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ECONOMICS OF SITE
SELECTION

INTRODUCTION AND LEARNING OBJECTIVES

The United States has about 925,000 restaurants, and 8,000 new ones open each year.
Restaurant customers now spend more than half of the average household food budget on
meals purchased outside the home.
The compelling reason why people pay for a meal instead of making it themselves, or
go out of their way to eat at a particular restaurant instead of visiting the closest one in their
area, is the restaurant’s ability to make its customers feel comfortable. Sometimes this means
creating a memorable experience, perhaps for a special occasion; but it also means provid-
ing a consistent, favorable impression, something the customer can count on, day after day.
It’s important to keep this focus when creating a restaurant concept. A winning concept is a
focused promise to the guest, a unique proposition that includes an emotional connection.
It also must have the power to create positive word-of-mouth awareness. In short, whatever
the type of foodservice operation, it knows its customers. Its concept should encompass
everything that influences how a guest might perceive the operation.
In this chapter, we will discuss:

Concepts for restaurants, and what goes into choosing a concept

Research that must be done to determine whether a concept fits an area or a particular location
Site selection: the advantages, or possible problems, in choosing your location
Major considerations when deciding whether to buy or lease your site
Common factors and advice for negotiating a lease

Concept development is the identification, definition, and collection of ideas that consti-
tute what guests will see as the restaurant’s image. Before you can sell the idea to the cus-
tomers, however, you’ve got to sell it to investors, your bank, and your business partners.
This requires the time-consuming job of mapping out a thorough business plan that has the
important side benefit of forcing you to look realistically at your big idea. Most restaurateurs
are dreamers—and that’s a good thing. This chapter examines the initial decisions that are
necessary to make the dream a reality.

1-1 TODAY’S DINING SCENE

The dining world today is populated by a new generation of restaurateurs serving confident,
educated, and sophisticated consumers. Together, they have redefined the landscape with
simple-but-stylish food and décor. How much have things changed? You may not be old