The Big 4 for Restaurant Site Selection Success

              

               The Big 4 in Restaurant Site Selection Success

Choosing the right restaurant location is critical to the success of your restaurant. The restaurant business is very challenging to be successful in and having a strong location will enhance your chances for success. The key factors to consider in choosing the proper location are as follows:

1) rent affordability,

2) demographics match your concept requirements,

3) trade area draw and

4) major market generators in the neighborhood.

1) Rent Affordability – This means that you can afford the rent you will be paying. Frequently operators pay more rent then they should and this can contribute to you going out of business. Restaurant operators should not pay more than 6% to 8% of their sales in rent. This 6% to 8% factor also includes any additional costs you may be paying the landlord which may include real estate taxes, fire insurance and CAM charges (common area maintenance costs) which include security, gardening, common area utilities and maintenance costs, etc. This means that if you are doing $600,000 in yearly sales your rent should be no more than $48,000 ($600,000 sales x 8% = $48,000) in yearly rent.

2) Demographics Match Your Concept Requirements – Demographics are the population statistics in the neighborhood of your proposed restaurant within a given radius of your site. In researching your concept you want to make sure that the neighborhood population can financially support your restaurant. The demographics include the following factors:

a) per capita income – the yearly earnings per person,
b) household income – the yearly earnings per family household,
c) education level – education levels are classified as high school diploma,     undergraduate degree and graduate degree,
d) percent of income available for spending on food purchases away from home,
e) a breakdown of ethnic mix in the area and the number of people living in the area.

3) Trade Area Draw – This is the distance an average customer will travel to come to your restaurant. Most neighborhood restaurants draw customers from a one mile radius of the site.

4) Major Market Generators in the Neighborhood – Ideally you want to have a mix of the following in the immediate area of your restaurant – a) a strong residential population, b) a strong retail area with lots of foot traffic and vehicular traffic and c) strong traffic generators such as hospitals, theaters, colleges, shopping centers and tourist attractions. Right now in NYC, tourist are driving most restaurants business.

You can not compromise in choosing the right location as this can be a make or break factor in your future success.