Location is one of the top reasons why restaurants fail. You have a good concept, you hired good people and your food is good. You have done everything seems right, but you forgot about the impact of the location. You opened your restaurant in a poor location.
When I coach clients, I also advise them if you find a good location and you can’t get a good lease, it means you are not doing your due diligence. Before you sign a multi-year lease, consider the consequences if your restaurant fails.
It isn’t pleasant to think about, but if you are roped into a ten-year lease, your landlord can still demand monthly rent, even if you are out of businesses. Ask for a five-year lease, with a five-year option, to start. Once you have established a successful restaurant, you can sign a longer lease.
In my 25 years of restaurant consulting, I have come across a number of reasons and even horror stories about people who chose the wrong location.
There are little things that make a difference. For example, a person buys a juice bar in a busy mall. You would think just being in the mall would be enough, right? What the owners did not realize is their location was not exposed to the flow of the customers as well as the other food facilities. It comes back to not picking the right location.
You’ve probably heard the clichéd phrase, “If you build it, they will come.” If you pick a bad location, they won’t always come. Customers might visit for special occasions, but not on a regular basis and that can lead to a financial hit.
Here are a few reasons why paying attention to the location is important:
I once saw how a restaurant lost their parking because a business next to them cut off half of the parking lot. There was no parking easement in their lease.
It doesn’t matter how good your food is. People do not want to walk a long way. They will go somewhere else if they can’t park with ease.
2. The Curse
Word on the street bears a lot of weight. When picking a location understand “the curse.” That’s when a location is associated with a bad reputation. Some locations have had one failed restaurant after another. Soon people associate the space—not necessarily the restaurant— with poor food, service and jaded ambiance. Or, if the place is associated with a crime, like repeated robberies, people will stay away. Do not take this lightly. This is “the curse.”
3. High Crime Area
You do not want to go where you might get your car broken into etc…You have to feel comfortable to go into the area of the restaurant, especially at night.
Does your concept demographics match the area around the location? Is your restaurant readily available to your target market? Are these the customers you plan on selling to?
What can you do before choosing your location?
Let big companies choose for you! Franchises like McDonald’s, Olive Garden, Wendy’s, etc. spend thousands of dollars on a feasibility study for choosing a location. They’ve done the research for you in terms of giving you an idea of foot traffic and visibility.
Know your neighbors. When looking for a restaurant location, consider who else is doing business in the neighborhood. What kinds of businesses are there? Maybe you’re next to an office building, which means you may be really busy during the workday but dead at night and on weekends.
Successful businesses attract other successful businesses. Is the area busy or full of empty storefronts? Examine how other businesses are doing with customers. Visit prospective restaurant sites during different times of days, during the week and on weekends.
Don’t be impulsive. You may visit one spot and decide that it is “the one.” Before you start sketching out the dining room, be sure to visit multiple sites. Patience pays off when selecting a restaurant location.
Kenny Arone is a restaurant consultant and partner in Cost Genie Menu Costing Software. www.costgenie.com