Famously expressed by British real estate mogul Lord Harold Samuel, “There are three things that matter in property: location, location, location.” The sentiment of this statement is particularly true for the restaurant industry because of its geospatial nature. Who a restaurant can cater to heavily depends on its address. Customers will only travel a certain amount of time to eat.
Specifically, on average, an individual is willing to drive 17 minutes to arrive at a restaurant. Therefore, a restaurant’s location significantly impacts its success, and it is of upmost importance to understand how to choose the right one.
How to Choose the Right Restaurant Location
The address of a restaurant impacts the bottom line. Here’s four criteria to regard before purchasing a location:
For restaurants, visibility, or the degree to which an establishment is seen, is key. Restaurants that do not have proper signage or that are covered by large buildings will go unnoticed by the local market. Simply put, individuals will not dine in an establishment if they do not know it’s there.
There are many walk-in restaurants located in high foot-traffic areas, and one reason new customers visit these restaurants is out of curiosity. Visibility triggers this curiosity by making customers aware the restaurant exists.
Customers value convenience — in a recent study conducted by the National Retail Federation, it was discovered that more than 80 percent of consumers value convenience more today than they did five years ago.
Accessibility, or the ease at which a location can be reached, ensures convenience. For instance, many successful restaurants, such as McDonald’s, are located by highway exits. This is because people can easily access the location; getting to the restaurant is easy, simple and not out of the way.
- Parking Availability
Apart from restaurants located in big cities, the availability of parking is another important criterion to consider when choosing a restaurant location. Lack of parking could result in employees running late for work, causing them to grow frustrated. With upset employees, customers may be more likely to experience negative customer service.
What’s more, if customers do not have a place to park their car, or if they must spend hours looking for a parking space, many will choose not to dine in certain restaurants. Individuals do not enjoy driving in circles, especially when they are hungry.
The fourth and final criterion that should be assessed when determining if a restaurant location is right or not is affordability. Staying on a budget is important. According to industry benchmarks, in order to ensure profitability, rent should not be more than six percent of a restaurant’s total sales. Additionally, there’s no use in purchasing an extremely luxurious property that is simply too expensive. This could drive a restaurant to its end.
Choosing the right location is one of the most crucial steps in restaurant development. Using the four criteria above to assess a possible address, restaurateurs can determine which location best meets their needs.