How to choose a restaurant location

By Ashna Ambre

Is it only food that customers look forward to when they dine out, or is it the complete experience? Besides the food, it is also the ambience and location that customers notice. Often, when the latter is below standards, no matter how good the food, the customer prefers to give it a miss.

Find the right option
A restaurant situated at a prominent corner or on a busy road would never go unnoticed. It could prove to be a landmark and hence become a free advertisement for the business. On the contrary, an eatery at a location which is difficult to track would simply fall prey to the associated disadvantages of a bad site.

The smallest food service unit needs adequate place for a kitchen and the basics that complement its functioning, storage capacity and some office space. These aspects should be on the priority list.

Some may think setting up an eatery inside a mall is a sure-fire winner but again, high rentals and footfalls differ from one mall to the other.

Shaun Kenworthy, Restaurant Consultant and chef, says, “Just being established doesn’t always guarantee success. Every well-established company will have a list of trials and errors behind it.”

However, Kenworthy has a slightly different view on the location issue. “The location is always important but I have seen with time that it has a lot to do with the overall product-space, theme, staff, food and beverage.

“Lots of restaurants fail because the product was bad or poorly executed. Hence, it is a tricky choice to make,” he says.

The most prime location needn’t always be the first choice as this depends on the kind of restaurant you want to set up. Sometimes, a relatively less central location ends up being a better deal. The gut instinct cannot be ignored in such situations.

Evaluate real estate prices
Variables such as ease of access, traffic, parking and construction permits are crucial for taking the big decision. The lack of parking space at a restaurant can be really frustrating. Carrying out a valuation of property in the area in advance helps in estimating what to expect in terms of rent payment.

If the property prices are high, it could mean higher rentals and access to a customer base with high disposable incomes. Similarly, if the area is already a hub of construction, then it is advisable to enquire with municipal authorities if that will affect your business. For instance, a construction of a flyover right in front of the restaurant wouldn’t work for anyone.

The biggest challenge in India, Kenworthy points out, are high rentals and in many places, low footfalls. “In a city like Bangkok, for instance, you can move into a fully furbished restaurant space and most of the time, with much cheaper rentals than most metros in India. The Indian food market holds many challenges,” he says.

Know your target market
Ensure that you target a group of people who share one or more traits, and then open the restaurant in an area where this group lives or spends a majority of their time. This could be anywhere around a residential, commercial or office area.

Commonly targeted market segments include families with children, business professionals, singles and sports fans.

If your concept is meant to cater to families, make sure you open your restaurant in a location that will be convenient.

“Know who your target audience is, and aim at giving them something that will put bums on seats and give you revenue,” says Kenworthy. He says that generally, Asian customers tend to be more demanding than most but otherwise, business by and large remains the same.

Understanding demographics is also important. Opening a lounge or a bar in a locality with a large number of senior citizens could be a bad choice. Similarly, serving high-priced delicacies around a college vicinity will not end well either. But an area with an educated population with a decent knowledge of food, however, could be receptive to dining at niche and premium cuisine outlets.

Therefore, it is important to know the age group, education level, religious beliefs and income groups the restaurant would be catering to. If you are really in the restaurant business to make some money, you need to pin down a demographic and then hunt the location.

Conduct a competition check
If the chosen location has multiple establishments of the same concept in the vicinity, look for another place. You must also conduct a thorough research on the restaurants in the neighborhood, their prices, menu and offerings and the findings must be analyzed in detail. This will help in having a broader idea of the market.

Kenworthy also points out that skilled and semi-skilled staff are becoming unrealistically expensive. With so many new restaurants opening on an almost daily basis, the demand-supply dynamics have resulted in labor making unreasonable demands. Look after your staff and control attrition rates. If possible, offer on-site meals and transportation.

Lastly, small things matter. Keep the entire location clean-no one likes to see dirty exteriors as much as they don’t like ill-maintained interiors with ragged menus, flies and an air-conditioner that doesn’t work properly.

> Entrepreneur India May 2013
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