Location Analysis for the Restaurant Industry

Instructor: Sean Kennedy

Sean has 8 years experience as a supervisor and has an MBA with a concentration in marketing.

Restaurant and bars are a major part of tourism industry. Location analysis for the restaurant industry is essential to success. In this lesson, we will discuss demographics, competition, and finding a location.

Demographics

Ever heard the phrase 'Location, Location, Location'? A good location can mean the difference between success and failure in the restaurant business.

Say Sports Fanatic Bar & Grill is looking at different locations to open a new store. A building is available near a senior center in a residential neighborhood, but they know that the best place would be a high traffic area near a college. They decide to keep looking.

Before a restaurant chooses a location, it is essential they look at the demographics of all the possible areas. Demographics is data that shows the types of people in a certain area. Different types of people will be interested in various types of food because they have different tastes, preferences, and affluence.

For instance, if there is an area of the city whose demographics show that is predominantly Spanish, it might not make sense to open a Polish restaurant there. Some simple research can avoid this type of mistake. The U.S. Department of Commerce Census Bureau website is a good resource for demographic research.

Review the Competition

Before you take a plunge and decide on a location, you should first analyze the competition. Looking at restaurants in the area is essential to make sure your business will be able to survive and thrive. It would be helpful to perform a SWOT Analysis to determine the strengths, weaknesses, opportunities, and threats of competitors.

The overall goal is to stand out, and hopefully fill an unoccupied niche. Sports Fanatic Bar & Grill doesn't want to move in right by another sports bar, nor offer the same menu as similar restaurants in the general area.

It is also important to determine what type of restaurants do well in the area. A high-end French restaurant may not fit in an area where there are all chain restaurants with low price points.

Other Attributes and Cost

Look for other attributes of the location as well. Is the building itself suitable? Is the area one with high traffic, easy access, good parking, and nearness to other attractions?

Cost of the space is another factor. You don't want to saddle yourself with a lease that's outside your projected budget.

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