Finding the Best Location for your Cafe

In business the real estate catch cry is Location, Location, Location. So how does this relate to your small business?Much of the future success of your business will depend on the location of your business. It is quite difficult togeneralise about the factors that make for a good location because so much depends on the type of operation forwhich the location is used. What is needed in a location is one that will ensure a sufficient number of customers tospend a sufficient amount of money to provide a profit. That is easier said than done! 

Location Factors to Consider

Often the best location for your new cafe/restaurant is where other cafe/ restaurants are. This is because yourprospective patrons are already used to dining at this location. However this should not be your only consideration.Others points to consider are: Rent: The amount of rent you pay should be proportional to the size of the business. Every chair at every table owes you a portion of the weekly rent, every day. If your rent is too high with too few tables to share the expense then you are placing unwanted pressure on your business. Make sure you have a solid knowledge of the rents payable at more than one location in your chosen area. Proximity to Parking or public transport Wheelchair access In-house toilet facilities including disabled: At the very least you should have clean public toilets with better than adequate lighting for evening use. Heating and air-conditioning Visibility: Is the location easy to find? Visibility has a great influence on sales. Studies indicate that 75 - 85% of customers state that the reason they first stopped at a particular outlet was because they saw it, saw the sign. Traffic count: This is extremely important as the people that flow passed your shop are potential customers. Competition, especially direct competition, is of the utmost importance to site evaluation. This is certainly true in shopping centres. Many do not have the capacity to support more than one or two cafes, therefore it is important to consider the number of potential customers and the overall turnover. Main street versus side street: How comfortable and safe your customers feel will have a tremendous impact on your business. Advertising: Will you require lots of advertising to attract clientele or is there already good passing trade? Council requirements: Council levies on things such as outside dining areas, signage and advertising hoardings are additional to your rent, but are regular expenses. Health requirements: Does the building conform to current council health and building ordinances? Landlord’s attitude: What is the landlord’s attitude to your business? Lease period: Is the lease period suitable for your needs and what are your options for extension or termination? Building outgoings: What are the buildings outgoing expenses, and more importantly, who pays them? Bond: What bond are you required to lodge? Fixtures and fittings: What fixtures and fittings will you require? Fit out costs: Will the landlord contribute to the cost of refurbishment and decoration? Noise: Do the noise and smells that your business make affect others? Or do the noise and smells that others make affect your business? Building security Utilities: Are gas, electricity, water and telephone connected? Building condition: Are the walls and floor in good condition, and what is the general state of repair of the building. Deliveries: Can your deliveries be taken through a side door, or is it necessary to accept deliveries through the seating area of the cafe/ restaurant? This may require special delivery times so as not to effect busy business times. Buying an existing business: Is the current kitchen equipment relevant to your style operation? If not, what is the cost of upgrading to appropriate equipment? Caution, when buying an existing business, often the equipment schedule, which is part of the sale price, is based on the price paid by the previous owners and not the actual value of the equipment. I have seen examples when the new owners were paying almost new pricing for very old equipment. My advice would be to have the equipment individually assessed and offer to pay a figure based on the assessment. Whilst having an average location for your business may not spell disaster, it is surprising how much the rightlocation will improve your day to day business and increase your profitability.

Expanding your current location

Almost every business feels pressure to expand from time to time and restaurants and cafe’s are no different.Hopefully, as you become successful, you will find that you are consistently turning away clients due to lack ofavailable tables. When this happens a bigger location seems like the logical answer.In evaluating that decision, however, keep in mind that there will be several types of additional costs. Obviously,there will the ongoing costs of a bigger location -- more rent, a larger mortgage payment, increases in utilities,insurance and the like. On the front end you will incur the costs of expansion. The hard costs are primarily thephysical cost of increasing your space and making it useful. The hidden costs are also significant, however. Yourbusiness will be likely to have decreased productivity and interruption of customer activity during the expansion.Much of your business’ energy will be focused on the expansion.As in other situations, make sure that the rewards outweigh the risks. Project your business income and expenseswith the expansion in place. Carefully budget the initial costs, factoring in the decreased profitability from loss ofmanpower and sales/service activity. Remember that more business doesn’t always equal more profits.