Dawn Henderson, from Anderson Strathern, lists the eight most important things to consider when choosing the location for your business.
Any property expert will tell you the three most important characteristics a property should possess are: “location, location, location.”
The phrase dates back to 1926 (although Phil and Kirsty may disagree) and it is just as relevant now as it was then.
Concept, food quality, service, and price are extremely important, but rarely will those factors overcome a poor location. Correct site selection usually defines the success of a new venture.
We see food and drink outlets everywhere: traditional high street sites, freestanding units, shopping centres and within multi-use concepts such as petrol stations, airports and hotels, but finding the ideal pitch is frequently overlooked.
The temptation is to spend money working up the concept and designing the interior of a property still to be found.
Later on, when attention turns to location, funds are limited. The perfect site is unaffordable, and in the compromise site sales don’t reach the levels you need.
At that point, all you want is a good location, but by then it is usually too late.
So what makes the “right” location? How do you avoid a locational mistake before it happens?
- Patience is a virtue. You fall in love with a pitch and start visualising the trendy finishes. Visit other sites. Go at different times of day and week. Is it full to bursting during office hours, but dead at weekends and evenings?
- Visibility is paramount. Think free advertising. High footfall is crucial. Zero visibility means the place is doomed from the start.
- Success breeds success. Are nearby businesses doing well? What are they doing? Are they busy and when?
- Think tactically. Is your product competitive both in quality and price? What’s the demographic and population density of the neighbourhood? Is it as strong as its appears? Does that fit with the demographic?
- Accessibility. Customers will not walk far to get to you. Either provide parking, or opt for a site with good public transport links.
- Size matters. The smallest food outlet needs enough space for equipment and an admin area. These can quickly fill up with equipment and before you know it you’ve lost space for covers.
- Get a good lease. What if your venture failed and you were tied into a 5 or 10 year lease? The landlord could still demand rent and insist you perform lease conditions, even if you were not trading. It could be disastrous if you had personally guaranteed the lease. Consider a lease with frequent breaks, or a shorter lease with options to extend to give you leeway to establish yourself. Watch out for the repairing obligations. If the property is in a mess when you take it on, make sure you are not on the hook to hand it back in an improved state. Get a survey. Ask for a schedule of condition to limit your exposure to repairs. Do you need planning permission for your use or fit out? Think about issues such as servicing, deliveries and refuse. What about ventilation and extraction and the need for rights to a plant area (maybe over third party property?) What about licensing? How crucial is the sale of alcohol to your use? Will you be able to obtain a licence? Will you need to make any adjustments to your fit out or trading hours to accommodate the licence requirements?
- Avoid a tarnished site. Sometimes sites just don’t work. We’ve all seen it. It is often difficult to know why. But on a site you might see one failed venture after another. Soon the site becomes identified with poor food, slow service, high cost and poor value for money. The bad karma just sticks.
Location is priceless. But how to find the “right” location – your oasis in the desert?
The key messages are: do your homework. Don’t be impulsive. It is not just about timing being right. Being in the right place has never been more crucial to the success of food and drink outlets. Where you should be matters more than where you want to be.
To hear more about the importance of property, and other factors crucial to the success of a food and drink business, book your place now for the Scotsman’s annual food and drink event on Tuesday, 8 September.
Dawn Henderson is a Partner in the Commercial Real Estate department at Scottish law firm Anderson Strathern. She specialises in hospitality, food and drink and all aspects of commercial property.