Buzz
For the food and beverage industry, the location arguably determines 50% of your restaurant's success, if not more. Therefore, selecting the right restaurant location is the foremost factor that requires careful consideration before opening a venue.
Here's a compilation of some tips for selecting a business location to boost customer traffic. Take a look!
Before Choosing a Location for Your Restaurant
Budget is also a determining factor in choosing whether to locate in a busy street, a small street, or an alleyway. You should calculate this budget to ensure the ability to maintain the lease for at least 01 year, regardless of whether the investment can be recovered or not.
In summary, the goal is to find a location that is good, abundant, and affordable. However, defining what is expensive or cheap is difficult because each person has different standards. Ultimately, the amount spent on renting a premises must be in line with the financial situation. A savvy investor is willing to spend millions in a place that can generate high revenue, rather than investing a few million in a location that is deserted. At the end of this stage, you must have a preliminary idea of the location you will rent, such as the approximate area, the area it belongs to, and the rental price?
Precisely identify your target customers before choosing a location.
Experience in choosing locations for restaurants and eateries.
1. Search for Information
After the preparation steps, you have significantly narrowed down the search scope, but now you need to find a specific location. You should start by gathering information about real estate transactions through newspapers, brokers, websites, etc.
2. Location Screening
Subsequently, business owners should spend time to validate the gathered information. Surveying pre-screened locations to further shorten the list and obtain more specific, detailed information will help ease decision-making. Apply the Pareto principle: 80% of the time to gather transaction information, 20% to conduct direct surveys.
You can find many locations that meet your criteria. Now is the time to choose the most suitable place to start your restaurant business. You should establish specific criteria to quickly eliminate unsuitable locations.
First,focus on the target customer group you identified earlier.
- Consider the demographic factors of the local population: gender ratio, average age, average income, spending habits, etc.
- Filter the obtained customer information: You need to understand the frequency of dining out, the amount spent per meal, ... Even more specific details such as their preferred dining style, favorite dishes,...
Second,research information about competitors.
It's crucial to recognize competitors operating within the restaurant business, their cuisines, restaurant style, business strategies, etc.
Thirdly, explore thoroughly the restaurant's location and traffic conditions:
- Main streets or alleys, pedestrian traffic per minute, one-way or two-way streets, susceptibility to flooding during heavy rains, etc.
- Parking availability, fees for parking attendants (if any)
- Evaluate transportation infrastructure, residential areas, commercial centers within a 3km radius of the establishment
Fourthly,assess the suitability of each location:
- For restaurant owners: When choosing a location, it's crucial that it aligns with your personal preferences, fits your budget, and complements your Feng Shui. Also, consider the ease of commute from your home to the establishment. If the space doesn't meet these criteria, you might have made the wrong choice for your restaurant location.
- For diners: Ask yourself, 'Is this restaurant location convenient for my customers?' Convenience can be interpreted in various ways, such as easy access to transportation (one-way or two-way streets), the area's safety and security, and ample parking space.
- For employees: You might think this isn't crucial initially, as potential hires might be willing to accommodate your demands. However, if the business location isn't convenient (e.g., too far from where they reside), it could be challenging to attract and retain top talent.
Screen locations beforehand to save time and effort on physical visits.
3. Negotiate with the landlord
Don't hesitate to engage in negotiations. If the landlord is genuinely interested in renting out the property, they will be willing to sit down and discuss terms. As an investor, you have numerous expenses to cover, so saving a little extra won't hurt.
Negotiation is a tug-of-war between you and the landlord. If you push too hard for victory from the start, you might stumble. Accepting the landlord's initial price will prevent them from feeling cheated and abruptly halting the deal.
The next principle follows the 'win-win' strategy. It means ensuring mutual benefits for both parties. You'll achieve your goals, and the landlord will get what they need. If the landlord decides not to renew the contract, it's a loss for you as you've established a stable restaurant business with loyal customers and a brand. When landlords don't see reasonable benefits, they may disrupt to reclaim the property.
4. Sign the lease agreement
This is the final but crucial step. Everything negotiated must be clearly and comprehensively reflected in the lease agreement.
The mandatory components of a lease agreement include:
- Rental price
- Area size
- Deposit amount
- Lease duration
- Annual price increment
- Date of premises handover
- Condition of premises upon handover
- Notice period for termination
- Other compensation agreements, if any
- Force majeure clauses
Investors should clearly negotiate all related costs in the contract, itemizing each expense for easy tracking: notarization fees, repair costs (if any), repair timelines,... These will serve as grounds to negotiate a lower rental price.
If the landlord is hesitant to draft the contract, offer assistance. Or if the investor isn't legally savvy, seek help from lawyers or experienced individuals to draft a contract for you.
It's advisable to notarize the contract. During this stage, the notary will confirm whether the individual is the genuine property owner. If there are any uncertainties during this phase, communicate with the landlord and request the necessary documents to authenticate the contract. Administrative procedure complications could hinder your restaurant business.
Pay close attention to the terms of the lease agreement.
Here is a compilation of practical experiences when selecting a restaurant location, from preparation steps to signing the official lease agreement. Stay vigilant at this stage to choose the most suitable and prosperous business location for yourself.
Wishing you all success in your business endeavors,
--
References: Smartgoal, Cafebiz
--
READ MORE
- 8 ideas to boost online sales for restaurants during Covid
- How to calculate food costs in restaurants for profitable business
- Salary table for restaurant and hotel staff (reference for multiple positions)
