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Selecting Restaurants location


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How to select your retail shop or restaurant location

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Selecting Restaurants location

  1. 1. Selecting Business Location By Sherif Hanna Founder & Managing Partner of Smart Up Business
  2. 2. Presentation Plan 01 02 03 04 05 06 Introduction Importance of location for restaurant & retail business Factors of good business location Different location for each business nature Evaluation of business location If I opened in the wrong location • Types of business location • Location selection mistake • More clients • Operation size • Permits & license • Affects operation cost • Sales channels • Demographics • Competition • Visibility • Accessibility • Parking • View • Exterior environment • Renovation bills • Staff convenience • Can the same location be good for any business? • Buy, Lease or Build • Before looking for your business location • Push & Pull checklist • Some ideas for some issues May-17 By Sherif Hanna - Smart Up Business 2
  3. 3. Introduction May-17 By Sherif Hanna - Smart Up Business 3
  4. 4. IntroductionThere are a variety of possible locations for restaurants including a freestanding unit, located in shopping mall outlet, food court, or a multiple concept unit within an existing facility designed for another business such as a gas station and convenience store There is no substitute for a good location. Good food, superb promotion, fast service and competitive pricing are extremely important, but rarely will those factors overcome a poor location. May-17 By Sherif Hanna - Smart Up Business 4
  5. 5. Importance of Location for Restaurants & Retail Business May-17 By Sherif Hanna - Smart Up Business 5
  6. 6. Why is location important in Restaurant & Retail business? May-17 By Sherif Hanna - Smart Up Business 6
  7. 7. 1.More Clients Types of Consumer Buying Behaviors & Product Decisions May-17 By Sherif Hanna - Smart Up Business 7 1. Impulse Purchases Consumer makes a purchase with little to no thought or planning involved. In most instances this happens with low-priced items in retail. Around 80% of QSR customers make the decision to go to restaurant after seeing the signage 2. Routine Purchases Customers spend very little time deciding whether or not to purchase these items They don't typically need to read reviews or consult with friends 3. Limited Decision Making Customers may seek advice or a suggestion from a friend. Customers might also ask for suggestions on which store to go to and which brand is the best. The consumer may research a few options. 4. Extensive Decision Making Consumers use extensive decision making. Consumers spend time researching potential options before buying. They speak with trusted friends, sales professionals, and read reviews and ratings online The decision making process lasts longer.
  8. 8. 1.More Clients May-17 By Sherif Hanna - Smart Up Business 8 • VISIBILITY 1. Impulse Purchases • ACCESSIBILITY 2. Routine Purchases • VIEW • CONVENIENCE 3. Limited Decision Making
  9. 9. May-17 By Sherif Hanna - Smart Up Business 9 2. Operatio n Size • Area of production defines the restaurant capacity • Warehousing area defines the amount of stocks the restaurant can keep – which means purchasing more amounts, less often • Dining area defines the capability of restaurant to generate sales
  10. 10. 3. Permits & License May-17 By Sherif Hanna - Smart Up Business 10 Depending on the zone & the area
  11. 11. May-17 By Sherif Hanna - Smart Up Business 11 4. Affects your Cost of Operation • Cost of rent • Cost of marketing • Labor cost • Supply Cost • Utilities cost
  12. 12. 5. Sales Channels May-17 By Sherif Hanna - Smart Up Business 12 • Dine in • Take away • Drive thru • Car service • Home delivery
  13. 13. Factors of Good Business Location May-17 By Sherif Hanna - Smart Up Business 13
  14. 14. What to look for in your business location? May-17 By Sherif Hanna - Smart Up Business 14
  15. 15. 1. Area Demographics and Market research • What kind of neighborhood your proposed restaurant space is located within. • Think about the kind of restaurant that would be well suited for the surrounding residents. May-17 By Sherif Hanna - Smart Up Business 15
  16. 16. 2. Competition and other Businesses A lot of competition is not necessarily a bad thing since it means that the market is healthy and can support a whole lot of restaurants. Secondly, you should find out if there are actually other businesses nearby that could be complementary to a restaurant, like traffic generators May-17 By Sherif Hanna - Smart Up Business 16
  17. 17. May-17 By Sherif Hanna - Smart Up Business 17 3. Visibility Restaurant visibility & signage Traffic direction
  18. 18. May-17 By Sherif Hanna - Smart Up Business 18 4. Accessibility Inviting facade Handicapped-friendly Kids pleasant place Ground floor Direct Access Traffic pattern
  19. 19. 5. Parking A great restaurant will ideally have its very own parking lot. Nearby public parking will also be acceptable. However, keep in mind that many people will simply drive on to another restaurant once they have nowhere to park their car.May-17 By Sherif Hanna - Smart Up Business 19
  20. 20. May-17 By Sherif Hanna - Smart Up Business 20 6. View You might sacrifice some of the factors of good location such as visibility or accessibility for the view that is an important part of the customer’s experience
  21. 21. May-17 By Sherif Hanna - Smart Up Business 21 Environment Take a good glance at the sidewalks and other buildings which might be around the location. They can sometimes affect a prospective diner’s impression of your business. You will have a bit of control over your neighbors so you want to choose a restaurant location with surroundings which are neat, tidy and well maintained.
  22. 22. • Market research has demonstrated that the "going- home" side of the street is usually preferable to the "going-to-work" side. People are more likely to stop at stores on the way home than when they are in a hurry to get to work on time. Also, the sunny side of the street is generally less desirable for retail operations than the shady side, especially in warm climates. Research shows that rents are higher on the shady side in high- priced shopping areas. May-17By Sherif Hanna - Smart Up Business 22 The side of the street
  23. 23. 8. Renovation Bills Different locations can have different costs associated using converting an available space to a restaurant. One big factor affecting the scale of renovations is a building’s previous use. May-17 By Sherif Hanna - Smart Up Business 23
  24. 24. 9. Staff convenience Able to find staff living nearby or accessible by economical transportation, especially for restaurants working until late hours at night May-17 By Sherif Hanna - Smart Up Business 24
  25. 25. Different Location for Each Business Nature May-17 By Sherif Hanna - Smart Up Business 25
  26. 26. Can the same location be good for any business?May-17 By Sherif Hanna - Smart Up Business 26
  27. 27. Business factors to choose your location May-17 By Sherif Hanna - Smart Up Business 27 Product nature Target customers Sales channels Cost projections Competitors’ presence Price range Budget
  28. 28. May-17 By Sherif Hanna - Smart Up Business 28 The rent-advertising relationship. Your advertising budget is closely related to your choice of site and the proposed rent. Your cash register will likely be ringing up sales the first day you open your doors, with no advertising effort on your part. Of course, your rental expenses will be proportionately higher than those for an independent location ALTERNATIVE ADVANTAGES DISADVANTAGES Buying Ownership, Operating flexibility, Quick occupancy, Accessibility to traffic, Asset appreciation Long-term commitment, Initial capital outlay Adaptability, Initial facility condition, Maintenance costs Leasing Quick occupancy, Relatively low initial costs Reduced commitments Operating inflexibility, Changing lease terms, Initial facility condition, Adaptability, Lease nonrenewal Building Ownership, Operating flexibility, Facility condition Asset appreciation, Location flexibility Long-term commitment, Initial capital outlay Construction time, Maintenance cost Buying, Leasing or Building?
  29. 29. Before looking for your business location… May-17 By Sherif Hanna - Smart Up Business 29
  30. 30. Concept Value proposition Brand Identity Name Logo Sales Channels Food Quality Service Pricing Atmosphere Menu Know your Concept & Business
  31. 31. Determine Your Customer’s Characteristics • Identifying the characteristics of your most frequent customers (heavy users) is essential • Understand Attitudes, Trends, Habits and Patterns of Consumer attitudes influenced by variables as age, children, income, lifestyle, profession, opportunities, household composition and size. May-17 By Sherif Hanna - Smart Up Business 31
  32. 32. Identify Your Trading Area • Numerous factors dictate the size of trade areas including type of food facility, type of location, income, topography, competition, traffic artery, traffic counts, physical and psychological barriers, market structure, activity generators, consumer patterns, visibility (sometimes), socio-economic characteristics, and perhaps, others. • Historically, restaurants have focused on a five-mile trading area, while quick service food facilities have settled on a three-mile radius. • In reality, trade areas are not rigidly round, square, or rectangular. Instead, they are positively influenced by the attraction of the restaurant (and often its surrounding generators) and negatively impacted by factors such as competition, and physical barriers, limited access, parking (or the lack of it)
  33. 33. Gather Factual Market Data • Market resources include population, socioeconomic characteristics, age structure, income, eating-out expenditures, lifestyle and household size. Through an orderly procedure, you can determine the extent of the present and future market. • Market resources can be checked for inventory and quantified to determine the share of market that a planned restaurant or quick service food operation can anticipate. It is possible to calculate demographics with a fair degree of accuracy and to compare them to customer characteristics. Also, expenditures can be estimated to determine eating-out potential. It is not the number of people in the trading area, but rather who they are and what they spend that is of paramount importance. May-17 By Sherif Hanna - Smart Up Business 33
  34. 34. Select Adequate Accessibility • When determining accessibility, it is necessary to consider major and minor traffic arteries, number of lanes, speed limits, turn signals, turning lanes, curb cuts, traffic backup, congestion points. • You should also evaluate automobile or pedestrian traffic counts, traffic flow, traffic peaks. May-17 By Sherif Hanna - Smart Up Business 34
  35. 35. May-17 By Sherif Hanna - Smart Up Business 35 • For most foodservice operators, being near generative facilities is a must. Such as major concentrations of office, hotel, industrial and other commercial facilities. • It is essential to identify and explore the many varieties of generative facilities in your area because they increase the frequency of visit into an area. Understanding their importance can represent the difference between choosing a poor location and a great sales performer. Identify Generative Areas
  36. 36. Evaluate Competition • Competition can usually be divided into two types: direct and indirect. Obviously, the more direct the competition, the greater the tendency toward saturation. Conversely, the less direct the competition, the greater the opportunity for higher market share. • Do you know what your competitors are doing? Find out! What are their weekly or monthly sales? May-17 By Sherif Hanna - Smart Up Business 36
  37. 37. Understand Visibility and Exposure • Visibility is the ability of a site, building, or sign to be seen; exposure is being seen over a long period of time. Whereas visibility creates opportunities for impulse eating, exposure gradually influences patterns and decision- making. Visibility is extremely important! May-17 By Sherif Hanna - Smart Up Business 37
  38. 38. Estimate Sales and Parking Needs • Almost all food operators estimate sales in one manner or another. • Parking is critical for most restaurants and quick service food operations not located in a downtown, airport, resort area, a business district, a university campus, hospital complex, or other location that depends upon walk in or take out business. May-17 By Sherif Hanna - Smart Up Business 38
  39. 39. Evaluate Site Economics and Physical Characteristics • Site economics represent the ability of a restaurant's sales and operating costs at a given location to support the cost of land, building and equipment, (or rent), while providing an acceptable profit and ROI. Its sales potential must match or exceed the site economics. May-17By Sherif Hanna - Smart Up Business 39
  40. 40. Evaluation of Business Location May-17 By Sherif Hanna - Smart Up Business 40
  41. 41. How to evaluate business location… May-17 By Sherif Hanna - Smart Up Business 41
  42. 42. Push And Pull Factors Factors that draw a business away are “push” factors. These include increasing costs, more competition, a reduction in demand or poor communication and transportation systems. Conversely, those that “pull” a business toward a location are lower labor costs, a growing consumer base, government incentives, improved transportation and communication systems. May-17 By Sherif Hanna - Smart Up Business 42 Create a checklist Put the most important factors in it Put the ideal of each factor, if applicable Evaluate each factor as a PUSH or PULL factor PUSH from -5 to 0 & Pull from 0 to 5 Preferably to be made by more than 1 person separately & in different times of the day, weekday & weekends Include the common factors & the ones you think are specially important for your concept Ideal space, ideal budget, parking space • Where 0 is neutral & 5 is the best • Where 0 is neutral & -5 is the worst
  43. 43. Opening in the Wrong Location May-17 By Sherif Hanna - Smart Up Business 43
  44. 44. Visibility May-17 By Sherif Hanna - Smart Up Business 44 • Usage of flags • Sky sign • Surrounding billboards • Surrounding street trash bins or seats • Umbrellas • Lighting
  45. 45. Neighbor s problems The good neighbor program as community activity May-17 By Sherif Hanna - Smart Up Business 45
  46. 46. Labor inconvenience • Offering labor transportation • Schedule adjustment (longer shifts & longer weekends) • Lower operation hours May-17 By Sherif Hanna - Smart Up Business 46
  47. 47. Parking • Free valet parking • Rent a nearby garage May-17 By Sherif Hanna - Smart Up Business 47
  48. 48. Low Foot Traffic • Tie in with traffic generators • Special offers for different communities May-17 By Sherif Hanna - Smart Up Business 48
  49. 49. Examples of Checklist Factors HEADINGS DEFINITION General Location Location refers to a general area within a city. Physical characteristics and area characteristics should be considered. Position of Site Site is a specific piece of property. Size, parking facilities, accessibility of utility and public services, convenience, and visibility are factors related to but not limited to the position of site. Demographics Information pertaining to consumers must be collected including data about age, sex, occupation, income, food preferences and potential for future growth and development. Traffic Information Traffic flow patterns are important for the analysis of the site. The factors related to traffic information include traffic counts and patterns, and frequency pattern of traffic flow. Competition A restaurant operation must consider its actual and potential competition: Include but are not limited to location and operating results of competitor, and proximity to competitor. Cost Consideration Costs associated with the development of the site need to be calculated carefully. This includes both the cost of purchase and the cost of site development, which covers factors such as building, landscaping, and the provision of associated facilities such as car parking and access roads. The cost of improvement – renovations and modifications - is also important considerations. May-17 By Sherif Hanna - Smart Up Business 49
  50. 50. The End