How to find a location for your restaurant

How to find a location for your restaurant

Finding the perfect location for a new restaurant can be tough. The actual location, the size, the kitchen, and the cost are important factors to consider before the contract is signed and keys are handed over. Besides that, the legal aspect can be hard to fully comprehend. We at METRO want to give you an overview of how to find the perfect location and make sure that legally, all aspects are airtight. This paves the way for the restaurant of your dreams.

What will be covered in this article

Picking The Perfect Location

1. How to choose a restaurant location

First, you need to choose a general area in Germany where you would want to open your restaurant. This is most likely the area where you currently reside. Once you narrowed down the possible location to a city, the real scouting process begins.

Most cities have very diverse areas. Generally, there are residential areas, commercial areas, industrial areas, and rural areas. A lot of times, these can be scattered and mixed, which makes it hard to define strict borders between different types. However, depending on what kind of restaurant you want to open, you need to think about the possibility of succeeding with your type of restaurant in any different area of a city.

Not every type of restaurant fits into every type of area. In the following, we will tell you about them and what kind of restaurant experience suits which area the best.

Types of Areas To Open a Restaurant

2. SCOUTING AREAS FOR YOUR RESTAURANT

Opening a restaurant in a residential area

2.1 Residential areas

In a residential area, which is usually located around the city center, you must consider the type of residents that live there. Is it an area that has been newly developed and houses a younger crowd, including young couples and young families? Is it an area where many people have been living for many years, such as seniors without any kids in the house? Is it an area that many students live in?

Most residential areas tend to house a specific demographic. Find out about the residents before deciding to open a restaurant. When a younger generation makes up most of a specific residential area, restaurants with a more modern cuisine and overall style are more fitting than very traditional restaurants with local cuisine. Students, young couples, and young families might be more interested in foreign cuisine, vegan or vegetarian food, or a sustainable and ethically friendly theme. In an area with many students, a restaurant offering food on a budget in a modern and fun setting might have more success than a fine dining cuisine with more expensive foods on the menu. The older generation might be more interested in a traditional restaurant where they feel at home and can enjoy familiar foods. However, these specific interests with specific demographic groups are not always exactly as you might expect. If your plan is to open a restaurant in a residential area, try to get a feel for its residents. Talk to people, find out what they like and find out what is still missing from the specific area.

Opening a restaurant in a commercial area

2.2 Commercial areas

In a commercial area, which is usually located in the city center, you must consider the ongoing development of new restaurants and the high possibility of competition.

We recommend walking through the commercial area or opening Google Maps to find out:

  • how many restaurants are already situated there,
  • what kind of cuisine these restaurants offer,
  • how many free possible restaurant spaces there still are on the market.

This is important to assess whether and how much more competition could open a restaurant there as well. Even if your desired cuisine is already represented in the city center (which is very likely in larger cities!), this does not have to stop you. Make sure that your restaurant gives customers an interesting, different, and exciting experience while dining. Maybe you can introduce a new concept of dining in that city center or add entertainment or activities to your restaurant. The possibilities are (almost) endless.

Since there are probably also many stores and offices in the commercial area in the city center, it would make a lot of sense to only open a restaurant there, if you can offer a lunch menu. During lunch time, many professionals and retail workers want to head out, and many of them enjoy a good restaurant with great lunch deals on their break. Offering lunch deals as a restaurant in a commercial area can therefore be very financially lucrative. Takeaway options for lunch can also attract many business professionals who do not have time for a long lunch break.

Opening a restaurant in an industrial area

2.3 Industrial areas

In an industrial area, you can mostly find factories, car dealerships and, if the area also houses businesses, large offices. In such an area, it might make more sense to focus mainly on lunch options, as in the evenings, most workers will no longer be there.

A more traditional or simple cuisine would also attract more people than a fine dining experience with a fusion cuisine. Most professionals and workers who work in an industrial area focus on getting a quick and simple lunch on their break, rather than sitting down in a fancy restaurant.

Opening a restaurant in a rural area

2.4 Rural areas

Rural areas are on the outside of the city and are mostly comprised of nature. You can usually find agriculture and leisure possibilities in a rural area. Sometimes, some residences are interspersed within the natural landscape. Possible customers would be people on vacation, people enjoying a day in nature, and people passing through on a longer drive. Because of this, a restaurant offering a cuisine that most people enjoy during different times of day – lunch, afternoon coffee, dinner – would be a great fit. Most customers would enjoy seating possibilities on a patio or in a garden, as silent nature would surround the restaurant.

Before deciding to open a restaurant in a rural area, explore the area on your own and find out what kind of people are doing what activities when they are passing through the rural area. In a rural area, you really cannot go wrong with a family-friendly restaurant that offers a simple, but delicious cuisine that everybody enjoys. A specialty restaurant with an extraordinary cuisine might feel out of space in a rural area. However, be aware of other restaurants nearby, so that you don’t open your restaurant too close to another one that offers the same cuisine.

Planning the Restaurant Space

3. finding the right space for your restaurant

After deciding on an area for your new restaurant, it is time to find the actual space to rent. You can go on the internet and look for restaurant spaces that are up for rent. Important factors to consider are the location, the size, the price, the opportunity to remodel, the kitchen, an outdoor space, parking options and the look of the space from the outside.

 

3.1 First considerations

Before booking any tours with agents or property owners, plan for your desired restaurant.

  • How big of a space do you need?
  • Do you want an outdoor sitting area?
  • What is your budget?
  • How big does your kitchen need to be?
  • Do you need parking spots especially for your restaurant or is there public parking nearby?

After answering all these questions for yourself, book many tours of spaces and bring a trusted person or a business partner with you to have a second opinion.

 

3.2 Questions to ask during your scouting

Come prepared: bring questions to ask the agent or property owner. Can you remodel the space? Can you put signs on the outside of the building? Do you need to adhere to noise regulations because people live in the building?

Be aware that restaurant spaces are in popular demand right now. You might need to bid for a space, which sometimes involves adjusting your budget.

 

3.3 Think ahead: Expansion and Year-round success

Also consider the possibility of expanding the space if business is good. If you are striving towards growth with your restaurant, make sure that the rental space has the option of being expanded or enlarged in any other way, such as renting another space in the building. Otherwise, you might regret not considering this possibility. If your restaurant is doing well and does not have the according capacity, you might be forced to start your restaurant space hunt again in the (near) future.

If you are planning on having a more “seasonal” restaurant concept, such as a beer garden, make sure that your desired restaurant space has the possibility to accommodate your restaurant year-round and in all-weather situations. It is important to have the option to run your restaurant as much as possible, without having periods of time without any profit. This would be detrimental, as you still must pay your rent every single month.

 

3.4 Checking permits and regulations

Legally, you need to know whether your desired rental space was used as a restaurant in the past. If it wasn’t used as a restaurant in the past, but rather as an office space or a residential space, you must apply for a building permit with the according building authority. You need the building permit since you would be changing the use of the space. However, if the rental unit was used as a restaurant or any type of food retailer, you don’t need to worry about a building permit. Make sure to get a permit, if it is needed, before signing any contract. You would not want to be bound to a contract after finding you cannot even use the rental space as a restaurant.

Moreover, another legal aspect to consider before signing any contract is the accordance of the space and especially the kitchen with regulations of the health department. Once you have found the perfect space for the restaurant of your dreams, it is time to make it official.

The Commercial Lease Contract

4. signing the contract for your restaurant

Signing commercial lease contract

4.1 Basic elements of the commercial lease contract

In Germany, the contract for restaurant rentals is called a “commercial lease contract”. This type of contract combines the aspects of renting a space and using it commercially as a restaurant. If you are unsure of the contents of the contract and have trouble understanding them, we advise you to seek advice from a legal professional.

The commercial lease contract is between you and the landlord. The basic elements usually are:

  • a definition of both parties,
  • an exact description of the space with its size and location,
  • the purpose of the lease,
  • the price,
  • the rental time, 
  • the period of notice,
  • the cost of utilities
  • the down payment.

 

4.2 Important clauses in the commercial agreement

The contract always must be in writing. Any oral agreements are legally ineffective.

Especially discuss the possibility of competition protection with your landlord. This would mean that the landlord can’t rent his spaces as other restaurants. This allows you to protect your standing and prevent competition from arising in the same building. Moreover, talk to your landlord about the rental time. Ask them whether the rental time is unlimited and if it is not, what possibilities of extending the contract exist after it ends and if the rental conditions would change. Unfortunately, we are still living in uncertain times, and nobody can predict the future. Make sure to discuss a possible premature end of the contract and a possible shorter period of notice.

Once you have discussed the details of the contract with the property owner and have gone over the contents with a legal professional and signed the contract, you can finally start visualizing your dream space and can get started with developing your beautiful new restaurant. Overall, the most important takeaway is to be aware of the surroundings of your potential future restaurant: eliminate the possibility of competition and make sure that your concept fits with the interests of the area.

To Sum Up

5. Summary – finding a location for your restaurant

Take enough time for a location analysis so that you are really sure you have found the right place to open your restaurant. It is important that the location fits your concept. In addition, you should also be clear about whether there is a demand for your service at this location and whether the purchasing power of the potential customers there can be well assessed. The location often determines the success of a restaurant.
Frequently Asked Questions

6. FAQ - finding a location for your restaurant

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