What to Consider Before Choosing a New Restaurant Location


There are over 1 million restaurant locations in the United States. Because the restaurant failure rate is around 59% within the first three year period, brands need to keep a close eye on the factors that predict success. Every store - franchise- or corporate-owned - is subject to the golden rule of real estate: location, location, location.

Of course, the most obvious rules when choosing a piece of real estate for your next location come into play:

1.  Visibility: Is it easily seen from the (hopefully busy) street it sits on?

2.  Convenience / Footprint: Is there enough parking? Is it easily accessible? Is there enough space to offer adequate seating?

3.  Cost: Does the lease fit into the business plan? When is your break-even point?

In most cases, these three priorities compete with each other. A fantastic spot in a high-traffic area with plenty of parking is going to drive cost up considerably. It may be difficult to find the sweet spot that optimizes each of these factors. So, when you're comparing options, a second set of considerations can help to make the decision clearer.

Whether it's your 20th, 200th, or 2000th location, here are 3 more considerations you should weigh before choosing a new restaurant location….    


The Community

Getting to know local consumers and their habits is crucial. How will your value proposition resonate with the community? If your brand is all about speed and convenience, you'll be looking for different signs than if you offer elevated, customizable fare. Regardless of your market positioning, you'll want to drill into local demographics with a similar methodology:

  • What's the size of the population, and how much has it grown in recent years? Higher growth areas tend to make for better locations.
  • What is the age distribution?  If you are surrounded by retired baby boomers, your adventurous and trendy fast casual restaurant may face a shortage of customers. If instead, your menu is full of creative spins on classic dishes, the retired set may be your perfect match.
  • What does household income in the area look like? It's important that the local community - or an adequate subsection of it - will have the desire and ability to make a habit out of your restaurant.

The Competition

Next, you'll want to do a competitive analysis. You'll want your prospective competition to be doing well (a community with thriving restaurants is always a good sign), but not so well that there's no space for your restaurant to succeed.

  • How much variety is there in terms of cuisine and value, and is there anything obvious missing? As an example, Columbus, Indiana had a rich restaurant culture - an army of sit-down restaurants. With a huge corporate campus at the center of town, though, lunch offerings were missing the mark because employees didn't have the time for a leisurely meal. Fresh Take Kitchen saw the gap in the market and pounced on it with great success.
  • How engaged is the community with the current restaurant scene? Take a look at Yelp, OpenTable, Instagram and other similar platforms to gauge how active the neighborhood foodies are. Google will often tell you how busy neighborhood restaurants are at different hours. Research along these lines will help you understand the barriers to entry in the local market and perhaps even help you project marketing costs for the launch and beyond.

The History


In the immortal words of William Faulkner: "The past is never dead. It's not even past."

Although the location will be a fresh start to you, other people in the area may associate your (new) place of business with failure from the start thanks to its history. Do some digging into the story behind the property. If what you find is a long string of failed restaurants, you might consider looking elsewhere. Chances are if many restaurants before you didn’t make it, then yours won’t either due to the location itself or the reputation of the location. Beware of the curse.


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