SITE SELECTION

Report in MBA 600 Advance Food and Beverage Service

Prepared by: Maryam Gela A. Garcellano

MBA THM 1
 LEARNING OBJECTIVES
• Determine the ideal site for your restaurant.

• Identify and discuss the factors to be considered in

selecting a perfect location.

• State the pros and cons of buying versus leasing for

your restaurant.

• Discuss the evaluation an existing restaurant

operation.
 HOW TO BUILD A SUCCESSFUL
RESTAURANT

• the CONCEPT (market trends for menu)

• SITE SELECTION (location)

• The FEASIBILITY STUDY( later business plan)

 IDEAL RESTAURANT LOCATION

a.The concept should fit the Location.

b.The Location match the concept.

c.The Location should appeal to the Target

Market.
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Target Market
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Labor Cost and the Minimum Wage
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Access
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Proximity to Suppliers
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Competition
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Visibility
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Size Matters for Future Growth
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Health Regulations and Zoning
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Safety/Crimes Rates
 ENVIRONMENTAL ANALYSIS
FOR YOUR RESTAURANT
• Cost of the building
 WHAT IS BUYING?

• to acquire possession, ownership, or

rights to the use or services of by
payment especially of money
 ADVANTAGE
BUYING A PROPERTY

• With fixed rate mortgage, your monthly

repayments will be predictable.
 ADVANTAGE
BUYING A PROPERTY

• You will gain equity in your property and

over time, your property may double or even
triple in value.
 ADVANTAGE
BUYING A PROPERTY

• Your mortgage repayment is likely to be

similar to or less than a rental payment on
the same property
 ADVANTAGE
BUYING A PROPERTY

• you have control over what alterations you

want to make to your property
 ADVANTAGE

BUYING A PROPERTY

• you may be able to sublet any free space,

reducing your monthly repayments and
allowing you to generate extra income
 ADVANTAGE

BUYING A PROPERTY

• You’re in charge and don’t have to deal

with the potential hassles of a landlord or
property manager.
 ADVANTAGE

BUYING A PROPERTY

• interest payments on a commercial

mortgage are tax-deductible
 ADVANTAGE
BUYING A PROPERTY

• as your business grows, you may be able to

extend your existing premises, avoiding
relocation costs
 DISADVANTAGE

BUYING A PROPERTY

• you'll need to come up with a substantial

mortgage deposit.
 DISADVANTAGE
BUYING A PROPERTY

• There may be some sacrifice on location

desirability, because many of the prime
locations may be available for lease, but not
for sale.
 DISADVANTAGE

BUYING A PROPERTY

• If you own premises, you may find it

harder to relocate your business, because
selling business premises is a complex and
sometimes lengthy process.
 DISADVANTAGE

BUYING A PROPERTY

• You’re in charge and will be the one

responsible for all maintenance and
repairs that a commercial landlord would
normally handle for you.
 DISADVANTAGE
BUYING A PROPERTY

• Any fall in the value of the property will

decrease your capital.
 WHAT IS LEASING OR RENTING?

• A compensation paid by a tenant (or

lessee) to the property owner (or lessor)
for use or occupancy of a property.
 ADVANTAGE OF RENTING A
PROPERTY
• Flexibility of renting business premises.

• Financial benefits of renting business

premises.

• Maintenance of rented business property.

 DISADVANTAGE OF RENTING A
PROPERTY
• Paying Rent Is Less Stable And Less
Economically Viable

• Forced Relocation Can Stunt Business Growth

• You Miss Out On The Economic Value of

Owning Your Space
 DISADVANTAGE OF RENTING A
PROPERTY
•Your Workspace Is Not Yours To Fully
Customize

•You Miss Out On Leasing Opportunities

Of Your Own
 BUILDING NEW RESTAURANT
VS. BUYING AN EXISTING RESTAURANT
Buying an existing restaurant is a major
investment. In many ways, it is more
complicated than opening a new one.
New restaurants face specific
disadvantages: no established clientele, no
reputation, no staff. Buying an established
business, however, comes with a host of
challenges and practical pitfalls to (hopefully)
avoid.
 ADVANTAGE OF BUYING AN
EXISTING RESTAURANT
• There are little to no start-up costs.

• Existing inventory and receivables.

• The ability to jump-up the profits right away

• All necessary registration and paperworks

 DISADVANTAGE OF BUYING AN
EXISTING RESTAURANT

• Higher cost than starting a business

• Hidden problems of the business
• Possible uncollectable debts
• Existing contracts that you have to see
to the end
 STARTING STEPS IN
BUYING AN EXISTING BUSINESS
• Step 1: See what you want

• Step 2: See what you are made for

• Step 3: See whether the business suits your

needs

• Step 4: See whether it seems worth it

 INTERMEDIATE STEPS
IN BUYING AN EXISTING BUSINESS
• Step 5: Become diligent

• Step 6: Determine the value (capitalized earning approach,

cash flow method, excess earning method, tangible assets method, value of
specific intangible assets method)

• Step 7: Doing deeper research

• Step 8: Hire professional help

 CLOSING STEPS
IN BUYING AN EXISTING BUSINESS
• Step 9: Review the adjusted purchase price

• Step 10: Review the necessary documentation

• Step 11: Have a professional handle the rest

• Step 12: Finalize the deal

Question?
Thanks you for listening!