Restaurant Location Analysis: How to Choose the Best Restaurant Location

The famous phrase “location, location, location” coined by Harold Samuel when referring to the three things that matter most in property fits the restaurant industry like a glove. For your business to thrive, doing in-depth restaurant location analysis until you find the best place for you is vital. And that place will differ from restaurant to restaurant.

Below, I’ll go through the main factors you need to consider when choosing a restaurant location and how to identify the best one for you.

What is Location Analysis?

Location analysis is a decision-making procedure aimed at finding the most suitable location for your business, keeping in mind your needs, budget, demographics, and more. It is a key aspect of planning for a business opening.

Restaurant Location Analysis: Why It’s Important

If you’re wondering why location is crucial for a restaurant, consider how much it can influence your profits. If you open your restaurant on a crowded street with a lot of foot traffic, you’ll get exposed to a larger group of people. However, that also means rent will be expensive.

A not-as-traveled street will save you money on rent, but it won’t give you as much visibility. In turn, that means you’ll have to invest more money in marketing.

Furthermore, suppose your restaurant is located in a notoriously unsafe neighborhood. That might damage your business in time and deter customers from visiting you. Same with positioning yourself next to your competitors. If they’re more established than you, customers will compare you all the time, and you may not end up winning.

As you can see, there are pros and cons to consider when doing a thorough restaurant location analysis, and we’ll discuss all of these factors below. For now, remember that choosing your restaurant location carefully is essential.

Restaurant Location Strategy: 7 Factors to Consider

1. Demographics

Perhaps the most important factor when picking a restaurant location is your target audience. If you’ve started looking for a space, you should know by now who your target customer is. If you don’t, go back a couple of steps to figure it out.

Based on whom you’re targeting, you need to research the areas where your target audience lives or frequents due to work and pastimes. You can use free tools, like the US Small Business Administration’s one, to do market research and competitive analysis.

For example, if you plan to open a pizzeria that sells pizza by the slice, you’ll want to look for areas with a lot of nightlife. People usually crave fast food after a night out. If you’re going to open a kid-friendly restaurant, suburban areas would be your safest bet due to the many families living there.

Read more: How to Attract Families to Your Restaurant: Kid-Friendly Restaurant Ideas

Your target audience and restaurant location will also influence other things you may need, like parking and how you decorate the place. A family-friendly restaurant needs parking to thrive, while a taco cart serving students doesn’t.

2. Accessibility and visibility

What makes a good location for a restaurant that just opened if not accessibility? How easy is it to get to your restaurant on foot? What about by car? This ties in with the issue of parking I mentioned above.

If your restaurant isn’t very visible (let’s say, for instance, that it’s located on a side alley), make use of street signs to attract customers. Use a specials chalkboard and write down your current promotions, so people are enticed to visit.

Take some time to make your restaurant accessible to all customers, including those with disabilities, by installing ADA-compliant ramps. If students often visit your restaurant, put up a bike rack too.

You might think the best location for a restaurant is a crowded street, but that is not always true. If the traffic is too heavy and the road is bursting with commuters, most people frequenting it might be too distracted by the traffic to notice your restaurant.

A good technique is to visit the location you’re scouting at different times during the day and night, during the week, and on the weekends. That way, you’ll gauge what you can expect in terms of traffic and clientele.

3. Competition

As a rule of thumb, avoid placing your restaurant too close to direct competitors. If they’re already a staple in the neighborhood, you’ll have to put in a lot of time and work to “steal” their customers. There’s also the possibility that the restaurant is too established already. This will cost you customers in the long run.

That said, don’t hesitate to position yourself next to other types of restaurants. This will bring diversity to the market. If you want to open a taco restaurant, set it next to a pizza or falafel place to attract a similar audience.

The same goes for complementary businesses. A coffee shop will become extremely popular next to an office building. Similarly, a health food restaurant will do well next to a gym.

When considering proximity, think of your suppliers as well. The farthest you are from your suppliers, the more you’ll pay on delivery fees.

4. Neighborhood safety

Restaurant location analysis wouldn’t be complete without a close look at safety and crime rates in the neighborhood. If the area is famously unsafe, you risk losing customers. You will also have to invest more in security measures, outdoor lighting, and extra insurance.

Research the area before settling in to avoid any surprises. Go and experience the atmosphere for yourself and try to put yourself in potential customers’ shoes when they visit your restaurant.

There’s no way of knowing with certainty how that neighborhood will change over time. However, you don’t want to start your journey with a huge obstacle you need to overcome.

5. Business regulations

Depending on the state, city, and even area where you want to open your restaurant, you will have different business regulations to follow, from zoning to health. Do your research ahead of time, so it doesn’t become an issue after you’ve already set up shop.

First of all, the space has to be zoned commercially for you to open a restaurant there, not residentially. If the building is in a mixed-use zone (which allows both), make sure you can still bring your concept to life without issues. If you plan on serving alcohol at your restaurant, ensure that it is allowed too.

6. Affordability

There are many costs involved with opening a restaurant, the location being the main one. Set your location budget, and don’t go over it even if a place seems perfect for you. You have to put things into perspective and think if you’re going to afford the location over time.

Suppose you don’t have a set budget and you can afford to spend some extra money to cover the difference between your rent and the profits you’ll make in the beginning. In that case, you could consider a location that’s a little out of your budget too.

Now, the question is whether you want to lease the space or buy it. If you can afford it and know owning a restaurant is your life’s dream, consider buying. If you’re unsure of this venture, leasing is the safest bet.

If you don’t have a big budget, collective venues are also an option for you to explore. Prices in a food court or food truck park might be lower. Not to mention this will give you a chance to create some buzz around your restaurant without spending that much money.

You might also like: 10 Food Truck Marketing Ideas That Are Guaranteed to Work

7. Space necessities

Finally, your restaurant location analysis should look at the available space for what you have in mind. Is the kitchen space enough? How many tables could you fit into the dining area?

The standard formula is five square feet of kitchen space per customer. Moreover, the kitchen should cover about 30% of your total square footage.

Here, it’s vital to think of your restaurant concept. Do you plan on having a bar area too? Calculate the additional space for that. Are you considering a lounge area where customers can wait with a drink for their table to be ready? That will require even more space.

Besides the tips above, you can also use a restaurant data analytics tool to gain a wider knowledge of city-wise data.

Restaurant Location Scouting: 3 Quick Tips & Tricks

1. Leave enough space for delivery & pickup

Adding delivery and pickup to your restaurant services can boost your profits and bring more customers your way. If you plan on offering those services, you’ll need a separate counter where people can come to pick up their food orders and where drivers can pick up the orders for delivery.

Read more: How to Promote Your Food Delivery Business as a Restaurant Owner

2. Bring in a building inspector

You shouldn’t open your restaurant without ensuring the building is up to code. For that, you need to contact a building inspector and get the proper authorization. They will check your electrical system, plumbing, verify the structure, and offer detailed feedback on what they find.

3. Investigate space turnover

You might have found a good location for your restaurant on paper, but is it really that good? Is this a place where multiple restaurants have opened and then closed in a few months? There’s a reason why businesses don’t do well there, and it’s best to avoid this location.

Bottom Line

A thorough restaurant location analysis can help you avoid many short and long-term issues that could pop up. It will also ensure you’ll discover the best possible location for your restaurant. Consider the factors above as a blueprint when searching for a restaurant location. Don’t forget to check every box before you decide.

Continue reading:

• Restaurant Opening Checklist: How to Start a Profitable Restaurant
• How to Market a New Restaurant: 10 Bulletproof Tips