Opening A Restaurant Location

So you’ve decided to open a brick and mortar location for your restaurant. It is an exciting time for you! This guide will cover what’s most important to keep in mind when opening a restaurant location.

Choose based on target demographics
Survey the area and interview locals
Make sure there is enough space for your concept
Negotiate the lease / rent / fees
Estimate remodeling / interior design costs
Turn your plan into action

Locate Near Your Target

Your restaurant location needs to be convenient for your target guests to access. Choose your location based on the demographic research you did when identifying your target.

To learn more about how to identify your target guest, read our free guide “Restaurant Target Marketing.”

Briefly, demographics are statistics of the people who live nearby. Because 80% of your regulars will live in the area within 10 miles of your restaurant, it’s important to do a demographic study before choosing a location.

Basic Demographic Questions About Your Target:

What’s their income range?
What type of work do they do?
What’s their average age?
Are they single, married or have kids?
Do they identify with a particular culture or ethnicity?
What are their interests outside of work?
What is their educational level?

Read More: Restaurant Blog Ideas

Perform Onsite Market Research

To make sure you’ve picked the right restaurant location, hang around on the street in front of the building for a while. This will help you get a sense of the area and the foot traffic.

Get a handheld tally counter or tally counting app for your phone. Use it to keep track of how many people come by at different times of the day. Stand in front of your future restaurant and strike up conversations with passers-by.

Work into the conversation questions to find out where they’re going, where they came from and why they are there. Let them know you’re thinking of opening a restaurant here and get their insight on the neighborhood.

Ask them if they like the concept you have in mind. If they say something like “we already have too many cafes” don’t try to convince them your cafe is different. You can’t stand in front of your restaurant all day selling your idea to people. Accept their feedback and reevaluate your concept.

Visit other restaurants nearby and see how they do things. What are they doing right? What are they doing wrong? Your restaurant concept should fit the surroundings while bringing something different to the table.

Chat up the folks eating there. Are they regulars? Search for online reviews for the restaurants nearby. Determine what is successful and what isn’t. Add this insight to your restaurant business plan.

Choose The Right Building And Floor Plan

Resist the urge to be impulsive. Don’t fall in love with a restaurant location. It has to be a strategic decision that is best for the business.

Is there really enough room for everything you want? Keep in mind that what looks like a huge empty area will quickly close in when you start planning out the areas of the restaurant.

When designing your restaurant layout you have to fit within the limitations of the building. Are there structural objects like vents and columns that are immovable?

Start designing the proposed layout before you fully commit. Use colored tape on the floor to mark out where everything would go, so you have a real sense of space management. You need to find out it’s going to work now. Not when you’ve already invested money in building.

Make sure there is plenty of room for back of house operations. The production area is the engine of your restaurant. Don’t sacrifice space in the production area for a larger dining room.

An insufficiently designed back of house will make every service a struggle. You won’t be able to keep up with the number of guests you have! It’s not just the size of the kitchen. You need room for:

Dry storage
Cold storage
Prep
Cleaning station
The back office

These areas should be sufficiently organized, allowing people to do their jobs on a busy night without having to squeeze through an obstacle course.

Negotiate A Fair Lease / Rent Agreement

It’s important to keep site costs low because they are a fixed cost. A fixed cost means that it doesn’t scale with the amount of business you do. Your lease is the same every month if you serve 500 guests or 5,000.

Start with the mindset that everything is negotiable. Negotiate any terms in the lease that you can think of. Look for costs like landscaping, heating and cooling and exterior maintenance. Try to get the property owners to pay for these costs.

To successfully negotiate your site costs it’s important to know what the property owners want and what you bring to the table. Often, your restaurant is exactly what the developer needs to bring positive attention and improved ambiance to the area.

This is a place of power from which you can negotiate. Bring in beautiful renderings of your design to the meetings. Turn the tables so they want to entice your business. Explain how your restaurant will raise the value of the other units they’re leasing.

As a restaurant startup, it’s very risky to sign a long lease. You probably don’t want to think about it, but consider how a five year or a ten year lease could become a financial burden if things change. What if you wanted to relocate the restaurant or you wanted to close it before the end of the term?

To reduce risk when opening a new location, sign a two year lease instead. Establish yourself in the area first. Consider a longer lease when you can accurately predict how your business will be doing in another five years.

Estimate Remodeling and Design Costs

An important part of choosing the right location is to project the site costs before you sign the lease. Site costs can easily over-run your budget if not planned carefully.

Any building in a state of disrepair will have to be fixed up before you open. It can end up costing much more than you planned for. Unaddressed problems with the site will negatively impact guest experiences and staff productivity — as well as your bottom line.

For example, opening a restaurant location inside a historic building can be a great way to gain instant social credit in a community, but be sure to take steps to mitigate the risks of using an older structure. Inspect all the electrical wiring and ensure there is proper ventilation.

Setting a budget for remodeling is part of estimating your entire restaurant startup costs and will be part of your business plan. List every cost in your preferred spreadsheet application and start filling in the dollar amounts.

Where you don’t know, perform the required research. It’s critical to have an accurate cost estimate before you start the project.