Opening a successful restaurant is all about location; physical brick-and-mortar venues matter even in today’s world of virtual reality. Location can make or break a restaurant. In “Location: A Strategic Marketing Imperative,” Forbes advises that researching your restaurant’s location is the key to success or failure.
Although a few universal criteria exist, such as accessibility, parking and visibility, not every restaurant is suitable for every location; nor is every location right for every restaurant. The right location is determined by a combination of restaurant concept and ideal customer. If you can define your restaurant type and identify your target demographics, you’ll be well on your way to choosing a restaurant location that sets your business up for success.
Start by Eliminating Bad Restaurant Locations
Before we can talk about what makes a great restaurant location, let’s talk about what makes a bad restaurant location. Several factors can contribute to a bad restaurant location, such as poor visibility (your restaurant isn’t easily seen from the street); no parking (it’s virtually impossible to find a parking place); and a high crime rate. So look around and ask yourself, “Are other restaurants in the area doing well?” If the answer is no, and boarded-up restaurants outnumber active ones, you are definitely not in a good location.
So, what makes a great restaurant location? Read on.
Know Your Restaurant’s Concept
A restaurant’s concept is a combination of cuisine type and restaurant style. Your restaurant’s cuisine type – such as Italian, vegan, all-meat grill – can be linked to your customers’ attitudes, beliefs, and other psychological identifiers. The personality type and preferences – also known as “psychographics” – of customers who frequent vegetarian restaurants, for instance, includes such things as being health-conscious and environmentally aware, while the psychographics of an Italian restaurant-goer is more family-oriented, with a desire for comfort and tradition. Taking your restaurant’s concept into consideration can therefore better help you decide upon a suitable location.
Restaurant Style: Another Key to Location
Most restaurants have one of four styles: fast food, bar/bistro, casual, or fine dining, and the demographics can be broken down, as follows:
Fast food: 15-35 age range; spontaneous outings that are often connected to another activity like shopping or an evening out with friends. Lower-income neighborhoods with high-population density and high foot traffic are key considerations.
Bar/Bistro: 25-45 age range; high disposable income. Business often takes place after work hours, often spontaneous, with most customers drinking alcohol. A relaxed social atmosphere is imperative.
Casual dining: Families with children under 16; mid-income households. The location’s safety is of primary importance. Outings are usually planned, and customers will often reach the venue by car.
Fine dining: 35+ age range, high-income couples and executives dining out. High price point, high service expectations, pre-planned and booked in advance. Customers will usually arrive by car and they will expect onsite parking.
Study the Demographics and Do Market Research
Your restaurant’s location must take customer demographics into consideration, including information such as age, gender, relationship status, median income, religion, environment, and ethnicity. Restaurant owners have to know who their ideal customer is, and how that matches with the demographics of the surrounding neighborhood. Upscale restaurants, for instance, have to be within reach of corporate and affluent clientele, while pizza joints and sandwich shops should be accessible to businesses and working-class neighborhoods. Awareness of demographics is especially important for niche and ethnic restaurants, which often cater to a smaller population segment.
Once you’ve identified who your target market is, based on concept and style, you’ll need to figure out where your ideal customers are located and decide if there is enough of a population base at a particular location to sustain your restaurant. When you are considering a neighborhood or community for your restaurant, take some time to study and research the demographics of the area to find out the age, ethnic background, and socio-economic status in the local population. Remember that you want to put your restaurant in or around communities of your target market.
The U.S. Census Bureau to the Rescue
One of the best ways to find where your ideal customers are located is through the U.S. Census Bureau. The Bureau provides a public tool called “Quick Facts,” where you can find such population information as size, age and sex, race and origin, specific characteristics, education, health, and more. The Quick Facts tool is searchable by city, state, or zip code, allowing you to find key consumer information for specific areas.
Another helpful resource available to the public is the U.S. Census Bureau’s Industry Snapshot tool. This can show you state-specific restaurant industry numbers, such as the number of food establishments, annual gross revenues, and more. While it won’t tell you anything about your ideal customer specifically, it will give you insights into the overall competitive environment and better your understanding of the communities you’re trying to target.
Know Your Surroundings
The next question you should ask is whether you want your restaurant to be located in a stand-alone building or within a shopping center. While stand-alone buildings tend to provide a unique venue, shopping centers are increasingly providing great opportunities for restaurants. One byproduct of the struggling economy – and the growth of the Internet – has been the downfall of upscale commercial property development, and these venues are often looking for restaurants to serve as anchors, leading to lower rental prices. This can be a great opportunity for the new restaurateur looking to minimize start-up costs.
Know Your Competition
Before deciding on a restaurant location, you must consider the other businesses that already exist in the area – and if they are thriving or struggling. A lot of competition is not necessarily a bad thing since it means that the market is healthy and can support many restaurants. However, you obviously want to minimize direct competition – restaurants that are already established, and that share the same style and concept that you have in mind. In addition, you will probably want to avoid areas that are saturated with direct competitors: If there are already four sushi restaurants on the block where you want to open your restaurant, take some time deciding if the area can handle another Japanese-style restaurant.
Complimentary restaurants have concepts that are different from your restaurant, but their price points are often in the same range as yours. These complimentary restaurants help establish specific areas within a community that offer multiple eating options. Customers often seek out these areas to “window shop” and find what they’re craving at the moment. A good strategy may be to locate in a cluster with a number of complimentary restaurant choices and away from any direct competitors.
Most people would rather drive than walk, and, if they must walk more than a block or two to get to your restaurant, they may opt to go somewhere more “convenient.” If you live in an urban area where everyone walks and there is public transportation, this is less of a factor. If you are thinking of a restaurant location in a place that requires you to drive to get there, you’d better have parking available. Ideally, your new restaurant should have its own parking lot. Take into consideration how many people you can seat at a time, and make sure that you have enough parking spaces to accommodate them. If you don’t, take a look around and see if there is a convenient overflow parking lot.
Accessibility and Visibility
Major chain restaurants are often located right off the highway to make it easy for diners to access them. Being accessible – in business areas and residential areas – ensures that you can attract the volume of people that you need to sustain your business. Stand outside the building that you are considering using for your restaurant. Assess vehicle traffic flow and compare it with other locations that you are considering. If it is a high-traffic area, know that these are usually good spots for restaurants.
The exception to the rule is if you are deliberately looking for an out of the-way-location to feature your restaurant’s concept, such as a romantic beach setting, or in a vineyard. With the right marketing, people may come to value the features of an exclusive or unusual venue over convenience and accessibility.
Visibility goes along with accessibility and is a very important factor for new restaurant locations. People have to know that your restaurant is there. This is why property prices in downtown districts and developed strips are higher than other areas; they offer a level of visibility that can bring in a good amount of walk-in business. When scouting locations, see if your restaurant is easily seen from the street. If the location isn’t directly accessible through Google Maps, it is probably not a good choice.
Restaurant Location is a Key to Success
Before opening your restaurant, you need to assess your location. Look around. See who is in the neighborhood. Analyze your restaurant’s concept and who your target customer is, evaluate demographics, and decide your style. Finally, take into consideration the nitty-gritty details like parking and traffic patterns. The location of your restaurant can directly influence whether you sink or swim – so choose the venue with care for the best chance of success.