There is a saying in the catering industry that if you choose the wrong location, even God can't save you. This is how people express how important location is. Once your location is wrong, your nightmare begins. I've had one of those nightmares. The mistake is long lasting.
Choosing the wrong location is like walking into quicksand or mud. And no matter how much you try to get out, you will still be stuck.
Let me give you an example. If you have the wrong restaurant concept, but the location is good, you still have a chance to save the business. But, if you have a bad location, your business is failing, and you're looking to sell your business, noone will want to buy it. Which is why I describe it as quicksand. You can't get out, but at the same time you can't put in any more money - the more force you put in or struggle, the faster you will sink. It's a f***ing nightmare. Just imagine how horrible that feeling is. The only way to save yourself is to cut loose.
So, I am here to tell you 9 points to consider when choosing a good location for your restaurant. Especially when it comes to your first restaurant. Because if your first doesn't work, you will take a long time to recover. For me, luckily my mistake/nightmare did not happen with my first business. That's why I am still in the business.
These 9 important points will not be the normal common sense points that you read everywhere. They are ones that most people don't even think of or forget, but in fact are crucial.
1. Your Restaurant Concept
The concept is the overall idea or theme that defines your restaurant, which relates to your customers. You need to know who is your customer. But more importantly, who is NOT your customer. Do market research, google the area, visit and walk around, get a feel for it, and make sure to go at different days and times as there will be different results. By doing so, you will find out if the people in that area will be attracted or suited to your restaurant concept. If you see that most of the people in that area are not your potential customers, you have to think twice.
Don't fall into the trap of only looking at the size and layout of the space. Look at the ratio of the target customers compared to non-target customers, taking into account of age, gender, profession, etc. If you find that there is a majority target customers in that area that will be attracted to your restaurant concept, then you are on the right track to having a good location.
2. Get Close to Other Restaurants
Don't be afraid of finding a location surrounded by other restaurants. Consider it a good thing.
Think about it, most busy restaurants are next to each other. People will choose that destination to visit more than anywhere else because it is all close together, increasing the chances for walk-in customers. At the same time, when restaurants around you have licenses for serving alcohol or outside seating (for example), it is more likely that you will succeed in getting the same licences from the local authority.
3. Cinema, Carpark, Shopping Centre, University
You must have at least 3 out of 4 of these walking distance from your restaurant location, especially if it is your first restaurant. I'm not saying that it is not possible to succeed with less than 3 near you. Some restaurants still do well even located in the middle of nowhere, but that takes experience. And, in the long run, it may not be good for the business.
Let's look at IKEA for example. When they are looking for a new site, they follow a special criteria that must be fulfilled. Same as when choosing a restaurant. If the criteria is not met, do not approach the location.
4. Hiring
Customers are not the only people to think about when choosing a location. Staff are important too. There must be people to hire for your restaurant in that area, or who can easily reach that area.
Here's an example. One of my friends opened a restaurant in a small town. Business was not bad, customers were visiting, but when it came to hiring, they were suffering. This was because of their location. Hence, hiring is one of the crucial considerations that you must think about. Are there people looking for jobs in the area? What kind of people are they? Are they people you want to hire for your restaurant?
5. The Future
Don't only think about running your restaurant and how great it could do in the first few years. Think about 5 years ahead. You may want to get out of the place, sell it and move on. And when you do, will anyone want to buy it over? This is when one of their considerations will be the location - it's like a safety net. If the location is good, it is easy for you to get out (for whatever reason), and for another to take over. People will be more willing to buy it when it is in a good location.
6. Rent
Everyone is scared of high rent. But, there are reasons why the rent is high for an area. It could be due to being in a prime location, surrounded by popular public places, carpark, easily accessible, high demand, low supply, etc.
Once you decide to start a business, mentality-wise you have to be all in. So something like 'high rent' shouldn't be the deciding factor that pushes you away from a location.
Some people look at the rent and are immediately turned off. But, first of all, why do you think the rent is that high? Look around the location, its accessibility, foot traffic, visibility, safety, proximity to other businesses, building structure, utilities and other costs, etc
So when you look at it in large-scale, just because of a tiny difference (e.g £15k > 20k), don't be turned away. Just go all in! (Otherwise, if you're not ready, there really is no point starting your own business). If you don't even have what it takes to begin with, it doesn't matter where you are or how much the rent is, you won't succeed.
'High Rent + Good Location' > 'Low Rent + Bad location'
A better location will increase the chances of your restaurant surviving.
After taking all considerations into account (excluding rent), the % of your restaurant succeeding is 65%, then you choose 'Low Rent + Bad location' it could pull you back to 45%. But if you were to choose 'High Rent + Good Location, it could push you push you up to 75% chance of succeeding.
If you have it, you have it.. If you don't. Let's be it.Your mentality should be all in.
But before you take such a gamble, transfer all your personal assets to your family. This is extremely important as there is no way back. Because if the business not working you MAY need to face bankruptcy , hopefully NOT, just in case!!!
7. Landlord
Sometimes landlords can be your biggest problem. They can be silent killers.
Make sure your research about the landlords, agents, their behaviour, rent reviews, etc. Because if you don't, they can trouble you big time. It could result in years of dispute and arguments; you will end up suffering the whole time you are there
8. Emotional Attachment & Regret
If you have 2 locations (Option A & B) to choose from, try imagine how you would feel if someone chose one of them. Which one would you have more regret not choosing? Which one do you have more of an emotional attachment to? If you feel worse not choosing Option A, then i suggest you take that option.
9. Avoid Paying Premium
On the market there are many different types of shops to let. Especially now when there are lots of restaurants & bars closing down. Because many businesses are now struggling to stay open, you can easily walk in, take over and start your business, without having to pay any premium. So, take your time in researching available locations which don't require you to pay premium.
And there you go, those are the 9 important points you must consider and take into account when deciding on a location for you restaurant.
After reading this you may think i'm an extremist, but after all my years of starting businesses, that's how I see is the only way to make it work and succeed.
- Wing Chang
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