A restaurant is one of the most capital-intensive small businesses you can open in Australia. Fit-out costs of $200,000–$600,000 are common. Lease terms of 5–10 years are standard. This means the location decision is not just the most important choice you make — it is one you will live with for the entire first chapter of your business.
60%
Of restaurants close within 5 years
$380K
Average Australian restaurant fit-out cost
8–10%
Target rent-to-revenue ratio for restaurants
Why restaurant location analysis is different from café analysis
Restaurants trade on different dynamics to cafés. Where a café depends heavily on commuter foot traffic during narrow morning windows, a restaurant revenue is more spread across lunch and dinner sessions, more dependent on destination traffic and less on walk-past volume. This changes how you evaluate a location.
For restaurants, visibility and accessibility matter more than raw pedestrian counts. Parking proximity, public transport access, and whether the suburb has an established restaurant culture are often more predictive of success than street-level foot traffic alone.
The four location types and which suits your concept
Restaurant location types
Foot traffic for restaurants: what you are actually measuring
When to count foot traffic for a restaurant
Tuesday 12:00–2:00pm: Weekday lunch benchmark Thursday 6:30–8:30pm: Weekday dinner benchmark Saturday 12:00–2:00pm: Weekend lunch benchmark Saturday 6:30–8:30pm: Weekend dinner benchmark Visit on at least 2 of these 4 windows before committing to any site.
Competition analysis for restaurants
Restaurant competition analysis requires more nuance than café competition analysis because concept differentiation matters more. Four Italian restaurants within 300 metres is a problem. One Italian, one Thai, one burger bar and one Japanese within 300 metres of your Italian concept is a different situation — they are all competing for dinner dollars but not directly competing for your specific customer.
Demographics: building your revenue model from suburb data
Restaurant price point by suburb income
Median income $130K+: Fine dining ($100–$180pp) viable Median income $90K–$130K: Modern casual ($60–$100pp) strong Median income $70K–$90K: Casual dining ($35–$65pp) optimal Median income $55K–$70K: Value casual ($20–$40pp) necessary Median income below $55K: QSR and takeaway dominant
The 5-year lease trap: how to protect yourself
Non-negotiable lease protections for restaurants
Personal guarantee: cap at 6–12 months rent, not the full lease term 12-month break option: at year 2 or 3 with 3 months notice Rent review method: CPI-linked, not fixed percentage above CPI Fit-out contribution: negotiate minimum $50K for a raw shell Exclusion rights: prevent landlord leasing adjacent space to direct competitor
FAQ: restaurant location analysis
What is the most important factor in choosing a restaurant location?
Access and visibility combined with rent affordability consistently predict success more reliably than raw foot traffic alone. A slightly lower foot traffic location with easy parking, good visibility and affordable rent will outperform a high foot traffic location with difficult access and punishing rent.
How many competitors is too many for a restaurant location?
Direct competitors (same cuisine, similar price point) — more than 3 within 300 metres is a yellow flag. More than 5 is a red flag unless foot traffic is genuinely exceptional. General dining competition at higher density can actually indicate a strong dining precinct.
Should I open a restaurant on a main road or a side street?
Main road locations offer visibility and walk-past traffic but typically carry higher rent and through-traffic character. Side street locations often have lower rent, a more local customer base, and a more intimate atmosphere that suits casual and fine dining.
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