It’s no secret, the choice of location for a new restaurant or hospitality business is critical to its long-term success. Every location is unique, every footprint is unique, and every hyper-local area surrounding a location - is you’ve guessed it, unique. This is why it is essential that you’re informed with how your potential choice of location; will affect overall costs, guest impression, and long-term profit.
When choosing your location, it is ideal to follow these required steps, at minimum:
Check the feasibility
Completing an accurate and detailed feasibility study is the first step in finding your ideal location. Is your location feasible? This study will help you determine the most opportune neighborhood for your business and will outline both your primary and secondary target markets.
This study will also match your concept to specific demographics within a hyper-local area of your city. Needless to say, this information is vital in determining where to even begin your property search.
Know your budget
What can you truly afford? You should have the knowledge of your overall start-up budget. Are you in a financial position to build a restaurant footprint from scratch or will it be more ideal for you to take-over an existing restaurant space? Analyze your vision, concept, and the costs of renovating.
Build an expert support team
Don’t choose your location alone. Surround yourself with a set of professionals that will assist you throughout the process. This support team should consist of commercial real estate agents, business/property lawyers, a chef or restaurant consultant, and an accountant. As a bonus (if possible), have an architect or seasoned contractor with you as well to help determine accurate renovation costs based on the space.
Identify your accessibility and traffic
When reviewing potential locations and neighborhoods, make sure to analyze the accessibility of the location from different streets, directions, and intersections. Many municipalities have also completed traffic reports, so with a little bit of research, you can likely find the amount of vehicle traffic going by on any average day.
Determine your curb appeal
Outside of social media, word-of-mouth, and online directories, how else does a potential guest notice a restaurant? Exterior appearance matched with accessibility and the right amount of traffic, will create a noticeable location. Take note of signage space and overall storefront appearance. What work would need to be completed to make this potential location, appealing to your target market?
Consider your space
How much square feet do you anticipate needing? What is your budget, not only for the start-up phase (leasehold improvements), but for ongoing operations (lease payments for example)? What is your break-even point? How many seats do you need? Is there going to be a bar or patio? Do you need a liquor license? How will you maximize the space in terms of revenue per square foot? These questions need to be answered in detail with strong projections (knowing what you can afford) to help define your property search parameters.
Think about any leasehold work
Consider the overall design you’re looking for, but also consider the required kitchen space and equipment, menu and overall concept, bar space and bar equipment, exhaust hood systems, overall ventilation, and washroom capacity.
If you’re on a tight budget, it may be ideal to look for a space that was previously a restaurant that comes with an existing (and working) exhaust hood, guest washrooms, and adequate ventilation systems.
Do a hyper-local analysis
It is fundamentally important to understand your hyper-local market, especially when it comes to demographics and competition. A radius of 1-5 miles surrounding your location of choice can be referred to as your hyper-local area.
This is the opportunity to analyze the local competition, market positioning, market analysis, and long-term feasibility of specific locations and neighborhoods. Does it truly make sense for your desired concept?
Check previous history
What is the history of your possible location? Did it previously host a restaurant, and how many restaurants has it been prior? If the location was a restaurant, what type of concept was it and why did it close? Complete your due diligence on the space in addition to the property managers. There may be underlying issues that need to be addressed.
When choosing a location it is important to keep an open mind, complete your due diligence, look at a variety of spaces, and don’t fall in love with just one specific location, until the lease is signed. know your wish list but keep your concept scalable in terms of size and design. Once you have these answers and a specific location in mind, complete the remaining portion of your business plan (financial projections) to ensure this space is 100 percent feasible.
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|Doug Radkey is the principal owner of Key Restaurant Group, a North American restaurant/bar start-up development agency based in Ontario, Canada. Being in the food and beverage industry for over 17 years has allowed Doug to become a leading voice in the development of feasibility studies, unique concepts, business plans, and operational systems. Learn more by visiting keyrestaurantgroup.com|
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