Restaurant Location Strategy: How to Choose the Right Spot 

Apr 29, 2024

Photo of Alison Arth and Chef Daniel Boulud. 

There’s a reason that we’ve all heard the phrase “location, location, location” more times than we can count: choosing the right location for any food business is a critically important decision that can quickly turn a solid, well thought out business plan into a failed restaurant.

In addition to being one of the most (if not the most) significant determinants of your financial viability, decisions regarding location aren’t easy to undo. 

It’s kind of like getting married. 

You need to consider whether the relationship will support your short and long term growth goals, make sure that there’s a strong fit, and think it all the way through because like marriage, it’s far easier to say “I do” than it is to get divorced. 

Changing your mind will be expensive, painful, and potentially damaging to the perception of your brand. For most businesses, a poorly chosen location is a near certain death. 

There are a lot of boxes to check and factors to consider when thinking through your restaurant location strategy–this article will cover:

  •  Why choosing a restaurant location is such an important decision
  •  The difference between a location and a site
  •  What to consider when choosing a location and a site
  •  Tips for choosing a great location for your business 
  •  Free and low-cost resources to support you in nailing this decision!

If you’re thinking about opening a restaurant in the near or far future, this blog is for you. 

The Most Important Part of Opening a Restaurant is Location Strategy

A location refers to the sub-market you want to place your restaurant in, like a neighborhood in a big city or a specific area within a town. 

A site is the specific space at an address within a location. Both decisions are important ones and in this article, we’re going to touch on both. 

The best locations for your concept will be the ones with the highest concentration of your potential diners during your specific hours of operation. 

If you haven’t already written a complete business plan, this is essential homework to identify what location or locations are viable for your restaurant. 

It can be so tempting to skip the process of writing a complete business plan, especially if you don’t know where to start, feel totally overwhelmed by the prospect of doing a bunch of writing, and are frustrated by the lack of resources available for people like you who are looking to open a thoughtful, purposeful food business that’s also sustainably profitable. 



Never have I ever heard someone say, “I just really regret taking the time to come up with a complete, clear, and financially viable plan for my business that I knew would work because I’d done all my homework.” 


I have heard plenty of entrepreneurs say, “I know I could have avoided these issues if I’d slowed down, done more research, and understood my business better before opening it.” 

Good news: we got you covered. 

Take a look at our Business Plan Bundle if you’re ready to get your ideas on paper, but want to skip worrying about your skill level as a writer, what to include, and how to organize your thoughts into a clear and complete plan. 

The headlines of what a business plan will ask you to do is to approach your restaurant location strategy by:

  •  Getting very clear about who is a part of your target market, and who isn’t 
  •  Naming your hours of operation based on your concept and budget
  •  Mapping your competition 
  •  Understanding your non-negotiable site requirements

We’ll touch on all of these strategy points below and we also invite you to read our blog on Hospitality Industry Challenges for more insight into why so many restaurants fail within the first 5 years, and how to not be one of them. 

Why is Location Important for Restaurants? 

Your location and site will have more impact on your financial success than anything else. 

They will determine:

  •  How much you’re paying every month to occupy your space (aka occupancy costs) including rent, common area expenses, property taxes, and insurance 

In general, occupancy costs should be no more than 10% of your (conservative!) projected gross sales. This is why doing your homework before you start seriously looking for a location and site is so important: you want to have an idea of what you can afford so you don’t risk falling in love with a space that your concept ultimately won’t be able to support. 

  • How easy or hard it is to get in front of the guests you’re seeking to attract. If you aren’t nestled within a community of potential guests that are interested in what you’re creating, you’ll have to work harder and spend more money to reach them and get them through your doors. A good location naturally integrates with your vision and creates that juicy attractor energy, whereas a location that isn’t congruent with your creative and financial vision lands you in chasing energy that feels terrible to you and your guests. 
  • Your own connection to your business and the joy you experience working in it. One of our most beloved (and successful!) clients said, “It’s an amazing neighborhood that I know would be great for my concept, but I hate spending time there so I have to move on from it.” Remember that you’re not going to have sustainable success if you start to dread going to work everyday.

4 Things to Consider When Choosing a Restaurant Location 

There’s no “right” way to approach your restaurant location strategy. But, there are some best practices to consider. Here are just a few that we recommend prioritizing:  

  1. Find your people. 
    • First, understand who you expect your guests to be to ensure their paths intersect with your restaurant. Figure out where they live, where they work, and where they spend their free time. Ideally, you’ll be able to find some areas that encompass more than one of these categories–if you’re located in a neighborhood where your target market both lives and works, there’s a better chance they’ll visit regularly.   
  2. Know your numbers.
    • The amount you can feasibly pay for rent every month while maintaining the health of your business is something that should be firmly fixed in your head as you go out to look for spaces. At this point, you’ve done careful homework and invested in a team of experts to help build a budget that dictates what you can afford. Whatever that number is, respect it. 
  3. Embrace the competition. 
    • It may sound counterintuitive, but the best location is often nestled into a cluster of other dining establishments. Think of it this way: if other restaurants are already in business and experiencing success, they are proof that the location is a fit for the target audience you share. Seek out spaces nearby, on the same block, or even right next door. While it’s nice to envision your audience planning an evening at your restaurant days in advance, these diners are only a part of your total guest base. Many others will simply walk in, and others may have even been turned away from a neighboring restaurant by a long wait time. The more people in and around your restaurant, the better for business.    
  4. Know your hours of operation.
    • Prime locations in high-traffic areas are going to cost more per square foot, so be clear on whether your concept will be serving breakfast, lunch, dinner or some combination of the three to avoid paying a price that your restaurant isn’t designed to maximize. 

The ability to do lunch business and dinner business in the same location is rare, and if you do find one that’s great for both, you’re going to spend a high dollar per square foot to get in there. For a dinner-only concept, it doesn’t make any sense to look at locations where there’s a lunch and dinner market because you’ll be paying extra money for a space that you’re not going to be using the whole time.


3 Not-So-Sexy Factors to Consider in your Restaurant Location Strategy

There are plenty of other things you’ll want to consider as you devise your own restaurant location strategy. Here are a few less obvious (and frankly, less fun) ones to think through: 

  1. Do your homework on liquor licensing in your area. 
    • Every neighborhood, city, and state has completely different laws and regulations around liquor licenses, but the one thing that’s true everywhere is that they’re never particularly easy to get. If you’re looking at a site in a neighborhood with only one or two other bars, the scarcity may be the result of very strict regulations. Given the liabilities associated with serving alcohol, applying for a liquor license is usually an involved process (maybe years long!) that requires personal information from you and, sometimes, your investors. If you plan to serve alcohol at your restaurant, make sure you’ll be able to obtain a liquor license at the site you’re assessing before moving forward. Sometimes this looks like applying for a new license, purchasing it from the previous owner of the space, or entering a lottery. 
  2. Do you need to have parking? 
    • The importance of access to parking will vary depending on your location. In New York City, there’s no need to even consider it for most restaurant concepts (though you might need to think about proximity to public transportation), but that’s not true of some other densely populated cities or rural areas. In plenty of markets, poor access to parking is a non-starter. If parking is scarce, ask local valet companies if they have arrangements with nearby lots. Bottom line? Be honest with yourself about how big of a factor parking is for your guests, and then adjust your location search accordingly. 
  3. Look into zoning requirements.
    • A pre-existing kitchen is not the only reason many restaurateurs opt to take over existing restaurant spaces. If you’re looking at a property that isn’t zoned properly or doesn’t have the right use listed on the Certificate of Operations, it can be complicated, expensive, and (very) time consuming to change those things. For many business owners, this is a non-starter. 

Tips for Choosing the Location of Your Restaurant

Now that you’re armed with lots of good knowledge about what you should be thinking about as you seek to make this most important business decision, here are a few tips to keep in mind as you go through the location and site evaluation process: 

  • Spend real time in each of the locations you’re considering. You’ll serve yourself well by shopping, dining, walking, observing and really absorbing a neighborhood before considering it as a location for your restaurant. Hit the pavement! Neighborhood demographics can give you a broad sense of age, income, population density, foot traffic, and number of households. While these are solid initial insights, they aren’t comprehensive enough to be the basis for a decision. 
  • Do not make this decision without the support of strategic partners. Your lawyer, general contractor, and architect are essential players to bring to the table before ever even considering signing on the dotted line. Each of these experts has laid eyes on countless leases and spaces, and they will support you in seeing what you might not know to look for. 
  • Make sure your head, heart, and gut are all a YES. If you’re here, I’m guessing opening a restaurant is a longtime dream of yours. That is such a beautiful thing, and it can sometimes lead you to make big decisions from your heart only. When it comes to choosing a location for your dream business, make sure that your head (which is crunching the numbers), your heart (which is looking for something that feels like home), and your gut (which just knows when it feels the right energy!) are all in alignment. 

Restaurant Location Strategy Resources from Salt & Roe

This is a lot to consider, we know. But listen, you don’t have to do this alone.

We invite you to really give yourself permission to take the time you need to get clear about what you’re looking for before going out there and finding it. 

Here are 4 ways we can support you to find a location that will feel like the right fit for years to come: 

  1. $0 Investment: Download our How to Open a Restaurant eBook. Look under the hood of the often elusive process of opening a restaurant so you know exactly what to expect going into your pre-opening journey. This is a must read before going into the lease negotiating process so you don’t miss make-or-break opportunities to ensure your lease is right for you and your business!
  2. $0 Investment: Download our free guide on How to Raise Money for Your Food Business. This guide delivers expert advice from 21 industry leaders you won't find anywhere else on how to embrace fundraising for any type of food business.  
  3. $295 Investment: If you read this post and you aren’t sure if you have the information you need about your target market and where they spend their time, check out our Business Plan Bundle. Writing a business plan demands that you get crystal clear about what you’re creating, why you’re creating it, how you’re going to execute your vision, and whether it’s financially viable. We see business planning as the unavoidable first step you must do before being able to find a location and site that will be a good fit for your unique concept. 
  4. $995 Investment: Our How to Open a Restaurant Toolkit gives you instant access to the 5 essential tools you need to develop and open an irresistible hospitality concept that generates prosperity and purpose for you, your team, your guests, and your community from day one. It includes our Pitch Deck Toolset, Business Plan Bundle, our How to Open a Restaurant eBook, Pre-Opening Critical Path, and Guide to Hospitality and Service Template. 

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