I never paid much attention to the whole ‘location, location, location’ thing until I opened my first restaurant in Braamfontein, opposite Wits University. I discovered the hard way that a location must work in the morning… in the afternoon… and at night.
When I scouted my restaurant in Braamfontein, I went there during lunch. The location was bustling with Wits University students. So, naturally, I thought I was going to coin it! What I neglected to do was to see if there was the same amount of traffic in the morning and in the evenings.
To run a successful restaurant, you see, you need at least two trades: Breakfast and lunch, or lunch and dinner. Ideally, though, you want all three.
My restaurant relied mostly on lunch traffic, but there was no breakfast or dinner traffic, as most people in Braamfontein were rushing to work in the mornings and rushing back home in the evenings. We were breaking even with the lunch trade alone, but you do not start a business just to break even.
Our location’s shortcoming was compounded by the fact that Braamfontein is a student area, so when the university closes for a holiday, Braamfontein dies. Wits University closes for four months of the year (add the occasional strikes, and it’s five months). That doesn’t leave you with an awful lot of time to make your money.
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Moreover, I only discovered after I opened the restaurant that students don’t waste their money on fast food — they spend it on alcohol. So it was a true baptism of fire.
A bad location choice can sink your business. At the end of year two, I needed to decide on whether or not I should continue with the restaurant lease. I decided against it. It was perhaps the toughest decision I have ever had to make in my business.
This was the business I had started just two years earlier with all the resources I had. I had invested everything in that restaurant: Money, time, effort, passion and soul. Failure hit hard. When I closed the doors to that restaurant it was certainly with a heavy heart. I remember thinking to myself that I would never let my future franchisees suffer what I went through that day.
Stores can be relocated when the demographics of an area changes, but closing a store means you got it wrong in the first place. Site location is crucial to the success of a business.
Small things such as the site facing the wrong direction, or not getting enough sunlight, or the store not being at street level also have an impact on the success of your business. Don’t settle on a location simply because it’s cheap, or even because it appears to be busy. Do your homework and choose carefully.
- Location, location, location.
- Location must work morning, lunch, and evening.
- Study the demographics of the location.
- Understand the location’s seasonality.
- Understand your consumer.