One of the most commonly mentioned anecdotes regarding Quick Service Restaurants (QSR) is that almost 50 per cent close within the first year of operations. This factoid has not been proven, but people who work in the sector know that location is one of the key factors that impacts success.
This article provides some inputs on 7 things to consider before choosing the right location based on practical experience.
Brand Image: Is Your Brand Going To Be Formal Or Casual?
In Food and Beverage business, shop is a visual representation of the brand. Hence the location and accompanying look and feel of the store is critical for success as it brings the brand alive.
The choice of location should be consistent with the brand’s style and image. If you are opening a coffee shop, choosing a kiosk in an IT park is acceptable. However, if it’s a cake shop meant for the middle class consumers, an attractive store in the middle of a popular market is ideal.
Accessibility To Customers
A QSR outlet needs to be easily accessible to target customers. Very few people will drive several kilometers for a quick meal and fewer for chai and samosa. Hence it’s is best to be clear on the profile of the target customer and be present in the right catchment areas.While it may sound attractive to ‘appeal to all’, in reality the lack of differentiation in the QSR business usually leads to failure.
This brings us to the next important question of catchment area. Ensuring the outlet is placed where the target customer gathers naturally is helpful for success. Use tools like Google maps, real estate sites and brokers to understand the right area and focus on getting the right location there.
- Example: A coffee shop could do brisk business near a university or school area. Whereas a Chic resto bar attracting women should be positioned in an upscale shopping district.
No Footfall = No Sale
For all retail business footfall is critical. No brand wants to be in that part of the mall where there are no customers, even if the rental is very attractive. All retail locations have ‘Dark Corners’ where for various reasons footfall is extremely low. It is best to avoid selecting a location here and hoping to attract footfalls by marketing initiatives.
- We recommend business owners to monitor the footfall outside a potential location for a period of time before signing up. Ensure both week days and weekends are covered to track potential walk-ins to your stores.
Parking Space Directly Linked To Walk-ins
Always consider how easy it will be for everyone to enter the location. Avoid taking locations on one way streets. And please consider making sure the store is accessible for people with disabilities.
- A beautiful location on a busy street will work only of there is adequate parking. Else customers will dine where there is ease of accessibility.
Competition: Keep Your Friends Close But Your Competition Closer
Some QSR chains like to open stores where competition is already present. The logic is that people may try out a new option at the same location or you may benefit from the long waiting lines at competitive outlets.
- However, if a nearby competition is too well entrenched and will make customer acquisition tougher, open a store elsewhere.
Site Is Most Important Aspect
Customers usually chose the restaurant that is right in front of them. If your outlet is not easily visible or requires the customer to take a detour – the customer will go elsewhere.
Hence look for a store with maximum frontage as this plays a key role in retail business. A location at the front of a building without obstructions (tree / transformer) has the maximum visibility. This generates the highest footfalls compared to other locations.
- Avoid upper floors and basements as they have less visibility
- Roof top location while popular amongst customers involve number of hassles regarding licensing and kitchen space
- Size is important as it should accommodate all kitchen equipment (freezer, cooking station and prep counters) and provide adequate seating arrangement
- Building amenities such as complete power backup, access to running water, bathroom facilities are also required.
A good location is important but the cost of the site should exceed more than 15% of estimated revenues. Hence choosing a site that fulfills all your requirements and yet is affordable is critical for success.
The right location is critical for QSR success. By focusing on the basics of accessibility, suitability and affordability, brand owners can make the right choice when it comes to location. This is a critical capital investment for any retail business and needs to be taken with great care.