Starting a restaurant is, by any definition, a daunting task.  A successful restaurant seems like a unicorn – magical, perhaps unreal, and most definitely difficult to attain.  There are a million variables that can dictate your success, and a million exceptions to every rule.  A thousand line items in your budget, and a thousand more imagined issues the will keep you awake at night. What if customer response is negative?  What if I get sued?

But, prior to getting yourself all worked up, you’ve got to figure out how to get your business plan off the ground.  An important part of that is the intended location of your business.

Location, Location, Location

The interesting thing about restaurant location is that there’s not a defined right or an absolute wrong. I once opened a breakfast restaurant in an industrial area only two blocks off LA’s infamous Skid Row.  While it took a minute to catch on, rent was low enough that we were able to hang in there until it did. When it did, profits were better than they would have otherwise been for the same reason.  There may not be a divining rod for the perfect restaurant space, but we have a few tips for you.

Local Competition

It’s important to eye your potential competition. If there’s another established restaurant with a similar concept to yours it will be difficult to get footing.

Population Density

This is simple logic. If there aren’t enough people in the area where you are opening your restaurant, you will struggle to find success. Why did my place near one of the most undesirable areas of LA take off? It was the density of the population in the area (downtown LA) who also had expendable income.

Rent/Property Cost

The more desirable an area is to live and/or operate a business, the higher the cost of doing business will be. There is no definite formula for this. The basic rule is that you need to find an area that fits for your business. Your prices will need to be high enough for you to remain profitable in a higher cost area. What are your target customers willing to pay? If your target customer isn’t willing to pay the prices you need to charge for a specific area, that area probably isn’t right for your business. The basic guideline I was told early on was to make enough on any given day to pay your monthly rent or mortgage payment.

Local Need

The bottom line is this: if the people living near your restaurant have no need or desire for what you’re offering you’re not going to succeed. Period. Ensuring that there’s a definite need for your product is absolutely key during site selection.

At the end of the day, there is no magic formula that will guarantee success. However, like with most things in life, if you make the most informed decisions you can, you bolster your odds significantly.