Why the location of your hospitality business is critical to the success of your business
Recently I was watching a program on the SBS food channel. It was about the hospitality industry in Singapore post pandemic. I can’t remember the name of the program or the host, but I found it interesting. Especially why the location of your hospitality business is critical to the success of your business.
This resonated with me as it’s something I discuss with my own hospitality design clients. For this blog post I talk to Anthony Saba-Bowering from Cedar Hospitality for his 15 year industry insights on this topic.
Multiple income streams for your hospitality business
I think most small businesses need multiple income streams. For example, I have my primary business which is my interior design studio Grace Interior Designs. But I also have an online business The Design Basics. The Design Basics offers shop the look furniture packages and targets a different, younger audience. It provides a low-cost interior design solution.
The same is true for hospitality businesses such as bars, cafes, and restaurants. For example, multiple income streams for these types of businesses include merchandise such as T-shirts and keep cups. It can also be product such as sauces.
Other income streams for some hospitality businesses includes take away, delivery, events, and catering. Which income streams you adopt in your hospitality business depends on your business goals and to some extent location.
Why is location important for your hospitality business
A good example of the importance of location for your hospitality business is foot traffic. As we saw in the Melbourne CBD during the pandemic, many hospitality businesses shut down because their primary audience had disappeared.
Office workers between normal working hours sustained many small hospitality businesses in the CBD. But due to the pandemic the CDB foot traffic changed and withoutmultiple income streams hospitality businesses struggled to survive.
But a ‘readymade’ audience due to location is only one aspect to the success of your hospitality business. There are other factors, such as parking and competition.
Anthony from Cedar Hospitality, suggests that ‘the location of your business determines the type of customers you’re likely to attract. For instance, a hotel located near a business district might require equipment for hosting conferences and business meetings. While a beachside resort might need equipment for water sports and outdoor activities.’
Why location matters – parking
Having good parking facilities next to your hospitality business is important. Especially, if you’re located in the suburbs of Melbourne. To increase your foot traffic beyond the people that can walk to your establishment you need good parking.
That’s why cafes, bars and restaurants around shopping centres or high streets are desirable.
Parking is important especially if you position your hospitality business as a destination place for foodies. For example, I remember waiting in line for a café in Coburg and striking up a conversation with the people in front of me who had come from Doncaster for the beetroot latte.
Hospitality entrepreneurs need to make it as easy as possible for people to come to you by foot, car and public transport, that’s why the location of your hospitality business is critical.
Why location matters – services & equipment
Some of my prospective clients look at spaces that are not suitable for a hospitality business. For example, a space on the ground floor of a two-storey terrace house on Brunswick Street, Fitzroy might be better suited to a retail space than hospitality when you factor in the need for an exhaust and grease trap.
Anthony confirms that ‘the physical space available at your location impacts the size and quantity of equipment you can have. Compact urban spaces might require more efficient use of space and multi-purpose equipment.’
While location matters from a parking and competition perspective the location of your business also matters from the point of view of being able to fit and service the equipment you need, receiving goods, storage, garbage, toilet facilities and so on.
That’s why I always recommend to my prospective clients who are keen on a space to get a feasibility study done first to ensure the space can accommodate their business needs.
On this matter Anthony suggests that ‘the availability of utilities such as water, electricity, and gas can influence your equipment choices. A location with limited access to these utilities might require energy-efficient equipment or alternative power sources.’
And that ‘different locations have varying regulations and building codes that dictate the type of equipment that can be used. For example, fire safety regulations might impact the type of kitchen equipment you can install, and noise ordinances could affect your choice of entertainment equipment.’
‘The ease of access for suppliers, customers, and staff can affect equipment decisions. If your business is in a remote area, you might need to consider backup power systems or specialised transportation for equipment delivery.’
‘The climate and weather conditions of the location influence the types of equipment needed. A restaurant in a cold climate might need space heaters and fireplaces, while a tropical resort might require cooling systems and outdoor furniture designed to withstand high humidity.’
Why location matters – competition
Some hospitality business owners prefer a location where they are the only café, bar, restaurant. Others like it when there is competition close by.
There are pros and cons to the location of your hospitality business depending on if there are other similar businesses nearby.
Take for example a café on St.Kilda Road Melbourne. Some might consider the lack of cafes in the area a plus, but this also limits the audience, and therefore income, to office workers and weekday trading.
Whereas in an existing built-up area with other cafes your business could benefit from offering a point of difference. You can compete on menu, interior design, price, opening hours etc.
Anthony offers this perspective on competition and differentiation – ‘Understanding the equipment used by competitors in your area can help you differentiate your business. You might choose to invest in specialised equipment that sets you apart or offers unique services.’
Why location matters – hospitality interior design
If you have a particular interior design vision for your space, then location can play a role. For example, one of my clients wanted a space with an internal brick wall.
The warehouse space they found was great for its location with parking facilities and limited competition, but we had to treat the walls with fake brick cladding so that the client could realise their interior design vision. Which was more expensive that if the space itself already had a brick wall.
The same is true if, for example your vision includes a vertical garden. If the ceiling of your space doesn’t suit a hanging mechanism and the weight of artificial foliage at that height for one reason or another you might have to compromise on your vision or find a different space.
The SBS Food Channel program I mentioned above covered all of this including using a robot barista to make coffee for customers. A robot means not paying an employee.
So while the idea was sound to reduce costs and increase income, the quality dropped and the lack of person to person contact really impacted the hospitality experience, losing the business customers.
Why location matters – other factors
From his years’ experience in the hospitality supplier industry, Anthony suggests the following factors also impact on the location of your a hospitality business.
- Climate and Weather: The climate and weather conditions of the location influence the types of equipment needed. A restaurant in a cold climate might need space heaters and fireplaces, while a tropical resort might require cooling systems and outdoor furniture designed to withstand high humidity.
- Cultural and Local Preferences: Different regions might have specific preferences or cultural norms that impact the type of equipment you need. For example, a location with a strong coffee culture might necessitate high-quality espresso machines.
- Tourism and Seasonality: If your business relies on tourism or experiences seasonal fluctuations, you’ll need to consider the equipment needed during peak and off-peak periods. For instance, a ski resort might require snow removal equipment in the winter but not during the summer.
- Long-Term Sustainability: Your location can impact your business’s long-term sustainability. If your business is situated in an environmentally conscious area, you might need to invest in eco-friendly equipment and practices.’
There are many ways to future proof your hospitality business (other than robots) such as exploring multiple income streams, investing in great Instagrammable interior design, and choosing the right location and equipment.
To compete you can’t put all the eggs in one basket by restricting the quantity of customers and opening hours by the choice of your location. As is the case of a CBD space. Which is why the location of your hospitality business is critical to your success.
You can read more about the common mistakes people make in their hospitality business here and my commercial builders’ top tips here.