Choosing the right location takes research and luck

When Giuseppe Amato walked into a bakery in Ocean View, Delaware, he saw a For Lease sign in the window. He chatted with the business owners, who said they had outgrown the space and were moving the bakery across the street. Amato, who with his wife was having a townhome built in the beach town, has been lamenting the lack of old school pizzerias in the area. So, he decided to do some research.

“I went online and looked at within three to five miles, new homes coming in and how quickly they were developing,” Amato says. “This area increased 12 percent in population since 2020 and is now increasing four percent a year.”

Amato, who opened Amato’s Pizza in 2022, liked the fact that Morning Buns Bakery was expanding, not failing, which hinted that it was a good location. The bakery owners sold him some prep tables and refrigerators, which helped defray costs. There is even a nearby church that opens its parking lot to pizzeria customers. “We have that rapport,” Amato says. “I donate pizzas to them.”

Due diligence is a crucial element of site selection.

Whether it’s the first location or the latest in a chain, it’s important to know details about the area and the building.

“It’s more of a risk mitigation process than a crystal ball,” says Troy Sproul, owner of Blue Square Pizza in Hopkinton, Massachusetts. Before he opened the pizzeria in 2022, he prepared a spreadsheet of 24 emerging markets near Boston. The spreadsheet includes key traits such as population, household income, age and percent of the population that is female, variables that Sprouls says correlate with higher sales on average.

The spreadsheet also listed each market’s existing artisanal pizza restaurants that would be competitors, which Sproul gave scores of 1 through 7, with 7 being most competitive. He then calculated the addressable market, or percentage of households earning more than $100,000 and therefore more likely to spend $25 on a pie. “What I really want to do is understand how many households have spending power to purchase my pizza,” says Sproul, who previously worked as regional operations manager for a regional pizza chain.

When he finished the spreadsheet and a business plan, Sproul contacted his broker, who sent him a Craigslist ad for a restaurant for sale in Hopkinton, 26 miles west of Boston and not on the spreadsheet. Sproul researched the location, applied the same variables, and found it rated favorably. There were only three pizzerias in the city of 18,600, the area had a high median household income, and 51 percent of the population was female. (Much of the data is available on the U.S. Census Bureau’s website, www.census.gov.)

Sproul recommends writing a business plan and researching markets. “You always learn something through a business plan,” he says. “You’re trying to take the emotion out of the decision.”

Even with emotion out of the decision, other qualitative factors can make a site favorable.

Esters Neighborhood Pub looks for buildings in family-friendly neighborhoods. The “casual beer and pizza joint” recently opened its third Denver-area location in a former restaurant in Wheat Ridge, a suburb west of Denver. “It starts with a cool old neighborhood,” says owner Paul Sullivan. “Once we saw the opportunity, we did run analytics in terms of demographics, population and restaurants.”

Sullivan says some of the restaurant’s food vendors supplied demographic information. The data confirmed his premise that the site would be a good one for a pizzeria where families could dine after kids’ soccer or other games, for a birthday party or to watch sports. After gutting the restaurant and installing new equipment and furnishings, Esters – the name refers to flavor compounds that result from the beer fermentation process – opened in 2022.

The three locations of Esters, all in residential areas, close at 10 pm. “I’m not sure our concept would do well in downtown Denver because we don’t stay open late,” Sullivan says. “It’s knowing your concept and being authentic about your concept and seeing where you fit.”

Some pizzerias fit best in busy areas.

“What we like to see is very visible locations, high traffic both foot and automobile, and very strong daytime and nighttime population density,” says Luigi Cardillo, co-founder and chief operating officer of Riko’s Pizza, which has four corporate-owned and four franchised locations in Connecticut, Florida and New York.

Riko’s Pizza uses market intelligence software that takes the demographic information of the brand’s current units to develop a profile for future locations. The analysis proves useful not only for new sites, but for relocating existing pizzerias. Riko’s Pizza, founded in 2011, moved its first three corporate locations from busy secondary streets to busier main roads and business doubled or tripled.

Cardillo recommends visiting the site 30 or 40 times, during different hours and various days. “The first time you visit on a Friday night and it’s hopping, you think this is the perfect spot,” he says. “Go the other days and see the traffic.”

Others maintain that the busiest streets are not the right fit. “In today’s world people are working from home, so it’s really about being in the center of the community,” says Cord Thomas, CEO of Pupatella, which has eight locations in the Washington, D.C. area and four in development. “Stay local. You know what works, you know the traffic patterns. That’s the community you will be in for the next 20 years.”

By focusing on a neighborhood instead of a busy downtown area, the pizzeria can get involved in community events, support local schools and learn the traffic patterns and preferences of the residents. Managing partner Michael Berger explains that Pupatella attracts people from three to five miles away, so it’s important for the pizzerias to be in neighborhoods. That’s in contrast to restaurants that open in large lifestyle centers, hoping to attract customers from five to 10 miles away, who are mostly just passing by.

“We prioritize small standalone buildings with accessible parking and convenience,” Berger says. One thing that’s changed lately is Pupatella is looking at smaller locations, 2,000 to 2,500 square feet instead of 2,500-plus square feet, as pick-up and delivery have increased.

Moving into former restaurants has not worked for Pupatella because they had to replace all equipment. “There are some cost savings initially, but you will pay for that down the line,” Berger says. “All of us need to be trying to make money from day one.”

NORA CALEY is a freelance writer who covers small business, finance and lifestyle topics.