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Why does restaurant location matter?

June 20, 2024 6 min
Author
Senior Content Manager at Eat App
Reviewed by
Co-founder and CEO of Eat App

A business’s success is location, location, location. Especially when opening a restaurant.

Finding the right site for your restaurant will get you customers and retain them. So, will make money and profit. This is where strategy and location research comes in. Restaurant operators can find the best site and streamline their operations by evaluating potential sites against a number of criteria.

This blog is about the value of a restaurant’s location, what to look for when doing a location analysis, and where to put your business. So, keep reading. 

Restaurant location

The address of a restaurant where customers can eat and buy is called the location. When choosing a location, potential customers consider how close they are to the area, how easy it is to get there, and what’s around like parking and shopping centers.

Restaurant locations must also support their operations by having enough space for kitchens, dining areas, and other facilities. A restaurant’s success is largely dependent on its location. Before opening a restaurant, you need to research the local market and customer demand.

The site choice can make or break a restaurant’s profitability and customer satisfaction. So when choosing a location for your restaurant, you need to weigh your options carefully.

quote-img Frame 2608398

Location, location, location. The three things that matter most in real estate and in restaurants.

Danny Meyer, a renowned restaurateur and CEO of Union Square Hospitality Group

 

Restaurant location

Restaurant location analysis

Restaurant location analysis is the process of evaluating potential sites for a new restaurant by looking at demographics, competition, accessibility and local regulations. Finding the right location is key to attracting and retaining customers, making money and being profitable.

Restaurant location analysis

Five things to consider

  1. Demographics: Knowing the local population demographics - age, income, education, and ethnicity - is key. This will help you determine the type of cuisine, menu pricing, and marketing strategy. Catering to the local demographic can make or break your restaurant.
  2. Competition: Analyze the existing restaurants in the area, their menu, pricing, and reputation to identify gaps in the market and opportunities for differentiation. By knowing what your competition offers you can create a unique dining experience.
  3. Accessibility: Looking at parking, public transport, and foot traffic is crucial to evaluate potential customer traffic. A location that’s easy to get to will attract more customers and enhance their dining experience.
  4. Local Regulations: Knowing the local zoning laws, permits, and licenses required to open a restaurant is key to avoid legal headaches and delays. Compliance with health, safety, and building codes will ensure smooth operations and no fines.
  5. Rent and Lease Agreements: Evaluating the cost and terms of the rent and lease agreements is important to ensure the restaurant’s financial viability. High rent can break the bank so you need to find a balance between cost and revenue.

Restaurant Locations

Why is a restaurant location important?

Doing a restaurant location analysis is important because the location is key to the restaurant’s success. A restaurant in a bad location will struggle to attract and retain customers which means lower sales and profitability. A restaurant in a good location will have high foot traffic, easy access to their target market, and less competition.

A full location analysis will also uncover potential risks and challenges such as legal hurdles, high costs, or low customer demand. Identifying these early will allow restaurant owners to address them before they become costly mistakes and make the opening process smoother. This will save time and resources and increase the chances of the restaurant’s success. By making informed decisions based on a full location analysis restaurant owners can lay the foundation for a successful and profitable business.

Restaurants

A restaurant location strategy

A restaurant location strategy is about finding the best area to open a new restaurant. This involves researching the area’s demographics, competition, and potential customer base to determine the location's viability. By looking at factors like population size, average income, existing restaurants, and other relevant data, restaurant owners can gauge how well their business will do in that area.

The location of a restaurant is key to its success. It's important to choose an area with enough customers to support the business and not too much competition. Additionally, the type of restaurant should match the area. For example, a seafood restaurant won’t thrive in a region without access to fresh seafood, and a high-end restaurant will do better in an upscale neighborhood than in a low-income area.

Restaurant location strategy is a detailed process that requires a lot of research and thought. When done right, it helps restaurant owners find the perfect spot for their business, allowing them to stand out from the competition and be easily accessible to customers. This leads to higher customer satisfaction, more business, and increased profits. Planning your restaurant location strategy before opening can significantly increase your chances of success.

Restaurant location strategy for target markets

Using your target market to guide your restaurant location strategy is like having a compass in the wilderness. Knowing who your customers are and what they like will help you choose a location that attracts your crowd.

However, a successful restaurant location strategy goes beyond that. Aligning your location to your concept is like matching your shoes to your outfit. It’s not just about looks – it’s about creating a cohesive experience for your customers.

Conducting a location analysis will help further solidify your restaurant location strategy for long-term success. And what about the businesses around you?

When it comes to your restaurant location strategy, your neighbors are important too. Choosing a location that fits with nearby businesses will create a diverse and lively dining precinct. This can attract more customers and make your restaurant part of a vibrant community.

Restaurant target market

How to choose the right restaurant location

When opening a restaurant, location is everything. Choosing the right spot requires research and thought. Here are 5 tips to help you choose the perfect location for your restaurant:

  1. Visibility: Any restaurant needs to be easy to find. Look for a location with good visibility and access to your target market. Visibility attracts walk-ins and makes your restaurant a landmark in the area.
  2. Competition: Research other restaurants in the area and how they will impact your business. To stand out, look for an area with low competition or find ways to be different to other restaurants in the same location.
  3. Rent: Location can be expensive so make sure to review the rent and compare it to your budget. Make sure the rent you pay is reasonable for the size of your business and expected profits. Balancing rent with potential revenue is key to being profitable.
  4. Foot Traffic: Look for areas with high foot traffic to increase the chances of people seeing your restaurant. Consider time of day, seasonality and proximity to other places where people congregate. High foot traffic means more customers and more sales.
  5. Local Regulations: Different cities have different rules and regulations for opening a restaurant so research the zoning laws and restrictions that apply to your chosen location. Knowing the local regulations will help you avoid legal issues and a smooth opening.

Research and you’ll be more likely to open a restaurant. Plan and you’ll find the right spot to start your new venture.

Why location is important for restaurant

Location is one of the most important things for a restaurant. Here are five reasons why:

1. Visibility and footfall

A restaurant’s location can affect its visibility and accessibility to customers. Being in a busy area with lots of foot traffic will get you more customers than a quieter location. Higher visibility means more walk-ins and easier to find.

2. Target market

A restaurant’s location determines its target market. For example, a restaurant in a business district will get a lunch crowd looking for quick and easy food. A restaurant in a residential area will get families or groups looking for a more relaxed dining experience. Knowing the local demographic helps you tailor your offerings to meet their needs.

3. Competition

The level of competition in the area is also affected by the restaurant’s location. If you’re in an area with many similar restaurants it’s harder to stand out and get customers. If you’re in an area with few competitors you have a big advantage in getting customers.

4. Cost

The cost of the restaurant’s location is another factor. High rent areas will get more customers but also come with higher expenses which can affect profitability. Balancing the revenue with the cost of the location is key to financial health.

5. Convenience

The convenience of the restaurant’s location can also impact customer satisfaction. A restaurant near public transport or with plenty of parking is more convenient for customers to visit. This convenience is a big factor in getting repeat customers and long-term success.

FAQs

FAQ

Opening a restaurant is a big adventure and location is key. Get it right and you’re set. Get it wrong and you’re in for a world of hurt. So take your time and make an informed decision. Here are some questions to consider.

What should you consider when deciding on a restaurant location?

Choosing the right location for your restaurant is key to success. Here are some things to consider:

Demographics: Know the demographics of the area, age, income, education, cultural background. Choose a location that matches your target market.

Foot Traffic: Go for a spot with high foot traffic, a busy street, shopping centre or tourist spot. More people passing by means more customers.

Accessibility: Make sure your restaurant is easily accessible with good transport links, major bus or subway routes. And parking for those who drive.

Competition: Check the competition in the area. How many restaurants are nearby and what type of cuisine do they serve. If many restaurants already serve the same cuisine you might need to rethink the location.

Rent and Lease: Check the cost of renting or leasing the space. It should be affordable and reasonable for the location and expected revenue. And review the lease terms and restrictions to make sure they work for your business.

Facilities: Check the infrastructure of the location, power and water supply, zoning laws.

Safety: Make sure the location is safe for customers and staff. Research the crime rate of the area and any potential hazards.

Now you can choose a location that will make your restaurant succeed.

Where to open a restaurant?

Wherever you’re serving and to whom you’re serving it. Look for walkable locations with parking.

Is the location of a restaurant important?

Yes, location is key. It’s the first thing customers see and can make or break their decision to eat there. A good location should be easy to get to, have parking and attract customers from the surrounding area.

Restaurants in great locations get more customers and more profit. So restaurants need to get their location right before they open.

Contents

Author

Senior Content Manager at Eat App

Elana Kroon used to work in restaurants before becoming a journalist and expert restaurant industry content creator at Eat App.

Reviewed by

Nezar Kadhem

Nezar Kadhem

Co-founder and CEO of Eat App

He is a regular speaker and panelist at industry events, contributing on topics such as digital transformation in the hospitality industry, revenue channel optimization and dine-in experience.

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