Get it right and you will be on a path to continued business expansion, but get it wrong and it could be a costly mistake that is difficult to correct. Here, we look at ideas to help you find that perfect location.
Plan to succeed
It is easy to jump straight into looking for a location, but not going into the project with a strategic mindset can be the biggest mistake that you can make.
First assess your readiness for expansion. Do you have the necessary financing, giving you scope to cover a fit-out, stock, marketing, recruitment, training and cover any unexpected costs such as delays or a less successful launch than you hoped for?
Also are your backend systems, processes and management controls in place that will extend to your new location?
“Perhaps you should consider moving to a cloud accounting system so that you can monitor performance across your locations in real time, gain economies of scale from your bookkeeping or integrate your point of sale.” says Majid Sadeghi, Partner.
It is also time to dust off your strategic plans and ensure that you are clear on your target audience. Having a clear picture of your customer, not just in terms of demographics such as age, income and ABC category but also spending time talking to them or carrying out formal research. What draws them to your current location/s, when do they visit and why do they visit? Is it an impulse visit when they are shopping or driving past, are they price driven, are they looking for speed of service during their office lunch hour or are they celebrating a special occasion? Are there other establishments that they consider before choosing?
There are many questions to ask to build up an understanding of your customer, though you should review whether the answers are unique to that location or to your brand. Have you reviewed your pricing and profit margins to set targets for your new location? What cover will you need to maximise the take from your busy periods?
“Like any new launch there will likely be a period where your investment and promotional activity will eat into your returns but forward forecasting and modelling will help you plan ahead and keep you on track to reaching your targets.” says Leighton Bower, Partner.
Finding your prime location
When developing a brief for commercial estate agents you should set out a clear description of your target audience and types of location or region that will work for you. Also consider the availability of staff, public transport, infrastructure, local traffic generators and complementary businesses, facilities or attractions that will draw your target audience.
The location must be in keeping with your brand. For example, one of our restaurant clients were offered a new location in an upmarket area just outside London. The area was in keeping with their audience demographic, but would dilute their central London focused brand strategy.
“If you choose an area with other restaurants it could reduce your marketing spend as you can benefit from their cumulative marketing, but you will need a strong or unique concept and customer proposition to compete.” says Leighton Bower, Partner.
In the brief you should also describe your ideal building. What is the ideal size of premises, do you need parking or a waiting area, are you looking for open plan, a more private dining experience or outside seating for summer trade? You should also set out to what extent are you prepared to refurbish or renovate the premises.
Carrying out your due diligence
With your shortlist of available premises, it is time to review if any are right for you. Have a checklist ready.
Visit the location/s at different times of the week and weekend before deciding. How is the footfall or passing traffic? Is it the right type of customer for you? Is it accessible for suppliers and deliveries?
If the premises was previously a restaurant find out why it was not successful. Is there anything that you can do to improve the chances of your success, perhaps with better frontage and lighting, accessibility or layout? How demanding are the local planning permissions?
Getting the right agreement
If you have found the perfect site it is natural that you will be keen to secure it for your business. However, you should not overlook the lease, as this is just as important. Review the service charges and rates, and update your projections. Can you agree a short-term lease to limit your risk if it doesn’t work out? Having an experienced solicitor can help on these points and having worked with hospitality businesses for many years we can introduce you to our contacts.
Finally, once you have secured your new site, if you are carrying out refurbishments it is important to get a chartered accountant in as soon as possible. They should work with the chartered surveyor to maximise your capital allowances tax relief. The shell of the building might not be covered by the relief, but the fixtures being installed as the restaurant goes up will be.
“We had a client who brought in the surveyor to literally see what was going into the walls as it was happening, so he would have evidence to substantiate his allowance claim. It’s very easy to see that as it is being built, but difficult once it is all covered up with nice wallpaper.” says David Sharp, Partner.
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