A New Restaurant

I went to a local restaurant this past Saturday that I had low expectations of, and it met my expectations.  I had been here before, and I’ve never been impressed with the menu offering or the quality of the food.  I went this past Saturday because I believe in second chances, but mainly because I had a gift certificate and I really believe in free dinners.

I’m not the only one who shares the opinion that this restaurant is, at best, average.   In fact, I have not talked to a single person who thought the food was great, or that it was a great bargain.  The BBQ sauce tasted like it came from a bottle, and the pasta sauce was rather flavorless.  The portion sizes were adequate, but it was a bit pricey for what you got.
The food wasn’t bad, and the menu selection was OK,  but there wasn’t anything that made me want to come back anytime soon.  There was really only one thing that differentiated this restaurant from any of it’s competition: Location.

After the demise of the local Italian eatery, there are very few selections for residents who want to stay local when they go out to eat.  The result of this is, the restaurant can get away with being average, but the place was still full on Saturday evening.

The point being, a great location can make up for a lot of shortcomings.  This restaurants location in an area with little competition has allowed it to be successful despite the fact that it does not excel at providing great food or value.

This isn’t to say you should shoot for average.  If the management and owners would step up their offereings a little bit, the place would probably have lines out the door.  What it does show is the importance of doing your homework when choosing a restaurant location.

We all know how important it is to have a great location, but have you thought about how the concept you decide on affects your location choice.  It does.  Your concept will, in part, determine how far people will be willing to travel to get to your place.  That little piece of information can be a big determining factor in your restaurants success or failure.

A Tale of Two Restaurants

There are two different restaurants in my area that have different concepts, and very different abilities to draw customers.

Restaurant #1 is one I’ve talked about before.  It is an Italian restaurant that has finally started to see a little bit of success.  The problem is, however, there is no shortage of Italian eateries in our area.  That limits this restaurants ability to draw from surrounding communities.  While the food is good, there isn’t anything that would make potential customers want to drive past one or more of the other Italian restaurants in order to visit this restaurant.  Restaurant #1 has to rely on the people living in the neighborhood for it’s long-term success.

Restaurant #2 is located about 10 miles way.  It’s a restaurant that specializes in sandwiches, burgers, and home style dinners.  It has huge portions, and has positioned itself as a quirky, fun place to go.  It has  a burger topping bar that is in the trunk of a Cadillac that is attached to the wall.  Even though there is a pretty good burger joint not far from my house, I’d rather travel the 10 miles to get to  restaurant #2.

The point is, these two restaurants are in completely different types of location.  Restaurant #1 needs to be located near residential areas.  Because it has to rely on the people living nearby for it’s success or failure, it needs to be in a location that is close and convenient.  Restaurant #2 is located on a busy intersection, but the closest residential area is nearly a half mile away.  There are a lot of restaurants that are closer and more convenient to get to, yet restaurant #2 continues to thrive.

Now I’m not suggesting that you should ignore all of the rules when it comes to finding a great location.  A bad location makes success much more difficult.  While there are a lot of people that are convinced that they are the ones that can overcome the obstacles, the failure rate indicates that most of them are wrong.  Just be aware that there are a lot of factors to consider when you are thinking about your restaurants location.  Don’t be impatient.  Keep working on your business plan and doing your homework.  The right location will come along.

Things are starting to look up in my quest for my own restaurant.  I have stumbled across a property that may be what I am looking for.

One of the things that stand between potential restaurant owners and their dream is the ability to finance the operation.  Starting a restaurant from scratch has a huge start-up cost.  Unless your personal finances are in excellent shape, it is very difficult to raise the needed capital.  Because of the high mortality rate of new restaurants many lenders have higher requirements for new restaurant than they have for other forms of business.  Without the start-up capital, your dreams are dead in the water.

One way to reduce the start-up costs is to get into a place that is set up for a restaurant.  That’s what I stumbled across last week.  The restaurant that had been there wasn’t there for very long.  People that had eaten there said the food wasn’t good, and it was in direct competition with another restaurant that anchored the plaza it was located in.  Then the couple that owned the business went through a divorce, and that was the end of the business.

The location is a little bit larger that I was initially looking for, so I need to be careful running the numbers to make sure my business model can support a higher lease rate, but it is in a good location, it’s the end unit of a small plaza and has great visibility, and it has a lot of daily traffic going past it.

Because the exhaust system and most of the equipment are already there it will reduce some of my start-up costs.  There is a bit of remodling to be done, and it’s not the most ideal kitchen design, so I will need to make sure my menu can be supported by the kitchen.

Be sure to check back for updates.  I will keep you posted as I continue to develop the restaurants concept, and as I develop my business plan.

I have mentioned a number of times the restaurant that I recently worked for.  It was a start up by an owner that didn’t really know or understand the restaurant business.  He had some success in other businesses, but he faced a steep learning curve when he started the restaurant.  It’s a great case study in how not to get started in this business.

One of the things that was lacking in his operation was adequate signage.  we were approaching the restaurant.  You are nearly passed it before you even realize it was there.  He was told by several people that he needed new sign, but he was slow to finally get one up.  Money was getting tight, and he was getting overly cautious on how he spent it.  That’s understandable, but there were some places that you really need to spend his money.  Making sure potential customers could see his restaurant was one of those areas.

He finally did break down and buy a new sign, and that’s made all the difference in his business.  Every time I go by his parking lot nowadays there are cars in the lot.  He doesn’t run nearly as many specials, and he’s not discounting his menu the way he used to.  Still, the customers are coming in.

When thinking about how you can make your presence known you need to make sure your customers know you are there before they reach your parking lot.  Leave them enough time to slow down and turn into your lot.  Once they get past your entrance, they may decide that it’s too much trouble to turn around and come back.  The more time you give them, the better the chance that they’ll stop.  And getting them to stop is what it’s all about.

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Yesterday my post was on buying a restaurant versus starting one from scratch. I’ve also recently posted an article about assessing the location of your restaurant. Today, I have a homework assignment for you that will tie those two posts together.

Go to one of the web sites that advertise restaurants for sale. Here are a few to get you started, or you can just Google “restaurant for sale (your city)”.

Craig’s List
Business Nation
Business Broker
BizBuySell
Restaurants For Sale

Look through the list and see if there are any that look interesting. Pick one that is close to your area and see if you can get some information about it. Many times the ad doesn’t include an address, so you will have to find out where it’s located before you can go on. Email the owner and ask for more information. I usually let the current owner know that I am interested in buying a restaurant, and I need more information in order to do some research to see if this is the right opportunity for me.

You might also want to ask the owner why they are selling the restaurant. Try to learn as much as you can about the operation. Reread the post on location, then drive by the restaurant to determine if it’s in a good location.

It’s good practice. Give it try and see what you can learn.

It’s been a dream of mine to own a restaurant. I’ve spent a lot of time dreaming and planning. One question that I keep coming back to is, should I start from scratch or buy an existing restaurant? There are pros and cons to each, but overall, which would serve me best? (more…)

As I wrote before, choosing the right location for your business isn’t an exact science. It all boils down to knowing who your customers are, and what they want. It’s about being there to meet their needs.

The Rocking Horse Bed and Breakfast

Several years ago my wife and I were driving down a back street of one of the towns in our area. Nestled in the midst of an older neighborhood was a sign for the Rocking Horse Bed and Breakfast. I remember we talked at the time about what a bad location it was in, and that I didn’t think it would survive. Sure enough, it wasn’t much later that I saw the Rocking Horse was for sale. (more…)

It’s long been a cliché in business that the three keys to success are location, location, and location. While it may not be the only thing that determines the success of your restaurant, it is a huge factor. I’ve seen a lot of restaurants that didn’t survive because they didn’t have the right location. They were too far away from their target market, or were located on a street that made it hard to get in and out of the parking lot. It could even be that they were in a location where it was hard to get noticed.

Have you noticed that you rarely see a McDonald’s go out of business? (more…)