More and more restaurants are moving towards suburban areas as opposed to central Kuala Lumpur locations that were previously popular. — FILEPIC
A few weeks ago, I walked into a stunning little café serving delicious, well-crafted meals. The restaurant was in a suburban area surrounded by car workshops and office spaces and seemed a little out of place. But for the owner, this location made perfect financial sense.
“Just across the road, the rental is three times more. I wanted the area, but the price had to be right too, so I chose this spot which is a stone’s throw away and much better value for money,” he said.
Choosing a location to open a new restaurant in is probably one of the most important decisions a restaurant owner can make. Often, locations can make or break an eatery from the get-go.
“I think the success of a restaurant is all down to location. People can say the food is the best, but very often, it is the location that is the best,” says Nicholas Thang, a restaurant consultant and the owner of steak-centric eatery The Honest Butcher.
Thang says he has learnt lessons through experience and consequently has figured out that sometimes opening in a more remote location is worth it if people are willing to travel for the food. — FILEPIC
So just how do restaurant owners make this hugely important decision?
Market data
For many restaurant owners, the precursor to choosing a restaurant location is to study the area and analyse competitors, general footfall and market demographic. This will give them a broader picture as to whether a particular restaurant will work in that area or not.
“Market intelligence is useful, especially if it’s a mature location. Then you can look at what other outlets there are, then extrapolate to see if there is a similar price point and similar sophistication of clientele. Once you see similar outlets that are doing well, it’s normally a strong sign,” says Wong Yin-How, the founder of the Tinkerman Collective, which owns restaurants like Vintry, Proof and Stoked, to name a few.
Wong took a leap of faith when opening his latest restaurant in TRX as even though the location is untested, he believes in its potential. — FILEPIC
Wong’s views are echoed by Kai Zen Au, the managing director of the Kenny Hills Hospitality Group, which runs the Kenny Hills Bakery outlets.
“Yeah, I think across all the brands that we operate, we are in the middle to upper category, so we look at location data in terms of consumer spending, consumer income, what kind of customers come across to the location. So this could be family size or what ethnic group is prevalent in an area. But mostly, I think we try to stay away from mass areas and look for more niche areas,” he says.
Concept
Often, a concept is the first thing F&B operators come up with. Then they work to find a location and demographic of consumers that will appreciate what’s on offer. Fundamentally, there is no point having a restaurant with great food if the denizens of that area are unwilling to try it or spend money on it, which is why a location that matches a concept is hugely important.
Once a restaurant has figured out a concept (like focusing on steak), then the next step is to identify a location that fits this particular concept. — FILEPIC
“You might have a concept that is compelling, but you couldn’t introduce this concept in Kampung Baru or something, because it may not be compelling there, so then it becomes ‘I have a concept, where can I implant it?’” says Marcus Low, the owner of neighbourhood restaurant Table & Apron and Basic Wine Store.
Low says sometimes a concept needs to be tweaked in order to suit a certain location. He cites the example of his own eatery Table & Apron, now a hugely successful restaurant. Low opened the restaurant in 2014 in Damansara Kim off the back of a pop-up restaurant he did which was very popular. When he opened the full-fledged eatery though, he eventually realised his concept was far too convoluted for people to fully embrace it.
“In the beginning, we were a café by day, a restaurant by night and we served brunch on weekends. It was very confusing for diners, so many people didn’t know we served food because they thought we were a bakery and conversely, people would come on weekdays and say ‘Where is the big breakfast?’
“Inexperienced restaurateurs would say we failed because of the location but actually it had nothing to do with the location. The minute we were more disciplined and started becoming a proper restaurant, everything turned around,” he says.
Low says once he figured out how to tweak the concept at Table & Apron, it went from unsuccessful to successful, despite staying in the same location. — TABLE & APRON
Low says that for him, having a concept is only one part of the equation. The other part is looking at how that restaurant concept serves the community in that particular neighbourhood.
“A lot of people said ‘Why open Basic Wine Store in Mont Kiara?’ And for me, it made perfect sense because people in that area have travelled all over the world and would probably appreciate the wines.
“And it’s the same thing with Table & Apron, I asked myself – how does this restaurant relate to the existing community and what am I bringing to the table?” he says.
Rental
Some locations are chosen entirely for financial reasons. A large part of the monthly expenses involved in running a restaurant is based on rent, which can eat into overall profits. For many restaurant owners, crunching the numbers can entail choosing a location that is further away but makes more financial sense. Of course, this also has to make real-world sense.
The Honest Butcher is smack dab in the middle of an industrial area. — THE HONEST BUTCHER
“I think it depends on what you are serving. Like The Honest Butcher is a destination place, people find us online and come to us, so it doesn’t matter where we are,” says Thang.
This is part of the reason why Thang decided to open The Honest Butcher in an industrial area in Sunway Damansara where he has a huge lot, which also means he has plenty of space to store meat (he is also a meat supplier).
“In terms of rental and the size of the space, for about RM12,000 to RM18,000 in this area, you get about 7,000 square feet of space. In Bangsar, the same rental will get you about ¼ this size and in TTDI, you would get about 1/3 the size,” says Thang.
Thang does say though that restaurant owners have to be confident that they can generate robust sales if they decide to save money on rental and open in lesser-known areas.
Thang’s expansive restaurant is possible, simply because he opted for an area where rental prices are significantly lower. — THE HONEST BUTCHER
“New entrepreneurs who don’t have the budget will try to open in the middle of nowhere to save RM4,000 a month in rental. But what they don’t realise is that RM4,000 divided by one month works out to RM330 per day.
“So if you open in a central location, you can probably make it work if you make at least RM350 extra a day. On the other hand, a cheaper area can be far more profitable if you are able to draw in the crowds every day. So you have to do the research, run the numbers and make an informed evaluation,” he says.
Faith in new locations
Sometimes opening a new restaurant in an untested location all boils down to a gut feeling and blind faith.
As the brands under the Kenny Hills Hospitality Group tend to cater to a higher-end market, Kai says their market research is key to identifying areas to open in. — FILEPIC
Wong for example has just opened a new grill and deli in the TRX Exchange in central Kuala Lumpur and although the location is untested, he believes in its potential.
“Opening the new restaurant in TRX is a very location-driven decision. I feel that this is a location that we need to be in because this will likely be a premiere mall in Malaysia. So I thought it would be good to plant a flag here and I feel confident about the positioning so that made me keen to come in.
“So with green locations like TRX that have no track record, there is a certain level of faith involved,” says Wong.
This leap of faith is something that Kai also decided to take when he recently opened the brand new Kenny Hills Bakers – also at TRX.
Kai chose the rooftop park of the new TRX to launch the new Kenny Hills Bakers outlets as even though the rental is expensive, it suits the brand’s demographic of customers. — KENNY HILLS BAKERS
“Fundamentally we don’t like going into malls, but there are a couple of good locations like the rooftop park at TRX. There are over 10 acres of park area here and we chose to put two restaurants that overlook the park. These are the only restaurants that overlook the park so rental is naturally very high, but I think this location suits our brand,” says Kai.
Lessons learnt
Experienced restaurant owners will learn lessons along the way and some of these lessons become cautionary tales of what not to do when opening a new outlet. Thang for instance says he would never, ever consider opening a restaurant in an office building for various reasons.
“The rental is often low so it makes sense to open a restaurant but I realised one thing: people don’t like to eat in the same place every day. This means you can’t charge more than RM10 to RM20 for meals. Also most office workers prefer to get out of the building on Fridays, so really you only make money four days out of the week, because no one wants to come to an office building on weekends.
Low believes that restaurants should enhance and enrich existing communities. — TABLE & APRON
“So eventually you realise having a restaurant in an office building isn’t really that great because you only make money on weekdays when it’s raining and people don’t want to go out,” says Thang.
Thang also says he has learnt the hard way that opening a restaurant in a college is a no-go.
“College students are always on holiday, so you pay rent for 12 months a year, but students only eat there for like nine months in the whole year!” says Thang.
Location trends
In the past, many restaurants in the Klang Valley were clustered around central Kuala Lumpur or other “strategic” locations such as Bangsar or Damansara Heights. But as the city has grown, so too has the appetite for diversity in different locations. In line with that, there is now a growing shift towards up-and-coming areas that were previously not considered prime locations.
“Yeah, I think a lot of restaurants are moving towards the suburbs because people are moving away from the cities and young families are blossoming in areas away from the centre – like Old Klang Road and Subang. So more restaurateurs are looking at the outskirts because rental is a lot lower so there are less risks,” says Kai.
(Left) Thang says while the food at a restaurant might be good, having a good location is paramount to the success of a restaurant. — FILEPIC
Kai’s views are echoed by Low who says that he has seen a shift towards the suburbs that has blown up as popular restaurants have emerged in quieter neighbourhoods.
“I think a lot of restaurants are starting to move out of more well-known areas. It might have all started when MyBurgerLab opened in SeaPark, Petaling Jaya in 2012. Nobody thought it would do well, but it did.
“So I would say if the food you are offering is more casual or mass-market driven, then the suburbs is the best thing because why would you go to a central area where the rental is so high?” says Low.
Wong meanwhile says the move towards suburban areas has a lot to do with rental prices.
“It’s all a matter of rent. You might get less footfall, but there is a much lower entry price. Ultimately though the most critical thing with F&B is that you need to survive the initial period of six to 12 months. It’s like a plant – the roots need to settle in and then the plant can grow,” says Wong.
