Site selection, like everything else in the restaurant industry (and world), has completely changed since the start of the pandemic. Gone are the days of building brand-new, massive restaurants adjacent to entertainment centers for the best results. Now, second-generation, smaller sites chosen using state-of-the-art data are the way of the future and leading to higher volume restaurants.
As the restaurant industry enters this new world of site selection and all the challenges that come with it, here are the top tips for franchisees when searching for the right location to build or open their business.
Bigger Isn’t Always Better
In today’s world, large square footage isn’t the go-to advantage anymore. Some sites now work better as a grab n’ go location as opposed to a traditional dine-in restaurant. Now is the time to re-evaluate areas and consider what real estate location meets your restaurant’s modern day needs. As consumers continue to embrace drive-thrus and pickup, I advise that you look at sites with drive-thrus, pickup windows, and smaller dining rooms. Unfortunately, these sites are the hardest to find because everyone wants them. So you’re going to have to do some work to find them, but in my experience, the best diamonds are found in the rough.
Data, Data, Data
Look at what’s relevant from demographic data. Simple points of data like age, family size, and income tell us a lot about our clientele and where we should open next. What’s relevant to producing high sales or high volume? No longer based on location, successful restaurants are now driven by off-premise offerings, including delivery, pickup windows, drive-thrus, and accessible parking. These offerings allow on-the-go guests to pick up food without leaving their car, a luxury many grew to enjoy during the pandemic. These offerings are also attractive to third-party delivery apps, another driver of high-producing sites.
Embrace Second-Generation Locations
Surprisingly and despite popular belief, there is not an abundance of retail or restaurant space available. Construction took a downturn with the economy and with investment in nonresidential structures declining, new structures ready for fast-casual restaurants are increasingly hard to find. Restaurant spaces that closed during the height of the pandemic are not suitable for traditional restaurant franchise brand sites. Due to this, there is now a need to look at second-generation spaces for new restaurants. As a multi-unit franchisee, embrace the ability to find different communities and insights when deciding where to open a new store.
Let Loyal Customers Guide Your Decisions
Loyalty apps provide us with a wealth of information about our guests and we should let these customers guide our real estate decisions. With this invaluable data at our fingertips, we should leverage this information about our existing loyal customer base. The merging of consumer marketing data with real estate data identifies who’s my customer and where’s my customer, helping guide us on where new sites should open. Along with loyalty rewards customers, third-party delivery apps are more important than ever for our business. These third-party apps need easily accessible locations for their drivers on-the-go making multiple deliveries. In addition, visibility is more important than ever. If your restaurant is easily visible, it’s that much easier for customers to visit. Pickup windows and adequate parking are also important as they increase accessibility to the restaurant and make it easier for loyal customers and delivery app drivers to visit restaurants.
Build Brand Awareness in Concentrated Areas
In newer markets, leverage the existing brand awareness you have. It would be logical to open a location nearby an existing location five miles away instead of across town. Consider delivery as customers on delivery apps don’t necessarily know where the restaurant is, just that it’s near them. Linking delivery areas increases brand awareness in concentrated areas and ultimately puts the restaurant in a better position for success when new locations open up.
As everyone in the restaurant business knows, we’ve got to be flexible and this couldn’t be truer than when it comes to site options. With fewer new facilities being built, you need to have the flexibility to work with the existing construction. A site on the West Coast is going to be different from a site in the Midwest so we shouldn’t be afraid of opening locations that aren’t identical to our other restaurants. With the restaurant landscape changing rapidly, now is the time to evaluate the importance of the dine-in space for your restaurant’s experience and how much space is really needed. Although you should be flexible, be cautious to not throw out elements essential to your restaurant’s success.
Although things will never be the same post-pandemic and we can forget returning to “normal,” our industry should embrace these new challenges to continue serving our customers and meeting them where they are. I look forward to seeing the changing landscape of the industry and how sites chosen in 2022 and beyond will prioritize customer convenience unlike ever before and help us emerge from the pandemic stronger than we were before it started.
John Ramsay is VP of Franchise Sales for Noodles & Company and has extensive experience in real estate site selection.