Site Selection Secrets for Restaurant Tenants

Location, location, location is often stressed for restaurateurs looking for the right property for a new business (or moving or expanding). And for good reason.

How can you distinguish sites that make sense for your restaurant?

As we recommend in our book, Negotiating Commercial Leases & Renewals FOR DUMMIES, your leased premises can make or break your restaurant and you should weigh many demographic aspects when considering leasing a location in a certain area or territory.

While you may have found a new property with space for lease this doesn’t mean the demographics will fit your ideal criteria. As a restaurant tenant, the following points will be specifically important to you when searching for your new business home: 

Age: The average age of people living in a particular area is extremely important to many business-owners. Will your restaurant be more attractive to parents with young families or retired seniors?  

Income: As mean income and the proportion of two-income households vary, so do the ability and desire to spend disposable income at your restaurant. 

Location: If you don’t think it matters which side of the street you’re located on, think again! Certain operations do better on one side of the street. Your restaurant may likely do better on a route where most people are driving home after work. Many people will not stop for a meal on their way into the office. Accessibility is another consideration here … do customers have to turn left in front of oncoming traffic to enter your parking lot? 

Residency: Set up shop where your target customers already live if possible, rather than try to make them come to you. 

Adjacent Property: If you find a great property with space available for lease, look around. If there is a bare patch of ground between your desired unit for lease, assume that someday, the landlord will lease that pad site or construct a building there that blocks visibility to both your signage and storefront. 

Neighboring Tenants: Who would be doing business next door to you? Will these tenants help or hinder your restaurant? If the tenant next to you is a heavy user of parking during the same prime times for your restaurant this may discourage customers from dining with you. 

Visibility (or lack thereof): Lack of visibility for your store front can cause people to drive right by it – especially if traffic is heavy. Trees in a parking lot can block signage and restrict visibility for drivers passing by. Some landlords have been known to overbuild their pad sites near the road, therefore blocking the visibility of the retail plaza behind it. 

Anchor Tenants: If you’re looking for commercial space to lease in a shopping mall or plaza, consider the anchor tenants (frequently major department stores which help to draw customer traffic). Ask the leasing rep/agent about how long the anchor tenant has leased in the property and if the anchor tenant has any plans to move. If the rep/agent claims to not know this information, press for more details.

Competition: Be aware of any, and all, competition within the area. Not only should you be acutely aware of your competitor, you should have someone “secret shop” their restaurant and report back to you about the entire experience. You could also have your secret shopper ask them about your restaurant (if you are already open) so as to discover what your competition is saying about you. Remember to also think in terms of future competitors. Check out which competing businesses are expanding within your city or planning to come to town. 

How can you distinguish sites that make sense for your restaurant? Begin by understanding that just because a developer bought some land and put up a building it doesn’t mean that the site is automatically a winner. Perhaps it was a great neighborhood 30 years ago, but it’s gone downhill? Perhaps the area is overdeveloped, meaning that another retail site isn’t needed or justified?

Consider the following two questions before choosing a specific commercial site for your business and signing a long-term lease agreement or a lease renewal: 

• Are you planning to open a restaurant that people will travel for miles to visit? 
• Are you taking your restaurant to where people already are (e.g. downtown, the suburbs, or a large shopping entertainment development)? 

For a complimentary copy of CD, Leasing Do’s & Don’ts for Commercial Tenants, e‑mail DaleWillerton@TheLeaseCoach.com.