Question:
I'm managing editor of Philadelphia Weekly, the
region's largest alternative newsweekly. I'm writing
a story for our Food Issue about why some restaurant
locations seem to be the kiss of death, no matter
what kind of restaurant inhabits the space. I've
been trying to talk to different restaurant consultants
about the importance of location, trying to find
an answer to the mystery of these culinary black
holes. I'm wondering if one of you might speak
to this issue; I'd very much appreciate it. Also,
if you could return an answer to my e-mail address
as well as posting it, it would help me tremendously.
Thanks very much for your time,
Liz Spikol
Answer
Dear Ms. Spikol:
Restaurant site selection/analysis is a topic
that many restaurateurs ignore.
There is a very basic concept that I follow. "Build
it where they are"! This may seem a bit over
simplified, but I have seen many instances of
new restaurants opening up in locations that leave
me shaking my head. In many respects the restaurant
industry is overbuilt. You can still be successful,
but you need the right concept in the proper location.
There are exceptions to the rule. We have all
seen the successful restaurants located behind
the barn, next to the tracks, under the bridge,
and down the dirt road. But these are very rare.
In order to avoid creating another "black
hole" I recommend using the following location
criteria: Geography – Geography is
important because customers in different parts
of the country display differences in eating and
expenditure habits. One should begin by analyzing
the sales performance of existing units based
on their distribution into geographic areas. Are
there differences? If so, why? Sales and Trends – Sales
size and performance trends are extremely important.
Gather as much restaurant sales information in
the area you are interested in building in and
rank these units in descending order and study
both ends of the range. What are the specific
characteristics of the restaurants at the top
of the list, and why are others at the bottom? Market Area Size – The
market (your target market) must be large enough
to sustain you and your competitors. Accessibility – Accessibility
means two things: road capability and adequate
ingress and egress. If people can’t get
to you, they aren’t going to come. Visibility – An essential
element to fast food restaurants is visibility.
If they can’t see you, they won’t
stop.
Another problem I see is the parade of restaurants
into an existing building only to see each and
every one of them march out within a few months.
This could have been avoided if the restaurant
owner did their homework and asked a few poignant
questions.
• Why did these other restaurants fail in
this location?
• Am I doing anything different that will
increase my odds of success?
• Maybe this is just one of those "black
holes" I’ve been hearing so much about
and that is why the rent is so cheap!
My advice to all restaurateurs is to be prudent.
Do your homework. Conducting a thorough site selection
analysis is expensive and time consuming. But
when you look at the failure rate of new restaurants,
it is definitely well worth it.
Regards,
Ron Santibanez
President
Qualified Solutions Consulting, Inc.
