Re:Location, Location, or.....no

[Geo99]

My wife and I are in the process of starting a small restaurant. But when comparing prices for location it is day and night.

We found a very good price just off the main street (practically behind it) $600.00 but there is no exposure.

The price for a location on the main street, same size but $2400.00 with very good exposure.

The capital is there but as starting a new business it can take time and if it does not work out there is a big difference to how much we lost.

We do have community support but tourism season is what makes the difference.

Any opinions

[machine]

I can tell you ABSOLUTE, CERTAIN, SURE, DEFINITE that location is extremely important.

I'll give one thin example. There is a fish and chips take-away shop here in Sydney that grosses $1 million annually. Just 50 metres away is another that barely gets a customer. The first one is 10 metres from the beach, the second is 60 metres from the beach.

Do you know the old expression "A miss is as good as a mile"?

The asian operators of the second fish and chip shop are clueless idiots who have made a serious investment in a business that cannot work.

Do this simple thing. Stand outside each location on the same day of the week. That would be your expected best day - let us say Saturday - and count the pedestrian traffic.

As a rough rule, you'll get about 1% to 3% of the walk-by traffic unless they are specifically going to your small restaurant.

Organise a spreadsheet and do all your costs at $2400 pcm. Try to determine how many seats you need to meet your monthly rent. Take that figure away from the total seats and that is what you have left for tax, wages, food costs, materials, equipment, insurance and advertising.

You'll need to be busy of course, to make a profit.

Don't worry too much if you have restaurants adjacent to you, it helps to get more customers in your own restaurant as people tend to head to where the restaurants are.

Don't run the business forever. Organise a year to sell it and do something else. Unless of course it is your intention to be there forever.

Set up an exit strategy BEFORE you start up in case everything goes belly up.

Good luck and please let us know how you go.