Physical location is just one piece of the puzzle when you're opening a restaurant

Physical location is just one piece of the puzzle when you're opening a restaurant

Danya Henninger

Philly restaurant pros on the myth of the perfect location

Location, location, location.

You’ve heard about this in the context of “the three most important things in real estate.” The saying has been floating around since at least the 1950s. Though considered a cliché, it’s also often cited as the most important mantra to keep in mind when opening a restaurant.

Can location really make or break a restaurant?

Depends.

A good location can be like an insurance policy, offers Steve Cook, partner at CookNSolo Restaurants (Zahav, Dizengoff, Federal Donuts): “A killer concept with great execution can work anywhere. But in a good location, it’s possible to do OK without those things.”

Witness the chain restaurants clustered around the Convention Center, or almost any restaurant in a city hotel. They prove that if there’s a big draw nearby or a captive audience exists, restaurants can succeed (read: be profitable) even if their food, service or decor isn’t all that great.

On the flip side, opening a restaurant in what’s considered a “good” location is no guarantee of success — even if you’re ostensibly doing everything right.

Take former Center City wood-oven bistro Petruce et al. A sultry interior, well-thought-out cocktail and wine lists, impeccable service and gorgeously-plated food from brothers Justin and Jonathan Petruce added up to critical raves. After launching in March 2014, the restaurant was awarded three stars from Philly Mag, and then it scooped up three bells from the Inquirer’s Craig LaBan. Yet in early 2016, less than 18 months after that review, it shuttered for good. That’s despite its location smack in the middle of a bustling downtown neighborhood — on a block Philly.com’s Michael Klein called “the hottest in Washington Square West” in an article published just three weeks post-shut down.

The right metrics

The explanation for the contradiction is actually easy: There is no such thing as a “good” location.

It doesn’t exist. Or really, it’s impossible to define, because what’s “good” for one restaurant won’t necessarily work for another, and what’s a phenomenal idea in one place can be a total flop in the next.

For instance, getting a fine dining restaurant off the ground in Jersey Shore party town Wildwood would be a challenge, suggests Harris Eckstut, a former restaurateur who’s retired into consulting. Conversely, a Church’s Chicken joint that would kill on the boardwalk might sink into sand if it tried setting up in swanky Stone Harbor, just one town away.

Eckstut is personally familiar with how a small geographic distance can make a huge difference in customer base. In 1980, he opened American-Mediterranean bistro Montserrat at 623 South Street. He operated it for almost two decades, during what was a hopping time for the avant-garde strip, but “my restaurant was two blocks from the heart of South Street, and those two blocks were huge,” he says. “[We made] a good 25 percent less in revenues.”

Vince Stipo, consultant at Philly real estate firm MSC Retail, puts forth a few main reasons a potentially great location could fizzle. One is mismanagement of capital — running out of money before things are fully up and running because of overspending or bad budgeting. In that scenario, even if the restaurant looks like it would be profitable within a year, it can’t make rent payments and is forced to bow out (case study: short-lived Le Bec-Fin successor Avance).

A second is setting a the wrong price point for the neighborhood. That doesn’t always backfire — check how Serpico’s high-ticket fare is a hit on a gritty stretch of South Street — but it often does, and may have contributed to Petruce’s demise (the popular spots on that block are both budget-friendly Irish pubs).

Jeff Benjamin, COO of the Vetri Family restaurants, agrees. “[A busy] location is valuable, but making sure you’ve identified the correct metrics for the location is just as crucial,” he says.

You get what you pay for

Yet another possible flub is paying for foot traffic you don’t take advantage of. Per Stipo’s guesstimate, if the sidewalk is busy during both day and night because of surrounding retail or offices, rents might be 40 or 50 percent higher than at a neighborhood site that’s only busy when people head home.

“In fringe neighborhoods, your average 40 to 60 seat restaurant might be paying $4,000 or $5,000 [a month], but the same size place in Rittenhouse might cost $9,000 or even $11,000,” he says. Stipo doesn’t usually like to quote figures, because “the reality is every landlord is different and there’s no two buildings the same.”

That’s something he thinks many aspiring restaurateur don’t often understand. In Stipo’s view, the majority of the industry thinks, “I have to find a space that I like, and then I’m gonna have to build my restaurant in it,” but that’s just not the case, he says. “There’s packages for improvement dollars from landlords or new construction programs with tax abatements” that can make it attractive to sign on a space that might not at first appear to fit, but can be molded to a concept.

And vice versa — a concept can be molded to fit a location. But young chefs sometimes believe what they’ve got in mind is so unique, so different, so amazing that it doesn’t matter where they go.

“Sometimes business owners feel so passionate about a concept that they say, ‘I’m gonna make it work no matter what,’” says Benjamin.

“It’s all well and good to care about food and drink and curating wines and going above and beyond with hospitality,” says Stipo, “but that’s kind of par for the course if you’re looking to open a restaurant. [Ed note: Zing!] The next step is the business savvy.”

‘I have the best menu ever’

Offering that business savvy to excitable and excited restaurant owners is actually Stipo’s job. Formerly a bar manager at a.kitchen and Vernick Food & Drink, he was lured away from the only industry he’d ever known by an offer to start a restaurant consulting arm at MSC Retail. The Michael Salove firm, which manages more than 500 area listings at any given time, realized many clients were coming to them very early in the game.

The conversation would go something like this:

“I need a space, I want to open a restaurant, I have the best menu ever.”

“Great. How much money do you have?”

“I don’t have the money yet.”

“Do you have a potential floor design?” No. “A business plan?” No. “A logo?” No.

Enter Stipo, who offers consulting on all of those things, while guiding the client to an optimum location. “We can introduce them to investors, help with projections, assist in concept development and recommend resources for graphic design, but there’s also value in me being able to walk people through a raw space and talk to them in industry lingo, point out potential benefits (or pitfalls) they may not see,” he explains.

Right now, Stipo is working with a family that runs two busy restaurants in Northeast Philly but was totally unaware of what it would take to translate their success in Center City. “Their food is amazing,” he says, “but they were using foldable tables and those assembly chairs and you’re not gonna survive in town if that’s how you present yourself.”

Proven record vs. heart and soul

Presentation matters, but so does reputation.

“While [an out-of-the-way location] might work for an established brand, a newcomer to a city might have to consider something else,” says Benjamin, who has actively been scoping out other cities as Pizzeria Vetri and other Vetri concepts expand.

But it’s not necessarily bad to be an unknown. “When you’re just starting out, you tend to end up in less-than-stellar locations, but that’s the moment those locations can work to your advantage,” says Steve Cook, who’s recently been seeking sites for new outposts of Federal Donuts, Dizengoff and other concepts. “Because as an operator there’s nothing more authentic than your first restaurant, and people can really sense that.”

When you’re already established, on the other hand, choosing a site that’s off the beaten path doesn’t always fly. With a solid track record and multiple outlets, “you almost have to go for the good locations,” Cook says.

“Because that hole-in-the-wall passion project becomes a little harder to sell, authenticity-wise, compared to the first-time restaurateur. Someone who’s pouring his heart and soul into the place and is on premise every day — people will seek you out, wherever you are.”

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