Choosing the right restaurant location is crucial for its success. Location affects visibility, brand, income, and expenses, so the search process must be thorough and complete.
Restaurant location research takes many factors into consideration and follows a process that has very few shortcuts.
Let’s walk you through the most important steps. We’ll help you make sure that you’ve evaluated all possible angles and help you feel comfortable with your final choice.
A 9-Step Guide to Choosing the Right Restaurant Location
1. Prioritize Accessibility and Visibility
The right restaurant location should be easily accessible. Ideally it has both high foot and car traffic.
If you’re targeting people with cars, they should be able to spot your restaurant while driving or riding a taxi. If you’re trying to attract diners who use public transportation, your restaurant ought to be within walking distance from the nearest bus or subway station.
A central, accessible location will also help you save costs on inventory shipments and deliveries because you’re closer to your suppliers. But accessibility isn’t the same as visibility. Your restaurant could be easily accessible, but if your competitors or other businesses shield it from view, potential customers may miss it.
A highly visible and accessible restaurant location may have a wide frontage with unobstructed views, or be in the midst of the action, near offices, a major university, or a popular mall or leisure destination
Leasing a space in a mall is a great option, but it is usually more expensive and with a more complicated contract.
Weigh the costs and benefits of locating your restaurant in a mall vs. setting up a stand-alone location. Malls typically charge a fixed percentage based on the sales report you submit to the mall admin, in addition to the basic rent. In some cases, whichever is higher between the two is what you will pay every month.
2. Factor in Parking
If your target customers live or work in nearby areas and use public transportation, having no parking spaces near your restaurant may not be a disadvantage. It becomes a non-negotiable amenity if you target people coming from faraway locations. For them, inconvenient parking situations, or not having access to a parking valet service, may turn into a source of inconvenience and stress.
Parking is especially important for fine dining and out-of-town restaurant locations. You could even offer valet service, if your location allows and your desired restaurant image would benefit from it.
Investing in a guarded parking location may be necessary, especially if you operate after dark. If your desired location doesn’t provide parking in front of your restaurant, an ample public parking area nearby will do.
3. Inquire About Zoning Laws
Local and municipal zoning laws govern how real property can be used in a specific location. They dictate whether you can build a restaurant in your desired location or not. In some cases, zoning regulations permit restaurants to be built, but place limits or regulations on the menu items you can offer.
For example, in Dubai, drinking and getting drunk in public places is strictly prohibited. However, obtaining an alcohol license to sell, transport and consume alcohol is allowed by law. Part of the conditions of obtaining the license entails preventing drinking and driving, alcohol consumption in public places, and instances of drunkenness in public.
If you’re an overseas investor who wants to build a restaurant in Dubai, you can choose a location within the Dubai free zones, where full foreign ownership of a business is permitted.
A handful of other licenses are required to open a restaurant in Dubai. You’ll need a food license to handle and process food legally. To remodel or relocate your restaurant, a construction license is often required. Lastly, you will also need a No Objection Certificate (NOC) from the Dubai emirate before operating.
Cities like Singapore impose other operating restrictions on bars and pubs. They are not allowed in mixed commercial and residential developments, or in locations within historic conservation areas. Singapore establishments also need to obtain an arts entertainment license if they plan to provide live entertainment, stage plays, or set up an exhibition.
Take these requirements into consideration before committing to a location with strict zoning laws. Special licenses and permits can put a strain on your startup budget. You also have to meet rules and regulations to avoid legal issues and any disruption to your operations.
4. Check for Competitors and Neighboring Businesses
A potential restaurant location teeming with competitors and other businesses can give you some indication of success if you were to set up in this location. Conversely, a remote location with fewer commercial establishments could be something of a gamble.
Though some restaurants become an instant hit in unique, remote locations, it may take extra marketing efforts on your part to build awareness and interest in your restaurant.
Having competitors in close proximity isn’t always a bad idea. Customers see competition in an area as a good signal, especially if they are looking for new places to try. Area regulars may have their favorites, but there’s always some potential for spillover traffic going to you.
It may be easier to draw customers from places where foot or car traffic is high but dining options are low. To maximize your reach, prioritize restaurant locations with other successful businesses, like salons, gyms, and indirect restaurant competitors who aren’t in your niche.
5. Do Market Research and Competitive Analysis
Performing a competitive analysis study will help you discover if there’s a market gap your potential competitors haven’t filled. Spotting that gap can give you a chance to target a unique concept or market niche within your targeted restaurant locations.
Market research is interrelated with competitive analysis, as both get down to the nitty gritty of your target market.
Find out more about the demographic and psychographic profile of your potential customers in your prospective locations. It can help you determine if your restaurant can succeed in a particular area.
Keep in mind that the patrons of your competitors’ restaurants may not automatically be interested in yours. If your restaurant doesn’t offer what the market wants, not even a great location may help you meet your goals.
For example, if you want to launch a vegan restaurant targeting adults 18 years and older, with an income above the location’s average, consider venues within a college or university area, or an upscale business district where customers seek a quick, healthy lunch. That high-traffic place may provide a health-conscious market that’s not necessarily vegan, but willing to spend money on plant-based dishes.
6. Assess Size and Scale
A small restaurant space entails a number of choices in terms of service and menu capabilities, because your location may limit the number of customers you can entertain.
Choosing a small restaurant location may also keep customers away if they don’t want to queue or want to relax in a bigger, quieter space. More importantly, you have to consider if you would be able to maximize daily turnover and make a reasonable profit after costs.
On the other hand, a larger space costs more to rent, outfit, and maintain, so you have to calculate or devise opportunities that create more traffic or reuse your spaces in different ways, such as business meetings, cocktail events, or private parties
When choosing the appropriate size and scale for your restaurant, always consider your minimum requirements for kitchen equipment and appliances, work areas, freezers, stockrooms, as well as your dining area.
A casual dining restaurant likely needs a waitstation and you may consider having a bar aside from the dining tables. You’ll also need some space for IT equipment and customer payments.
Using a Cloud-based POS for your restaurant will allow you to use less space for IT equipment. All you need is a tablet or monitor for the staff that handles orders, and all types of orders your restaurant receives—dine-in, takeout, walk-in, online, and phone—can be processed from there.
7. Identify Safety Hazards and Security Issues
Safety hazard analysis assesses risks within and around your target restaurant location. It also accounts for the aftereffects of bad weather and other natural events.
When evaluating a restaurant spot, assess the building’s workmanship and structural condition. It’s best to enlist a professional building inspector to ensure that your potential restaurant building is structurally sound and can withstand harsh weather conditions.
You should also assess risks posed by flooding, typhoons, and other threats posed by bad weather and natural events such as earthquakes.
If your potential restaurant location is constantly under the threat of flooding, you may encounter challenges getting customers and suppliers to come visit your restaurant. Locations that can be easily damaged by bad weather or any other natural event could also increase your repair and maintenance costs.
Take customer safety and security into account as well. Make sure that your desired location is free of security risks and threats, and within reasonable distance of a police and fire station.
8. Consider Getting a Feng Shui Master’s Opinion
More and more restaurants are looking at Feng Shui as a way of determining their location. If Feng Shui is a significant part of your culture—or even if it isn’t—it may not hurt to consult a Feng Shui master before choosing a restaurant location.
Feng Shui masters recommend avoiding certain types of locations such as cemeteries, prisons, police stations, hospitals, rehabilitation facilities, landfills, power stations, and churches with spires. Feng Shui masters consider these locations unlucky for business because of the activities they operate and the “negative energy” they contain or attract.
Feng Shui favors booming, brightly-lit locations near busy streets. They attract yang energy, which helps generate business in your restaurant.
Other undesirable locations include dead-end streets, street intersections, or T- junctions. Areas under a bridge and outside a curving road are also unfavorable choices and considered inauspicious.
Feng Shui masters can also give you helpful insight based on a location’s history. If a particular commercial space has housed failed restaurants more than once, they may or may not encourage you to find another location with a better history and reputation.
9. Study and Negotiate Your Lease Terms
If you have done your homework, and your selected location has most, if not all, of the desirable qualities you are looking for, it may be time to finalize the lease.
Before signing any contracts and making commitments, carefully study the lease terms of your chosen restaurant location.
You may be able to negotiate the rent amount based on the length of your contract and make agreements on who will cover essential services such as A/C repairs, snow removal, and general maintenance around your restaurant premises.
Landlords may agree to cover certain structural repair and maintenance costs, but conduct your agreements on paper to ensure either parties’ consent to the lease terms and hold each other accountable.
A Great Location Guarantees Great Profitability
To summarize, accessibility, size, and target market are critical to assessing and comparing potential restaurant locations. Keeping an eye on contract terms, local laws and regulations, as well as environmental risks is equally essential.
Taking risks and choosing an unusual location can turn into a clever, successful move. If the market in a particular area is looking for a restaurant, being the first to satisfy that need could give you substantial momentum.
In other cases, it may be wiser to make conservative choices, especially if the restaurant is your first. Narrowing your options to areas with high commercial activity usually leads to the best outcomes. Customers will not get lost, and you will not have a hard time driving customers to your business.
Prime locations are highly visible and recognizable on social media, which many diners today use to find places to eat. If you can pin your restaurant’s location on popular social networking apps, your posts can easily reach people within that geographic area, potentially turning them into regular customers.