

How to Choose a Location for Your Restaurant - Cafe

Restaurateur Rich Melman said that 80% of a restaurant’s success is determined before it opens. Many decisions have to be made before you serve your first guest, and choosing a location is probably the most important.

If you need help, this guide on how to choose a restaurant location outlines the criteria you should consider when selecting a site. If you pick the right spot, you will put your business on the path to success before it even opens.

The Neighborhood

When looking for a restaurant location, the first step is selecting a neighborhood. When determining if your restaurant would do well in an area, you should ask yourself:

Potential Customers



  • Is the area busy? – Foot traffic usually correlates with higher sales, so opening a restaurant on a busy street or near a shopping mall will give you an advantage.

  • Is the area known for restaurants? – If you are in an area known for good food like New York’s Little Italy or Chicago’s Greektown, people will be more likely to try your restaurant since they will assume that your food will live up to the neighborhood’s reputation.

  • Is it near your target market? – 80% of your customers will be within 3-5 miles of your restaurant, so be sure that likely customers are nearby. For example, if you have a donut shop, selecting a location near a train station to serve hungry commuters is a smart idea.


Neighborhood Environment



  • Does the “feel” of the neighborhood fit your restaurant? – Most people expect a fine-dining restaurant to be in an affluent area and a dive bar in a gritty one, so make sure that the surrounding area fits your restaurant.

  • Is the area safe? – Nobody wants to be the victim of a crime, including your guests, so it’s important to choose an area where diners will feel safe.


How to Choose a Location for Your Restaurant - Neighborhood

An importance consideration is whether or not your restaurant fits the “feel” of the surrounding neighborhood.


Accessibility

It’s also important to consider accessibility. You want to make it as easy as possible for people to visit your restaurant, so be sure to consider:


  • Is the transportation good? – If your restaurant is near transportation options like a main street, train station or bus route, people will be more likely to visit. 

  • Is it easy to access? – Dunkin’ Donuts opens stores on the side of the road where morning traffic is heavier so that it’s convenient for drivers to stop. Although it may not seem like a big deal, making it easy and convenient to visit your restaurant is crucial.

  • Is there enough parking? – FitSmallBusiness.com’s CEO David Waring says restaurants need 3 parking spaces per seat and a space for each employee. If guests circle the parking lot looking for a space, they might get frustrated and drive away, so having enough parking is essential.


How to Choose a Location for Your Restaurant - Parking

It’s important for your restaurant to have enough parking for both guests and staff.


Competitors and Other Businesses

Unless your restaurant is out in the country, there will be competitors and other businesses in the area. When thinking about how your business would interact with others, you should ask yourself a few questions:


  • Is the area saturated with restaurants? – Even though being in an area with a lot of restaurants can be beneficial, make sure that they’re doing well. If they’re struggling to attract enough customers, your restaurant will probably struggle, too.

  • Are you near potential competitors? – Ever notice how car dealerships cluster together? It seems counterintuitive, but choosing a location near competitors can be beneficial. If a restaurant’s marketing efforts have helped it build a following in the area, at least a few of those people will see your restaurant and want to eat there out of curiosity.

  • Are there complementary businesses nearby? – Different businesses can serve the same people, so a smoothie bar near a gym or a pizza place near a movie theater would do well.

  • Are there other businesses that could negatively impact you? – Do members of the gym take over the strip mall parking lot after 5 o’clock? If so, that location might not be ideal for a bar and grill.


The Space

When choosing a restaurant location, evaluating the commercial space itself is essential. Important considerations to keep in mind include:

The Outside



  • How noticeable is it? – 60% of Americans have driven past a business they were looking for due to inadequate signage, so restaurants that lack a large sign or are tucked into a corner are handicapped from the beginning.

  • Was a restaurant there before? – If a successful restaurant was there in the past, there’s something about that location that makes it good for a food business. Likewise, if restaurants pop up and then disappear there all the time, there’s probably a reason why.


The Inside



  • Is a restaurant buildout required? – If a restaurant wasn’t there previously, you will have to make significant renovations and purchase expensive equipment, adding to your restaurant startup costs.

  • Do you want to buy or lease? – Buying has a higher initial cost, but it gives you more control over your future. If you don’t want to buy, expect to sign a multi-year lease. If you sign a lease, remember to always negotiate.

  • Is the space big enough? – Make sure there will be enough space for both guests and staff. In regards to the kitchen, you should have 5 square feet of kitchen space per diner, the kitchen not exceeding more than 30% of the total square footage. 


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