Biz Blog #1: Your Location

Dude I'm not really concerned about your location. The old marketing adage "location, location, location" is true dont get me wrong, but I think its like everything else......its all relative. Assuming we are talking about somewhere within a reasonable distance of the masses, whether that be a city of 1,000,000+ or a town of 10,000. To me it all depends on what you are serving, what genre of food your place is. I think that most restaurant genres fall directly under that old marketing rule, but I believe that a few do not. I also would like to mention that those "few" are indicative of the area of the country you are in. Here in the South If there are two types of food that people will drive way out of their way for its BBQ and Cajun food. I have a conservative estimate that (marketing info) 35% of my customers drive from Nashville to eat at my place. Thats a 1 hour round trip in the car for BBQ. That is very flattering to me but it goes to show that in this day and time, with all the choices consumers have, they want value and quality in the money they spend. In other areas of the country it may be a great Pizza place, a burger joint, whatever. If your food is extremely good, they will find you. There might be some that disagree with me on this, and I may be wrong......but I doubt it. If you are reading this thinking about opening up a BBQ joint, and you live in say Hartford, CT then your location MUST be very important, has to be! But if you are in say, Columbus, MS it is not. In Columbus, MS you can afford to lie on the outskirts of town or even farther than that and be successful.......if your BBQ is really and truly great! This is not to say that there are not some exceptions to the rule. As we all know nothing is a guarantee, there are a few places that had good food but for whatever reason just did not make it. Maybe the service was bad, Parking sucked........there are all kinds of reasons but thats for another post on down the road. Right now I'm talking in very general terms. When shopping for a location you do have to weigh them against each other. In Macroeconomics one of the first terms a student will learn is "Opportunity Cost". What does it cost me to choose to do business at location A instead of Location B? Considering all the demographic figures, traffic counts, sales tax returns from other restaurants in the area you are considering and all that other crap.....if location A should yield $17,000.00 a week in gross sales and location B should yield $10,000.00 per week, then your opportunity cost is $7,000.00 per week. In other words its costing you a potential $7,000.00 a week to choose B over A. That doesnt mean option B is not a better choice though.......lease rates, certain clientel, all weigh in on it.
Try if you can to NOT open a BBQ joint in a strip mall. You limit yourself so much in terms of creating an atmosphere. If you must then at least get one of the "book-end" locations so you have options for a patio or deck. If you can find a stand alone building you are far better off!!! If you are buying the location then your annual sales to start-up costs should be 1 to 1. If you are leasing then it should be 1.5 to 1. To help you decided on the space you should consider this rule of thumb for profitability (limited service restaurants......full service would obviously be higher I would think, but my place is a limited service so that is all I can comment on):

1) $200.00 or less you are losing money like an open siv
2) $200.00 to $300.00 and you are breaking even
3) $300 to $400 means you are making a moderate profit
4) $400.00+ means you are flat out skinnin' it back!

Last year my place did $380.00 per square foot. We have a lot of room to grow. We do very, very little catering/off premise sales, which should add 30-40% to that square footage number. Also, my menu prices are very low compared to my competition. Add to that what has happened over the past year with commodity prices and I have lost potential income. I have not reflected those price increases on my menu yet and it is really hurting me. I plan to change that in the next few weeks. Commodities have really hurt some restaurants. Especially anything made with milk (cheese, slaw mix, potato salad, etc.), certain vegtables like potatos, or beef product (brisket). I will never structure my menu prices to be on the higher side of the scale, because I want to provide my customers a premium product at a real value to them, especially the folks of Nolensville! But to be profitable you have to reflect inflationary price increases on to your consumer. So to keep up with my square foot average last year I will have to do that. To grow it past he $400.00 per square foot mark we'll have to grow our catering.