Choosing the right community can make or break a new business.

Location is one of the single most important factors for a business’s success. In the restaurant world, the ramifications of choosing the wrong space could range from decreased consumer traffic to financial ruin. So how can restaurant leaders ensure they choose the right location? Here are some key factors to take into consideration when choosing the next spot.

1. Potential Traffic

If a restaurant is going to succeed, it needs to be part of a community that offers plenty of traffic from guests, both in family dining, and business lunches and dinners. Job growth can be a good indicator that a community can support a new fine-dining restaurant. Marlborough, Massachusetts for example, has had about 100 companies move into the area in the past five years, creating 6,000 new jobs and increasing the potential customer base for restaurants. 

“You want a good population of residents and also a good business community, which means more people frequenting your establishment not only during the week, but also during nights and weekends,” says Meredith Harris, executive director of the Marlborough Economic Development Corporation (MEDC).

In addition, tourism and travel can draw further traffic to the area, as more consumers pass through town and frequent local restaurants. Allora Ristorante, a fine-dining restaurant in Marlborough, benefits from its proximity to Interstate 495, a fast-growing business community, and flourishing regional sports tourism.

“Here in Marlborough, the community is great for us,” says Laura Palmer, owner of Allora. “There are lots of corporate offices, and that generates more business lunches and dinners. We are also a quarter of a mile away from the interstate, so people come from out of town. The hockey rink and the baseball fields bring a lot of tourism as well, and families revisit Allora year after year.”

2. Disposable Income

Similarly, community income levels are important. It’s not enough to simply have residents and workers in the area if they don’t have the income to spend money at a restaurant. 

“Do your homework on markets for your restaurant,” Palmer says. “Are there enough people who will want your product?”

Restaurateurs should research demographics, salary information, and how potential pricing could affect profits. Marlborough, for instance, offers the second highest average annual wage in the Boston MetroWest region, and its amenities are attractive to young couples and millennials.

“We have a bustling business community here—many executives who are looking for places to treat their employees and clients,” Harris says. “Plus, many of our local residents spend a significant portion of their disposable income on dining out, and they are always hungry for more places where they can enjoy a nice meal. So, it benefits everybody if there are a lot of dining options to choose from.”

3. Liquor Licenses

A liquor license may seem like a small detail, but it can be a critical factor in deciding whether a location is the right fit for a restaurant. Some communities have quotas, which limit the number of liquor licenses that can be issued, and it can be difficult to get a license after that number has been reached.

“If there is a quota and it’s been met, it’s much harder to start a business,” Harris says. “In Marlborough, we don’t have a quota, and communities with unlimited liquor licenses make the process of starting a restaurant easier.”

4. Financial Assistance

Securing financing is one of the biggest challenges restaurants face when they open, and it’s an important consideration when selecting a location. Some communities offer financial assistance for new businesses, in addition to traditional bank loans, which could make launching a new restaurant easier.

“We have found that, with any new small business, like a restaurant or a mom-and-pop shop, the biggest struggle for the owners is access to financing for startup costs, equipment, and things of that nature,” Harris says. “That’s why we have developed a suite of financial incentives geared toward different segments and industries in our community, which make startup costs more manageable for a new restaurant.”

With rental assistance, tax incentives, beautification grants, and gap financing through a revolving loan fund, along with a special amenities program that pays up to $25,000 to new restaurants, businesses receive ample assistance in Marlborough.

5. Business-Friendly Community

Not all communities offer the same level of support for new businesses. Those with active community organizations that ally with entrepreneurs and restaurateurs are ideal for new restaurants, because they can offer more assistance and networking opportunities.

“Any community can say they are business friendly, but only the communities that follow through on their promise to help you with a problem is truly supportive,” Harris says. “If you are struggling with with permitting or access to the city officials, having someone you can call ensures that you can get the answers you are looking for. In Marlborough, the MEDC is here to help through the entire process.”

To research new locations, it is important to contact these business allies early on. In Marlborough, for example, new business owners can rely on the MEDC, site selection firms, the Massachusetts Restaurant Association, and MassEcon, a statewide economic development organization.

“In the restaurant business, we are lucky because we have the MEDC and the chamber of commerce,” Palmer says. “They are always here to help us.”

Though choosing where to open a new restaurant is a tough, finding the right community to support a business is critical to its success. Entrepreneurs can partner with local organizations to help make the process easier and get the support they need.

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