There are many considerations restaurants need to make when considering where to place a new location. 

Should restaurants open in a strip mall, at an endcap, in a city center, at a non-traditional location like a stadium, college campus, military base or an airport — or should they build a new standalone? Each option provides different opportunities that allow them to capture untapped customers and traffic as well as potential pitfalls if the dynamics aren’t right, industry experts say. 

Venue hosts and large quick service restaurant chains, such as Potbelly, Panera, Saladworks, and Frutta Bowls, put a lot of thought into these decisions. 

It requires looking through analytics that match a restaurant with their target customers. It also requires asking the right questions regarding traffic patterns and the state of the other businesses in the immediate area. It also includes figuring out whether the terms of the lease for the space are affordable and flexible enough, and whether a new location would eat into sales of another one of a brand’s existing shops. 

For quick service restaurants, putting multiple shops within a one-mile radius in New York City is different from having multiple shops within the same radius in a suburban area, said Lynette McKee, senior vice president of franchising at Potbelly. 

Potbelly evaluates a number of factors for specific locations such as whether the other businesses at that location are vibrant and thriving, whether there’s disability access or if customers can easily drive to and park at the shop. 

“We try to be very cautious,” said McKee. “We can never guarantee success, but we want to try to hedge the bet out as much as we can.”

Finding the right store type

Restaurant conglomerate WOWorks considers numerous factors when scouting locations. The company’s fast casual brands, including Z!Eats, Saladworks and Frutta Bowls, should be in locations that have high foot traffic, great visibility, easy accessibility and that are near “complementary businesses and residential areas that align with our target audience,” WOWorks CEO Kelly Roddy said in an email.

But each type of restaurant space comes with its own unique positives and negatives, said Roddy. 

End caps, for example, offer “fantastic visibility and access,” but also often include higher rents, said Roddy. Urban in-line locations can attract “the hustle and bustle” of a crowd but also force restaurants to navigate space limitations and “operational flexibility,” he said. Meanwhile, standalone lots give restaurants “room to breathe and brand ourselves boldly,” but can also make drawing foot traffic more challenging. 

Most Potbelly shops are located in shopping centers or strip centers and end caps in urban and suburban areas, said McKee. The cost of the real estate factors into the equation, as well as whether the landlord offers terms and conditions that are financially feasible for the company. 

“We have to look at it from a standpoint of what we project the volumes will be, and how does the cost of running that real estate fit in,” said McKee. 

Panera prioritizes visibility, accessibility and capacity when evaluating new locations, said Whitney Hewitt, the restaurant chain’s senior vice president of development innovation and growth, in an email. 

Different types of sites attract guests for different reasons and each site comes with their own unique “wins and challenges,” said Hewitt. But the company’s design team is able to fit and adapt the Panera concept to most site types, she said. 

Sizing upon-traditional sites

Non-traditional locations — including spaces inside hotels, office buildings and other unconventional venues — may come with higher upfront costs and unpredictable foot traffic, but they can also be “a goldmine” that gets WOWorks restaurants’ food offerings in front of more potential guests, said Roddy. 

“The potential for consistent sales and brand exposure is worth the gamble,” Roddy said. 

According to McKee, they can also be more challenging to operate, depending on the venue. Potbelly opened a shop earlier this year at the Pentagon in Arlington, Virginia, for instance. The company needed to navigate different government programs and regulations before it could open shop. 

Shops at airports need to navigate security and oftentimes house coolers or freezers offsite, she said. And sometimes leasing terms and conditions for the space are more restricted, she added. 

Restaurant spaces in airports are also limited by the food and beverage needs of each specific terminal and concourse, said Tyler Pitman, senior vice president of concept development, brand partnerships and adult beverage for Avolta, the parent company of airport food service company HMSHost.

Restaurants can also be limited in their ability to expand their space at an airport, since it could have a gate on either side, a baggage claim below it, and crucial airport infrastructure above it, said Pitman. 

“Brands considering entering the airport environment should be prepared to collaborate on their brand expression while never sacrificing the integrity and authenticity of their brand,” said Pitman.

Using data and weighing risks

Crunching data and asking the right questions is critical in determining whether a particular piece of real estate is a good fit for a brand. 

Potbelly uses a program through Sitewise Analytics that factors in a range of data to help the company and franchises identify the trade areas that meet what it considers its customer base, said McKee.

Potbelly’s demographic base tends to skew younger, but also includes families and people who are retired, and who typically have “a slightly higher income range,” she said. 

“When we start looking at real estate, we know we’re looking at the right areas,” said McKee. “We look at it from the standpoint of, does it meet our customer base?”  

Panera also evaluates potential risks associated with real estate locations by using advanced technology and software programs to analyze traffic patterns, consumer demographics and nearby business profiles, said Hewitt. That includes evaluating whether a location attracts a mix of customers, she said. 

WOWorks also tries to be strategic in its growth and avoid mistakes, like overestimating a potential store’s foot traffic, by using market research to analyze demand, local competition and customer demographics, said Roddy. The company also analyzes the performance of its existing locations to avoid cannibalization. 

McKee suggests that operators create a pros and cons list for the location of a new shop before signing any lease or contract. That will allow them to understand the worst case scenario heading into the venture. 

“Unfortunately, franchisees, and companies too, get so excited about a piece of real estate that they forget to look at it from, ‘What if X happens,’” said McKee. “Know all the pitfalls too. And if you can live with those, that’s fine. But know them before you sign anything formal.”