Is it a Food Business or a Location Business?

Posted by fshsfhsfh on Tuesday, March 22, 2011

Veterans in the restaurant and food business will tell you that this business is more of a location business than a food business.

If you are investing in a restaurant business - listen to this advice very carefully - Pick a ground floor location in a street that already has a few thriving/successful restaurant businesses, offering products at a similar price point that you plan to offer.

A 500 sft ground floor space in a great street will be far better than a 1500 sft first floor space on the same street or a 2500 sft ground space in a road that is off the main road - even if it is just around 200-300 m from the main road. Essentially, if your restaurant business is not visible to a lot of folks, you will not be able to generate enough traffic/footfalls into your restaurant to justify the numbers.

Unless you are actively involved in this business, it will be tough for your mind to reason this and accept this thoroughly. But consider the following example - have you ever seen a McDonald's in a location different from the one I described. Even in a mall, McDonald's is present right at the front where it gets maximum visibility. If a brand such as McDonald's is so particular about the location, should'nt you be?

When we start, we tend to compromise on the location, as we may not be able to afford the rental or we want a larger space for the same rental value etc. This is being "Penny Wise and Pound Foolish". I would go to the extent of saying that if you don't get a location at a rental that meets your requirements exactly, it may not be worth investing in and starting your business.

There are a few restaurants, which are doing well despite a significant location disadvantage (e.g. Kanua in Sarjapur Road), but I believe there are other factors (not visible and apparent), that have made the place successful. We will explore these factors in detail in some of the later posts.

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