Once you have decided to open a restaurant, or yet another restaurant, you must begin thinking about a location. This willbe the most important decision you make and often defines the success of your new venture. In today’s packed world of restaurants, you don’t have to travel far to find an available location. But, remember, there is a reason a location is vacant. Because of the restaurant addiction I suffer from, location was, unfortunately, not always one of my top priorities. I was so anxious to open another location, to expand the company, to bring money to the bottom line, that I was often blind to the detriments of a space. Therefore, I opened a few beautiful restaurants that customers couldn’t find without a hand-held GPS system. The rent was right, the build-out credits were right, and the atmosphere within the restaurant was beautiful. However, the money I spent on marketing, promotion and advertising eventually dragged the operation into such debt that all the good looking deals in the beginning became the restaurant’s downfall.When people tell you that the key is location, location, location, to a successful restaurant they are partially correct. The real statement is the right location, right location, right location. Naturally, food preparation, ambiance, service, price and convivial attitude of the staff are all important equal elements in the equation of success that should all be weighed equally, but the right location is more important and holds more weight in the future success of a profitable restaurant. I have owned restaurants in great locations, others in bad locations, but the most successful have been the ones opened in the Right Location. Finding that Right Location is not always the easiest task to tackle. Seldom do restaurants in the Right Locations go out of business. And the reason for that is the exposure to a strong customer base that has the demographic to fit your menu, ambiance and personality. With the complexities of culinary concepts sweeping across the country, one has to really study the area that they intend to open in. Serving food is no longer the key to the successful restaurant. So there are numerous questions to ask before choosing a location. I opened a restaurant offering a menu based mainly on barbecued brisket and rotisserie chicken in a neighborhood where everyone was walking around in spandex with a yoga mat under their arm. Not a wise move. I didn’t do any demographic study and didn’t realize the neighborhood had changed that much over the years from when I first had my eye on the location. And, although few restaurants in the Right Location go out of business, on occasion they do. And when that happens you have to dig deep to find out the reason why. Is the capacity too small in ratio to the rent making it impossible to serve reasonably priced meals? Are the demographics in the neighborhood not as strong as they appear? Is the rent just too high? Or, is the landlord asking for key money? There is also the possibility that the seasonality of the neighborhood also makes the property difficult to deal with. Keep in mind that staffing a busy restaurant is always easier than staffing a slow restaurant. And, if seasonality is something that you must consider, for instance busy in the summer but very slow in the winter, don’t forget to take that into consideration when running your numbers and when hunting for that treasure of a location. All of these possibilities quickly make the location that appears perfect because of its address seem less than perfect on the financial spread sheet. I recently came across a restaurant that opened just last week. The new owner took over the space after the last owner went out of business after only 18 months. As soon as the For Lease sign went up on the building I called to inquire about the price. The previous owner was asking $340,000.00 for the space because of the remodel that he did to the landlords building. The rent was $4800.00 a month and that was for 1200 sq. feet inside and 2000 sq. ft. patio outside. Considering the location was in wine country, where the rain is a frequent partner in the winter months the rent just didn’t work out. On top of these flaws, the space had almost no visibility onto the street so nobody passing by could see inside. The place is doomed from the beginning. The numbers just don’t pencil and because the last operator went out of business so quickly, the reputation of the space is already tarnished. Although the location appears good, it probably isn’t as good as it looks. It isn’t the Right Location. Finding that perfect spot is one of the most difficult tasks in the entire process of building a restaurant. And, it is often one of the most frequently overlooked. The excitement of opening, the frustration of constantly searching for a location, and the rapid passing of time often force future restaurant owner’s to make decisions that are not that prudent. But remember the Right Location is the most important part of the formula.
Areas of Expertise: Restaurants
John Foley joined AllBusiness.com in 2005, bringing with him an extensive body of communication, culinary, and business expertise. He is a successful entrepreneur whose interests focus on food, publishing, and communications. He has published weekly and daily newspapers and magazines, has owned and operated eight restaurants, and has begun two Internet companies. He honed his Internet development, sales, and marketing skills as Publisher of IzmoMedia, a Bangalore, India-based content provider. He is a noted culinary and business columnist whose work appears in the San Francisco Chronicle, Examiner.com, and a variety of other Internet sites. He has consulted on numerous restaurant, newspaper, and Internet startups. Foley recently joined crowdfunding company Foodie Tout to develop, launch, and publish FoodieDaily.com, a new Internet food site covering the who, what, where, and how in the world of food.