Third Quarter 2006 Volume 8, Issue 3

The Major Factors In Selecting a Strong Restaurant Location

Choosing the right restaurant location is one of the most important factors in contributing to ones success in the business. The restaurant business is very challenging to be successful in and having a strong location will enhance your chances for success. The key factors to consider in choosing the proper location are as follows:

1) rent affordability,

2) demographics match your concept requirements,

3) trade area draw and

4) major market generators in the neighborhood.

1) Rent Affordability – This means that you can afford the rent you will be paying. Frequently operators pay more rent then they should and this can contribute to you going out of business. Restaurant operators should not pay more than 6% to 8% of their sales in rent. This 6% to 8% factor also includes any additional costs you may be paying the landlord which may include real estate taxes, fire insurance and CAM charges (common area maintenance costs) which include security, gardening, common area utilities and maintenance costs, etc. This means that if you are doing $600,000 in yearly sales your rent should be no more than $48,000 ($600,000 sales x 8% = $48,000) in yearly rent.

2) Demographics Match Your Concept Requirements – Demographics are the population statistics in the neighborhood of your proposed restaurant within a given radius of your site. In researching your concept you want to make sure that the neighborhood population can financially support your restaurant. The demographics include the following factors:

a) per capita income – the yearly earnings per person,
b) household income – the yearly earnings per family household,
c) education level – education levels obtained broken down by persons holding a high school diploma, undergraduate degree and graduate degree,
d) percent of income available for spending on food purchases away from home,
e) a breakdown of ethnic mix in the area and f) number of people living in the area.

3) Trade Area Draw – This is the distance an average customer will travel to come to your restaurant. Most neighborhood restaurants draw customers from a one mile radius of the site. Outstanding planned dining restaurants such as the French Laundry in Yountville, Michael Mina and Gary Danko’s Restaurants in San Francisco may draw customers from hundreds of miles away.

4) Major Market Generators in the Neighborhood – Ideally you want to have a mix of the following in the immediate area of your restaurant – a) a strong residential population, b) a strong retail area with lots of foot traffic and vehicular traffic and c) strong traffic generators such as hospitals, theaters, colleges, shopping centers and tourist attractions.

An example of a strong location in San Francisco would be the Irving Street Corridor which includes Irving Street between 5th and 12Th Avenue in the Richmond District. This location has a large residential population with a high household income that is well educated. It is adjacent to the following:

a) 9th Avenue which is one of the major vehicular feeders into Golden Gate Park which is a large tourist attraction which generates close to 75,000 cars daily and lots of food traffic,

b) University of California Medical Center, University of San Francisco and St. Mary’s Hospital and

c) a strong retail area which generates additional foot traffic.

You can not compromise in choosing the right location as this can be a make or break factor in your future success.
 

Restaurateur of the Quarter
The One Industry Group - Bob Jones, Hugo Gamboa, & Drew Adelman

 

The One Industry Group, made up of Bob Jones, Hugo Gamboa and Drew Adelman, is an innovative restaurant, nightclub, and bar management company. They create new venues that are out of the ordinary.

Bob Jones attended the University of Southern California, during which time he worked in various areas of the restaurant and night club industry. Bob always knew that he wanted to work in the entertainment industry, so he took every opportunity that he could to learn the business. Bob met Hugo Gamboa, who at the time owned Dos Locos Cantina in San Jose. Bob ran the restaurant for five years until the two co-formed The One Industry Group. In 2003, Bob and Hugo partnered with Drew Adelman.

Hugo Gamboa attended San Jose State University where he received his degree in advertising. While attending school, Hugo helped open 6 different venues. This accomplishment led to him being recruited right out of college by Crobar in New York to launch night clubs throughout Southern California. In 1992, Hugo realized his true dream of opening his own venue (Dos Locos Cantina in San Jose). He ran the restaurant for 5 years before meeting Bob Jones.

Drew Adelman worked in all aspects of the nightclub industry throughout the New York and New Jersey areas. Drew settled in at a small Upper East Side spot known as Polly Esther's. Drew traveled across the country opening Polly Esther’s all over the West Coast, building a successful chain. Drew did not stop at decade-themed nightclubs; he opened Cabana in San Jose, which included a sushi/sake bar in the nightclub.

Bob, Hugo, & Drew utilize their skills and experience and build off of one another. The trio is a hands-on group involved in every aspect of the restaurant/entertainment business. The group takes pride in what they do, which shows in their work. Restaurant Realty Company has had the pleasure of completing 3 deals with The One Industry Group on three separate occasions, and from each of these, a fresh operation has resulted in San Francisco: Mas Sake, Impala, and Marina Sports Bar & Grill.