Hey guys, welcome back for another week of video.
Today we're going to be talking about how to choose a perfect location for your food
and beverage shop, so then that way you're going to be set up for success.
So many times people have been asking me, "How do you choose the perfect location for
the food and beverage shop?
How much should I be paying in rent, should I be paying $10,000, or should we be paying
$2,000?"
Today, this video, we're going to be answering that for you.
We're going to be answering all the common pitfalls to consider when choosing a location,
so make sure you guys stay till the end.
There's going to be a checklist for you, when you go out there to search for that location.
At the end of the day, in the ideal world out there, if pricing was never an issue we
would always choose the place which is at the heart of downtown.
Why is that the case?
It is because it has the most traffic, and in turn, more potential for you to be able
to convert this traffic into your customers.
But, in the real world out there pricing is definitely an issue, which is a reason why
we're going to be talking about the difference between a destination location, and a high
traffic location.
The pros and the cons of both.
What is a high traffic location?
A high traffic location means that there's going to be a lot of foot traffic.
That means a lot of people are walking by that area.
An example of a place that has a high foot traffic would be malls, would be downtown,
financial district.
The pros of that is that since there's so many people walking by, it's a lot more potential
for you to be able to convert these walk by traffic into your customers.
Now, keep in mind, I said potential because it does not equate to your customers if you
don't do a good job into converting these people into your customers.
That's for another video later on, but for the sake of this video we're going to focus
on the locations that we are choosing.
Now, the con side of that is that rents are usually extremely expensive because of the
landlords knowing the fact that there's a lot of foot traffic, which in turn can mean
more potential revenue for you.
On the flip side, when we're talking about destination location, that is basically a
location that has minimal to no foot traffic at all.
These are, examples would be like an inner street that is a little bit tucked in, we're
talking about someplace that you actually have to drive to, it's not really as accessible
as a high traffic location.
Now, the pro of that is that rents are a lot more affordable in comparison to high traffic
locations, and the cons would be because of the fact that you don't have a lot of foot
traffic, you need to be able to drive your own traffic.
You need to be able to do your own promotions.
People need to know about you, and people need to drive intentionally to your location,
and to consume at your location.
That requires a lot more friction when it comes to it, and in turn it reflects on the
rental price.
To give you an example, 720 Sweets is a destination location because initially we didn't want
to take the risk of paying five, six thousand dollars for rent just to sell ice cream.
We chose a destination location a little bit tucked in from the main street, and the rent
was a lot more affordable.
So even for us, if it takes a while to gain traction we were okay with that, because our
risk tolerance was a little bit lower.
That's why we chose a destination location.
So depending on your resources, and the confidence level of your offering, you would be able
to choose either a destination location, or a high traffic location.
A lot of times we see franchises, and big box shops, and chains.
They choose downtown locations and malls because they can afford it, and because they have
a proven formula.
That's the difference between high traffic, and destination.
Now that you know the difference between high traffic locations and destination location,
now it's time to choose a location that is best for you.
Because at the end of the day, we're going to be able to choose a hybrid between these
two models.
I'm giving you the extreme of two cases, and a lot of times locations are not as clear
cut as either being a destination or a high traffic, because there are a lot of different
elements that come into play.
Some of the elements would include, visibility.
How visible is your shop?
How visible is that location?
When people drive by, can they see your location?
Or, is your shop completely tucked in and out of sight, and there's no way anyone can
ever see your shop?
If it's completely tucked in, that means that it is a destination location to the extreme.
Sometimes there are locations where people do drive by, and people do see it, although
not a lot of foot traffic.
Other times the location will be situated at the financial district, which is only busy
during work hours.
But, then after work hours no one goes there.
There are these elements that you would consider, and you would bring these elements to actually
go and negotiate with your landlord.
Another element to consider is the crime rate.
How safe would you feel if everyone around that area of your shop is taking drugs, and
having multiple break ins, so on and so forth?
You wouldn't feel that safe, and in turn that rental space would cost a lot less because
of the crime rate around that area.
Even though it has a lot of high traffic, it is not the traffic that you're looking
for.
And in turn, you can negotiate for a better rate with your landlord.
Another element to consider is parking.
Is there accessible parking for your location?
If there's no parking spot dedicated for your restaurant, then that means that is not as
accessible as a place in a lot that has a lot of parking space.
That itself will take away a lot of different customers.
For example, if you're catering to a more higher end demographic without parking spots,
then you would probably offer valet, which is another additional cost.
Having said that, is your location accessible by bus, or public transit?
If it is, then that means that the prices would go a little bit higher as well because
once again, higher traffic.
All in all, when you're considering a location, consider these different elements to choose
the perfect location that fits your needs.
Because, when it comes down to it, pricing is one thing, but the different elements is
also things to consider when choosing your location.
The last thing to consider is the community.
This is something that no one talks about, because no one really cares about that.
Yet, it is one of the crucial things to consider when deciding a location.
What I mean by that is, you need to be in a place where you feel that it serves your
customer.
You need to be in a community where you feel belonged.
A lot of times when I choose locations, I would actually be in that location, and be
at the competitors spot.
And see, and observe how the community is coming together.
When people come in, do the waitress and waiters address each other by their first name?
Because if they do, then we know that these are regulars, that they come back again and
again.
When I'm there I'm also observing whether people feel like they belong there.
Whether they sit there for a long time, or they just grab and go.
Regardless of the fact, you need to be within the community where you feel comfortable,
because you're going to be spending years in this community.
If you do not spend the time to consider this really crucial factor, which is your community,
then you're going to be stuck in a place where you don't find any joy and passion in, and
that really defeats the purpose of running a food and beverage shop, because it's going
to limit your success.
Make sure you guys spend the time in the community, spend the time within the area to see if it's
fitting for your demographic, and that is the secret that I want to share with you today.
For example, when we were choosing location for our dessert shop 720 Sweets, we were driving
around the area, and driving across different communities to see which one is most fitting
for our demographic.
In turn we were able to find a community which we really, really like.
Our shop is very accessible, right in front of the bus station.
We were 10 minutes away from the university, and when I was choosing that location I was
just at McDonald's, and I was able to see a lot of university kids just walking and
strolling by the streets, even though the traffic is not very dense.
But, a lot of university kids are just walking around the area.
This community proves to me that it is catered towards my demographic, and which is the reason
why we chose our first shop 720, in that location.
Now that we've talked about the different elements to consider when choosing your perfect
location, we're going to be talking about the two deadliest pitfalls that I always see
people make.
The first one is confirmation bias.
What that is, is basically falling in love with a place that you've been to, and you're
finding all these reasons to back up and validate why this should be the place of your choice,
why this is the place that's going to make it super successful.
And, you're finding all these clues just to confirm and validate your emotions, which
is you falling in love with the location.
And, you fail to see there's no visibility, it's tucked into a corner out of nowhere,
there's not accessible at all, no parking spots, no public transit, yet you're catering
to university kids.
How are they going to be able to get to the shop?
They're not going to be able to get to the shop.
And thirdly, you fail to see the three other ice cream shops around the area, and they're
all suffering.
These are what I call confirmation bias, and a lot of people fall into this trap because
they're making judgment based upon their emotions, not rationally.
When it comes down to it, choosing a perfect location, always, always be aware of this
number one deadliest pitfall, which is confirmation bias.
Now, the second deadliest pitfall that I always see is that people don't negotiate for their
rent.
It's not that they don't want to, it is because that they're afraid to do so.
Why are they afraid?
It is because they're not well equipped with the education that I'm just sharing with you.
They're not aware of how much of the surroundings they're charging per square foot, they're
not aware of the different elements that come into place.
Is the place accessible?
Is the place highly visible?
These are the things that you would want to bring up to your landlord after the fact that
you've done your research, to tell them, and negotiate with them, and to rationalize with
them.
"Hey, you know what, landlord?
Your place is charging the same as something that is comparable, but you're lacking parking
spots.
Why can you charge the same?
Can't you lower the rent because you don't provide parking spots for my guests?
And in turn, that would lower our customer satisfaction."
Well, a lot of times they actually know about these things.
Me acting as a landlord, I can share this with you.
I know my shortcomings, and I know when people pick on them, I would be much more willing
to negotiate because they know their stuff, okay?
When it comes down to it, always, always do your home.
Always figure out all the different elements that comes into play to negotiate with your
landlord.
A few things that you can negotiate, whether it be build out cost, free rent, not increasing
the rent, or lowering the rent.
These are things to consider, and to negotiate for when negotiating with your landlord.
These are things that you need to look out for.
Make sure you guys always, always negotiate with your landlord when choosing a location.
Because, at the end of the day there really is nothing to lose.
There you go.
I just covered the two types of location that you can choose when you're setting up for
your business.
The first one is the high traffic location, which has a lot of people walking by.
And, the other one is the destination location, which you have to drive your own traffic over.
We talked about the pros and the cons, and the different elements to consider when you're
choosing these different locations, and the hybrid of them too.
Visibility, accessibility, parking, crime rates, and lastly, community.
These are the things that you should definitely consider when choosing a location.
And, the two deadliest pitfalls that you must consider and try your best to avoid.
Number one is confirmation bias.
Never ever get emotional with a location, okay?
There are tons of locations out there, never fall in love with them.
Use rationale when deciding a location.
And, the second deadliest pitfall is that to always, always negotiate.
Because, you have nothing to lose, and the landlords are much more lenient when ... And
actually, landlords know their shortcomings, okay?
At the end of the day if you point out their shortcomings, they're much more willing to
negotiate.
In the link below, download that checklist because you need this checklist when you're
going out there to search for your perfect location.
Otherwise, I really hope you enjoyed this video.
I hope this has been a value packed video for you.
If you have any questions, leave it in the comment section below.
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Otherwise, smash the like button.
That shows me that I'm on the right track, and I'm delivering value to you.
Otherwise, if you want more of these resources, if you want me to dive into deeper about the
step one, to step like 100 about building a restaurant, a successful restaurant, then
make sure you guys check out in the link below.
I've actually put in everything that I've learned within the last five years of running
my ice cream shop, and turning that into an international chain, all into that link, okay?
Click on the link below, otherwise I'll see you guys in the next video.