We’ve all heard the mantra location, location, location. But is finding just the right spot in just the right neighborhood still the prime factor in opening a restaurant? “It’s part of a larger context, but [location] is no longer the most important thing,” says Richard Coraine, senior managing partner for New York City-based Union Square Hospitality Group, Danny Meyer’s company behind Shake Shack, Gramercy Tavern and The Modern, to name a few. With consumers’ ability to judge quality higher than ever, “desire for good product won’t be impeded by location,” he says.
That doesn’t mean to discount finding a location that fits your business. Coraine’s team routinely
researches real-estate costs, what other retail is developing in communities and which neighborhoods are in transition to pinpoint potential sites. He uses this information to narrow down the neighborhood search and analyze the competitive landscape. It’s a twofold approach: looking at what’s already in the area and deciding if his concept is one the locals would embrace.
There’s no perfect formula, and Coraine cautions operators to be prepared to make concessions. “You’re almost never going to find a perfect space on the perfect block with a perfect deal from the landlord,” he says. “What are you willing to give up?” Whether it’s square footage, neighborhood or rent, Coraine suggests operators pick their sticking points and then adjust the rest of their business plan to develop a restaurant that still can thrive.
Whether opening a first restaurant, running a hot portfolio or heading up a chain with a multiyear development plan, you’ll want to keep these scouting tips in mind.
1. Know the rules
Deal-breakers for Oklahoma City-based Sonic Drive-In’s vice president of development and franchising, Mike Gallagher, are difficult municipalities and ordinances that’ll require “substantial or costly construction changes or reduction in brand touch points,” he says.
2. Always be canvassing
Even when they don’t have a concept in need of a space, Coraine’s team is out engaging with consumers regularly to get a feel for different areas. They also watch and track occupied spaces on an in-house “what if” list. “Getting out and looking at neighborhoods makes it easier to form educated decisions,” he says.
3. Lease for the future
Project how your business might change over the course of a lease. “The key is trying to think about what the deal looks like five years from now … That’s Danny [Meyer]’s genius; he foresaw years ahead,” says Coraine.
4. Plot your expansion
Have an eye on what’s next. “With early market planning, we can accurately plot the number of trade areas in a market for maximum penetration,” says Gallagher. “Whether it be a new build or a conversion, we want to manage trade area by trade area to ensure long-term market success.”
You can also search the full ranking of more than 900 metro areas in RB's 2014 Restaurant Growth Index, an analysis of markets with the highest potential for success.