June 2015

News From The Louisville SBDC
Location, Location, Location!

How the big restaurant chains pick great locations and you can too!

If you are thinking of opening your own restaurant, the biggest decision you will need to make is where to locate your new restaurant. This decision is so critical and once made, you’ll have to live with it from start to finish. It’s very hard to pick up your store and move to a new spot.

So how do the big restaurant chains grow to 10, 50, or 100 units of profitable locations?

How do they find one great location after another? Simple. They have a method that they follow every time that increases the likelihood of success. And, of course, they teams of location experts to consult too!

Can you learn to be a location expert too? YES, once you know the method and what to look for. Here’s some things to pay attention to as you look for locations:

Cost: Rent cost needs to make sense. The rule of thumb here is that you need to keep your rent cost below 7% of sales. This keeps your fixed cost of occupancy to a manageable level. Your lease is often more than just rent. You should be aware of other costs included like common area maintenance (CAM) or other landlord costs that may be passed on to you on top of your rent. And don’t forget to get some exclusivity written in the lease if you are locating in a strip center. You don’t want a direct competitor to open right next door. A great location can be a financial disaster with a bad lease.

Traffic counts: Good traffic counts are great but also understand where the traffic is coming from. Traffic usually is not equally as busy throughout the day and can be directional. For example, if your store serves primarily dinner, then you may want to be on the homeward direction of the street. In addition, ease of access may be critical so understand how your customers will have to navigate traffic to get to your store.

Population Density: Knowing there are people around your location is great but you must know much more than that. For example, if your concept is geared toward lunch then you would want a high density of businesses close by to take advantage of employees going out for lunch. . If your lunch concept was in a primarily residential area, then your customer base may be elsewhere during the day.

Parking: Most trips to restaurants are destination trips. So if your guest knows that parking may be a problem, they may choose a competitor even if they prefer your food.

Signage and Visibility: We all know busy, successful restaurants that are tucked away off the beaten path but that success is usually not the norm. Make sure you can be seen from the street. Your storefront and signage are important marketing tools. Most communities have signage laws too. Make sure local ordinances will allow you to use the size and type of sign you want.

Your Gut: Sometimes what you innately know about an area is more important than data. But not often!

If there is one facet that can doom a restaurant from the beginning it is the location.
Finding a location that fit the criteria that is right for your business can be tough. But not impossible.

If you want to know more about location selection methods and planning your restaurant, plan to attend our Opening a Restaurant seminar on June 18th. REGISTER HERE

You’ll be able to get valuable information, tips and tools to start your restaurant right.
Or, if you want a personal, one-on-one session to review your restaurant business plan or just kick some ideas around, contact me. I love starting restaurants!

Contact David Oetken at doetken@greaterlouisville.com or 502.625.0123
David Oetken
Center Director, Louisville SBDC
Email David
Dave Oetken has worked with the KSBDC for since 2011. Dave began his business career in the sports/entertainment industry, primarily in ice skating and ice hockey. He has owned and managed three ice rinks and earned the Manager of the Year award from the Ice Skating Institute of America. In addition, Dave was operations manager for several professional ice hockey teams in both the East Coast Hockey League and the American Hockey League. He has also owned, operated and sold several businesses in the food industry. From there he moved into the restaurant field, owning and operating a number of franchise concepts. Since 2005 he has owned Louisville News company, one of the largest distributors of thoroughbred horse publications in the eastern United States. David has a B.A. and M.B.A. from Bellarmine University. He remains active in his community, serving as a SCORE volunteer since 2003 and is a past vice chair for GLI’s Small Business Innovation Committee
502-625-0123 l david.oetken@uky.edu
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