What are some of the top location and real estate considerations when adding a new restaurant?

Many factors and decisions go into scouting and selecting the best location for a new restaurant. It involves detailed research and market analysis that increasingly uses sophisticated technology for territory mapping. Choosing the right location for a new restaurant can be the difference between it being a success or a failure.

Franchise Update asked several multi-unit franchisees about their top location and real estate considerations when adding a new restaurant. Their answers reflected many of the important aspects involved in site selection. While there is considerable research in the due diligence process, several franchisees recommended inspecting the locations in person in advance to get the best feel for all these factors.

Starting with the physical location of a potential property, some primary considerations include traffic patterns, accessibility, and visibility of the restaurant. After drilling down further on a specific location, franchisees said they must think about build-out costs, space for parking, and logistical questions of a standalone unit versus an endcap, and the option for a drive-thru. With downtown spaces, factors such as foot traffic and surrounding businesses become major considerations.

Beyond the physical location, franchise brands also analyze the customer demographics, which include local family income levels and whether the space is in an up-and-coming area with the potential for growth. New areas should also have an ample employee pool to be able to support restaurant operations after it is open for business.

In addition to conducting the proper research on a new location, being able to add more units requires funding. In this week’s Franchisee Bytes section, we asked multi-unit restaurant owners about their best sources of capital expansion. Their answers varied based on their experience in franchising, the number of units, and personal preference. Their approaches ranged from relationships with local lenders, a line of credit, and the best way to leverage debt. See their answers below for more insights about preferred sources of capital expansion.

Ron Parikh

Company: CMG Companies
Brands: 60+ Little Caesars, 190+ Sonic, 160+ KFC/Taco Bell, 60+ Rent-A-Centers, 40+ Ace Hardware, 30+ American Freight
Years in Franchising: 25

We always start with one question: can this site generate strong sales and operate efficiently? That requires looking beyond just demographics or traffic counts. From there, we evaluate build-out costs, rent, and how the location stacks up against others in the market. Our internal benchmarks help us assess performance potential, but even great-looking sites can come with surprises like zoning issues or flawed site plans. That’s why we always visit the market and spend time there before making a decision.

Another major factor is staffing. Even the best real estate won’t work if you can’t find strong people to run it. Labor remains one of the biggest challenges across the board, regardless of how many units you have. Ultimately, there’s no single factor that makes a site right. It takes a combination of smart analysis, real-world context, and a long-term mindset to make the right call.

Steve Zahn

Company: Tulsa Development Incorporated
Brands: 7 The Big Biscuit, 2 Sonic
Years in Franchising: 30

We evaluate sites through a few key filters:

• Traffic and accessibility: High visibility, easy ingress/egress, and strong daily traffic patterns.
• Demographics: Families, commuters, and daytime population for breakfast/lunch concepts.
• Competitive landscape: We look for gaps, which are areas with demand but limited breakfast or QSR options.
• Co-tenancy and surrounding development: Strong anchors, stable retail, and long-term growth in the trade area.
• Operational fit: Parking, drive-thru feasibility, kitchen layout demands, space for a patio, and a strong labor pool.

Joe Saldana

Company: JKSK
Brands: 5 Smoothie King
Years in Franchising: 5

We focus heavily on growing communities and the competitive landscape in the surrounding area. An endcap with a drive-thru is often ideal, but it’s equally important to assess overall visibility, accessibility, and the balance of both vehicle and foot traffic. We also spend time on-site at potential locations to observe real traffic patterns during peak and non-peak hours, across different days of the week. This firsthand approach provides valuable insight into guest behavior and helps us determine whether a location truly has the demand, convenience, and exposure needed for long-term success.

Dan Sacco

Company: Central Coast Hospitality, Inc., dba Pancheros Mexican Grill
Brands: 3 Pancheros, 3 Your Pie Pizzerias
Years in Franchising: 21

When looking for both Pancheros and Your Pie locations, we consider traffic counts, population density, high visibility, accessibility, and growth potential of the area. Since our locations are franchises, we stress great service and consistently deliver the menu that is set by the franchisor. We also run a fundraiser program in all locations to ensure that we have a community presence.

When evaluating potential sites for Pancheros specifically, we always start by looking for areas that will be receptive to the brand, where we are not oversaturated but where nearby communities already recognize us. Operationally, our locations are typically around 2,400 sq. ft., which gives us the back-of-house we need while still supporting dine-in options. We like to open locations in growing, family-oriented areas and look forward to seeing more Pancheros pop up throughout the Midwest and Northeast this year.

Stuart Ottinger

Company: OPG Holdings
Brands: 5 Another Broken Egg Cafe, 1 Mercy Kitchen, 1 BJ’s Pizza, 1 Palmyre
Years in Franchising: 23

The first thing we look at is competition, especially as the breakfast and brunch segment continues to grow and more brands enter the space. From there, real estate decisions come down to understanding the market. We evaluate population density, household income, and whether a site is part of a high-visibility, front-and-center development that naturally drives traffic. In suburban markets, parking and ease of access are critical. In urban, high-traffic areas, like our downtown Nashville cafe, the focus shifts more toward foot traffic, nearby hotels, tourism, and overall activity levels. Regardless of the market, we prioritize locations with strong access, high traffic, and the right demographic profile to support the brand.

Steven Young

Company: MLY Investments
Brands: 12 Freddy’s Frozen Custard & Steakburgers
Years in Franchising: 11

Outside of the typical important metrics such as traffic counts, demographics, and trade, we tend to seek locations that have great energy. Is there a buzz to the area that carries through our volume periods, or is it only busy because of traffic? Do people come here as a destination, or is it simply part of their daily commute? How involved are the people in the surrounding community? Do they like to get out and about for things like events and fundraisers? After we find a site that hits the general metrics we like to see, we want to know how that location feels as if we were a true local.

Franchisee Bytes

What are the best sources of capital expansion?

Early on, we made the decision that we would try to expand our portfolio through existing cash flow and have very little debt, which we’ve been able to accomplish.
-Tom Lovelace, Owner/President, Tom Lovelace Group, 96 Papa Murphy’s

Instead of taking a large profit in the early days of our business, we reinvested our earnings back into the business. That way, we limited our debt.
-Jerome Johnson, Multi-Unit Franchisee, John Cove Management and Jbar Inc., 4 Sonic Drive-In, 10 Dunkin', 4 Baskin-Robbins, 1 Jersey Mike's Subs

Debt. We have good relationships with our lenders. We don’t pursue sale-leasebacks, but I know they can be a powerful growth tool as well.
-Alex Karcher, Operating Principal, JCK Restaurants, 61 Carl’s Jr., 11 Jersey Mike’s Subs, 8 The Human Bean, 8 Dave’s Hot Chicken, 1 Hawaiian Bros Island Grill

I've found being given a business line of credit to be incredibly helpful as it offers the flexibility to draw as little or as much as needed. Unlike a traditional business loan, a line of credit allows you to withdraw funds when necessary.
-Yousuf Nabi, Owner & CEO of Gotham IP Inc., Gotham Cookies Inc., DBA Mrs. Fields Cookies, 10 Mrs. Fields, 10 Sbarro, 4 TCBY

A combination of private equity, family office, REITs, and traditional banking partners.
-Amol Kohli, Managing Partner, Legacy Brands International/Chairman of the Board, Brix Holdings, Franchisee: 63 Orange Leaf, 60 Clean Juice, 36 Red Mango, 6 Humble Donut Co., 3 Souper Salad, 1 Smoothie Factory + Kitchen, Franchisor: 61 Friendly’s

If I can’t do it myself, I have two strong local banking relationships that help with funding.
-David Weeks, CEO, The Bean Team, 9 Barberitos, 8 Dunkin’, 4 Newk’s Eatery, 1 Dunkin’/Newk’s co-brand

I rely on Western Franchise Financing, a bank-owned direct lender based in North Dakota. It specializes in franchise financing, making them an ideal partner. Typically, I finance 50% of build-out costs through WFF and use cash flow for the remainder. Their expertise and flexibility have been crucial to our expansion.
-Jacob Webb, Franchise Owner, MPUT Holdings LLC, 22 Marco's Pizza, 4 Tropical Smoothie Cafe

We primarily use internal capital along with traditional financing. Both allow us to scale responsibly while staying true to our mission.
-Lawrence Kouri, Multi-Unit Owner-Operator, Dave’s Hot Chicken, 22 Dave’s Hot Chicken

The best sources have been local lenders who support community-based businesses along with traditional commercial auto loans tailored to our mobile food truck model.
-Yunus Shahul, Franchise Owner, Smartfoods Group, 24 Cousins Maine Lobster, 1 German Doner Kebab

A successful current business leads to resources for additional business. We have also worked with two capital partners, and they have helped fund growth.
-Chad Given, Brand President, Sizzling Platter, 361 Little Caesars, 107 Little Caesars Mexico, 185 Wingstop, 92 Jamba, 33 Jersey Mike’s Subs, 31 Dunkin’, 7 Sizzler, 5 Red Robin, 1 Cinnabon