How to Choose the Right Location for Your Retail or Restaurant Business

  • 3 min read
  • Blog

Finding the right location for your retail or restaurant business is one of the most important processes you will be engaged in for your business.  Like the old adage goes: location, location, location. Many factors go into site selection for your business. 

Space and Location Considerations:

  • Have you researched your market to determine if the location will be successful?
  • Size of space needed. If you are a restaurant, will the space accommodate the number guests you anticipate seating at any given time? Is there enough room for your kitchen and all your necessary equipment?
  • Do you need an end cap or are you willing to go in-line? Or do you need a freestanding location? What about a drive-thru?
  • Construction budget
  • Anticipated sales projections…rent is always a function of sales, and most businesses want its rents to be between 6%-8% of their total costs to run the business
  • Rent/NNN budget…make sure that you are realistic about what can be achieved in the market(s) that you are looking in, and how that compares to your budget
  • Do you need referrals for a general contractor/architect/etc.?  Do you have a prototype for your layout?
  • Which kind of other businesses/tenants do you want to be around (or stay away from)?

Interior of the Space:

  • What size HVAC do you need?
  • Do you need the space to come with equipment left behind by the previous tenant?  2nd gen restaurant space, for example, could save a restauranteur a lot of capital.  Or could you do new construction or a plain jane retail space?  If you’re considering a non-2nd gen restaurant space, for example, how much would it cost to retrofit a space?
  • Do you have to have natural gas?
  • What size electrical service do you need?
  • Do you need a grease trap or a vent-a-hood?
  • Does your space need to be sprinklered?

Selling Yourself to Landlords:

  • What kind of credit will be going on the lease?
  • Are you willing to personally guarantee the lease?
  • Where is your source of funding coming from to do this new location?
  • Resume…have you worked for a competitor in the past or do you have existing stores?  If so, how long have you been in business? If not, do you have a resume showing your operations prowess?

A broker who specializes in retail/restaurant real estate can be a huge resource navigating through all of these puzzle pieces.  And the landlords usually pay their fees, making this service free of charge to the business owner.  When hiring such a broker, still engage in a meaty interview process.

Here are some key things to consider when deciding who to hire:

  • Can they provide references from past clients?
  • How many similar-type deals have they closed in the past week, 30 days, 60 days, YTD?
  • If they work in other commercial real estate verticals, such as office, industrial, land (not related to retail), farms & ranch, medical or investment sales, for example, how much time does that agent spend working in those verticals versus retail/restaurant?

I highly recommend a broker who specializes in the retail/restaurant field.  That broker will more likely have the expertise, knowledge and relationships in the market to get you the best space for your business.

David Simmonds, President & Founder

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