How to Open a Restaurant: Essential Elements

How to Choose a Restaurant Location

Management 13 minute read 5th October 2020

There’s one element that matters more than most when opening a new restaurant: the location.

It’s thought that around 80% of restaurants fail within their first five years of operation. It’s a sobering stat, but one which demonstrates how much work you can throw into something that may ultimately fail.

However, the good news is that if you really work hard on the location for your restaurant, you’ll stand a brilliant chance of making it through those first five years and well beyond.

Welcome to our ultimate guide to choosing a restaurant.

Why “location, location, location” really matters

why restaurant location matters

It might be a cliché, but if you ask most experts why restaurants typically fail, they’ll respond with the phrase, “location, location, location”.

A combination of poor visibility, lack of parking, high crime rates and low footfall are just some examples of what makes a restaurant location bad. In fact, placing your restaurant business in a location like that makes it practically impossible to turn a profit.

Let’s consider why location really matters to your diners:

  • they want to feel safe: no one wants to head to a restaurant and feel unnerved about their surroundings - it’s supposed to be a relaxed, pleasurable experience;
  • parking is important (if possible): clearly, city centre restaurants don’t have the luxury of ample parking options, but if you choose somewhere that can offer parking, it’ll make a big difference to cover numbers; and
  • they need to find you: this might sound obvious, but how many times have you been recommended a restaurant only to end up scouring Google looking for its precise location on a map? Being easy to find sets the tone for a convenient dining experience, but it also makes you discoverable for people who are unaware of your business.

5 things to consider before picking a location for your restaurant

what to consider before picking restaurant location

1. How dense is the population?

The best place for a restaurant is an area that has a relatively high population. This will give you a head start in terms of local custom, but also means that the area will probably receive a fair number of inbound visitors.

If you’d rather opt for something out in the sticks, just make sure you abide by the rule of it being easy to find.

UK restaurateurs: Check population estimates in the UK

US restaurateurs: Check the United States Census

2. Is it accessible?

Convenience; that’s a key word you need to bear in mind when thinking about your restaurant location.

Accessibility isn’t just related to parking (although that’s important) - you need to think about how busy the road is (will people have to cross it to get to you?) and whether or not you can adequately cater for the elderly and guests with disabilities.

3. Is it the right size?

The best restaurant location can quickly become insignificant if your restaurant venue is too small or too big.

This is a tough consideration, because you’ll only have an estimation of how busy you’re likely to be. But try and imagine the place full of equipment, staff and customers. Will it look too tight or too empty when you’re finally up and running?

4. The competition

Competition isn’t a bad thing at all. If nothing else, it demonstrates that you’ve picked a solid area.

However, you need to get a feel for the restaurants you could be competing against. How big are they? Are they chains or independents? What style of dining are they offering and how closely does that match yours?

5. Previous businesses

If you’re taking over a venue that was previously run as a restaurant by someone else, do some digging and find out what caused them to up sticks and leave.

You may discover a lot of this through the property agent, but it won’t hurt to scour online reviews, too.

How to spot a bad location

how to spot bad restaurant location

There are some obvious reasons you’d perhaps want to give certain areas a wide birth, such as high crime rates and the proximity of a local power plant, but others are sometimes harder to identify.

For instance, if you pick an area where the neighbourhood has a large number of ageing residents, you may experience slow table turnovers.

Think about your market, too. If they’re young, likely to travel by bicycle or public transport and need super-fast eats, you can probably focus less on elements like parking and instead ensure the location is ideal for convenience dining.

There’s also such a thing as too much competition - particularly if it’s almost identical to your offering. Diners want choice, but if you feel you’ll be giving them too much by jumping into the fray, trust your gut instinct and look elsewhere.

Is it possible to overcome a bad location? Possibly. Sometimes, you have little choice but to pick the best of a bad bunch, and if your business plan, offering and handle on your target market is good enough, you might become a shining beacon in that area.

Taking into consideration demographics

restaurant location demographics

Your choice of restaurant location should be intrinsically linked to the demographics of your target market. There’s actually a term for this, which is the ‘restaurant concept formula’. It goes like this:

cuisine type + restaurant style = restaurant concept

Working out your cuisine type and how it relates to the restaurant style will help you choose your location, based on the type of people you’ll welcome through the doors.

To get you started, here are some simple, tried-and-tested customer profiles for restaurants.

1. Casual dining. Likely to have kids under 16, mid-income, will usually visit after work and in a planned fashion. They’ll most likely drive to the restaurant and combine the meal with another activity (i.e. cinema trip).

2. Fast food. Teens to mid-thirties, usually a spontaneous visit. Lower income profiles and tend to operate within high population areas.

3. Bar and bistro. Mid-twenties to late forties with high disposable income. Visits are usually spontaneous, and will include both food and alcohol orders. A relaxed ambiance is vital.

4. Fine dining. 35+, high income individuals, couples or families. Always pre-planned and booked in advance, and fully expect on-site parking and high levels of attentive service. Will travel far for the right meal.

n.b. There are of course exceptions to the above, so don’t take them too literally

Profiles above in hand, start thinking about where you’re most likely to find your audience.

The 6-step process to finding the ideal restaurant location

how to find best restaurant location

Step 1. Start with your demographics

As noted, demographics will play a vital role in your restaurant location choice, so start here and fully define your target customer by creating several personas.

Step 2. Think radius

The age-old trick of drawing a circle around a target restaurant location is still important. How big is that radius likely to extend based on your customer profile and the type of dining you’re offering?

Step 3. Look for perfection

Ok, so ‘perfect’ may not exist, but by looking for the ‘perfect location’, you’ll eliminate the worst places very quickly. Strike them off your list without fear until you only have one or two possibilities remaining. Be brutal.

Step 4. Focus intently on accessibility and visibility

Once you have your area, make sure your location is both visible and accessible for as wide an audience as possible. Think age, disability and any other factors that relate to the ease with which they can enter your venue.

Step 5. Weigh up buy versus lease

This may limit your choice of location considerably, so take your financials on board and think hard about buying or leasing. Which one makes the most sense from a business perspective, and how does that impact your choice of location?

Step 6. Consider any construction or layout changes needed

Imagine finding the perfect location only to realise you’ll need to spend a small fortune to create the restaurant you want. Before pushing the ‘GO’ button, make sure you can account financially for any structural or layout changes that’ll be needed to make the most of the location.

Add these to your reading list

We hope you’ve enjoyed reading this guide. Keep it by your side at all times while you’re searching for that ideal restaurant location.

Oh, and when you have some spare time, check out these related reads, too:

The Ultimate Guide: How to Buy a Restaurant

Break-Even Point Analysis: The What, Why and How

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