A number of restaurants are located on busy streets which are convenient for motorists or perhaps on a street close to a high density of shops and business organisations, with heavy traffic during lunch time or after work hours. An often overlooked issue, is the road traffic system and whether the restaurant is on a two-way street or a one-way street. Also it really helps to find a location closer to a subway or having a walking access to a public transport. As this will act as a huge money and a time saver for the restaurant customers. Setting up a hotel near an airport will help you gain business from international customers too.

Obtain a good understanding of who you want to treat as your target audience. For e.g. if you are planning on setting up a fine dining restaurant, you should set it up close to a place where loaded people reside or usually hangout at. On the other hand if you are setting up a casual dining restaurant, and consider youngsters as your prime customers, then choose a location closer to any malls, colleges, etc.

Obtain an idea of how the society is progressing through the ages to identify the trends, styles, modern likes, dislikes, expectations, etc. The best place to locate a restaurant is in an area with a high population (or that is easily accessible). One way to establish the population base of an area is to check the census .

Choosing a location close to any religious or tourist spot is an added advantage as it helps you gain a lot of loyal customers who come to those religious spots almost regularly. This also increases your chances of making a few extra dollars from international visitors.

Footfalls helps to increase sales and drive profits up. This makes for a great contribution in understanding the probable profits and expense. More is the foot fall , better it is for the business. Knowing your hourly, daily and weekly retail footfall can help you gain that extra edge to target peak hours, convert browsers into customers and ultimately optimize business performance.

Its very important to get a good understanding of downsides of choosing a particular location before actually choosing that location. Negatives can be anything such as bad odour in the vicinity due to any reason, presence of sewer close by, area experiencing water cuts regularly, area experiencing power cuts regularly, presence of a butcher house nearby, etc.

Its a not absolutely written in books but you should plan on one place for every three seats in the restaurant. Ideally, a restaurant should have its own parking spaces for customers. If this is not possible, consider a location close to a good parking area or within walking distance and access to public transport. Also, if you are going to be open at night, take into consideration lighting costs.

References :

http://www.foodstart.com/7-things-to-consider-when-picking-a-restaurant-location