Top Urban Locations for Launching a Restaurant Business

The Exciting Risks of Starting a New Restaurant

Launching a restaurant is a blend of excitement and risk. Owners must craft a robust business strategy, curate a welcoming and efficient team, serve mouth-watering dishes, and sprinkle in a pinch of good fortune for the perfect recipe of success.

Choosing the Perfect Spot

Your restaurant’s location can make or break your venture. Dipping your toes into a crowded dining scene or a declining area is a surefire way to invite trouble for any new culinary establishment.

Hunting for Thriving Markets

Fortunately, some regions are witnessing an impressive growth in demand for new dining establishments, flourishing thanks to eager entrepreneurs. NerdWallet crunched the data to uncover these culinary hotspots across the nation.

Crunching the Numbers

The analysis considered 530 U.S. cities, each with at least 50,000 residents. Using insights from the U.S. Census Bureau, they calculated scores reflecting the appetite for new restaurants alongside the economic climates that could influence their success.

Demand Analysis: A Closer Look

To gauge demand, they dove into population dynamics, including growth and density, plus factors like median income levels, income growth rates, restaurant sales per person, and the emergence of new dining options.

Exploring Economic Conditions

For a comprehensive understanding of economic viability, factors such as payroll expenses, workforce growth, and housing costs were considered. For a detailed methodology overview, check the concluding section of the article.

Population Boom Fuels Restaurant Growth

Cities like Cedar Park, Frisco, Round Rock in Texas, and Fishers in Indiana have experienced remarkable population surges of nearly 10% or above within a three-year timeframe. This growth directly correlates to an increasing demand for restaurants. In Cedar Park, for instance, a staggering 20% population rise more than doubled the existing number of eateries.

Suburbs Evolve into Culinary Hotspots

Most of the top cities on this list are nestled within larger metro areas—Dallas, Austin, and Nashville, for instance—cities that are enjoying a food renaissance spilling over into their leafy suburbs.

Capitalizing on Growth: New Additions

Within the vibrant Greater Austin area, Cedar Park stands out as a rapidly expanding suburb where the restaurant scene has flourished. Over five years, the number of restaurants doubled, sparked by an influx of new residents. Noteworthy newcomers like In-N-Out Burger and Sushi Fever have made their debut in 2014, with expectations of continued growth in town.

The Influence of Heavy Traffic

In Mission, ample automobile traffic translates into bustling eateries. The Interstate 2 corridor has birthed numerous restaurants, including the fast-casual Freebirds World Burrito and the lively Tilted Kilt pub, strategically placed to attract customers traveling between Mission and McAllen.

Franklin: A Dining Delight

Located in the Nashville metro area, Franklin has become a culinary haven, inviting chefs from around the nation to stake their claim. With a median household income around $60,000, residents are keen to dine out while local restaurant sales soar to over $190 million annually, averaging about $3,000 spent per resident.

Transformative Growth in Smyrna

Once an unassuming suburb, Smyrna has transformed into a lively community, witnessing population increases from 2000 to 2012. This rise sparked a surge in dining options, with four new restaurants opening in just one month in 2012, including a thriving mobile food venture.

Round Rock: A Booming Restaurant Scene

As part of one of the country’s most rapidly expanding metro areas, Round Rock is seeing consistent growth, making it a magnetic market for new eateries. Residents are enthusiastic about welcoming fresh dining spots, including favorites from Austin, which recently expanded their presence here.

Frisco: The Gourmet Capital

Boasting some of the wealthiest neighborhoods in the Dallas-Fort Worth area, Frisco's restaurants enjoy booming business. Recent years have seen restaurant sales surpassing $200 million, with a staggering addition of 100 dining establishments over five years. The city's population jumped over 15% from 2010 to 2013, a recurring theme in the cities highlighted in this study.

Alpharetta: A Culinary Hub

Recently recognized as one of the nation’s top spots for business, Alpharetta proudly boasts almost 9,000 enterprises nestled in this Atlanta suburb. Dining revenue here exceeds $300 million annually, equating to roughly $6,000 per resident, trailing only Miami Beach.

Fishers: Affordable and Attractive

With appealing affordability, great schools, and proximity to Indianapolis, Fishers attracts a dynamic mix of young professionals and families. Nearly 35% of its residents fall in the prime dining demographic of ages 35-54, driving the average restaurant sales to over $100 million per year.

Milpitas: Growth Breeds Success

Milpitas, a rapidly developing city in the San Jose area, has seen delightful growth that benefits local restaurants, generating over $200 million in sales, translating to roughly $3,000 per resident. New culinary ventures, such as a casual dining chain, graced the city in early 2015.

Southaven: Hidden Gem of Mississippi

Southaven may not spring to mind when considering economic growth, yet it's experiencing a construction boom—both commercial and residential. With substantial developments like the Southaven Towne Center mall and a new outlet mall on the horizon, hungry shoppers promise to support the thriving restaurant scene, which already boasts annual sales exceeding $105 million.

Understanding the Demand and Conditions

NerdWallet conducted an in-depth analysis across 530 U.S. cities to highlight those ripe for new dining opportunities. With data from the U.S. Census Bureau and various metrics, they assessed demand for new restaurants and evaluated the necessary economic conditions to back them.

Scoring for Success

The demand accounts for 60% of the overall scores, integrating multiple metrics such as population growth, density, median annual income, and restaurant sales per resident over recent years. Meanwhile, the operating conditions contribute 40% of the overall score, focusing on payroll costs relative to revenue, labor growth per employee, and housing costs.

Acknowledging Contributions

This article benefited from the insights of NerdWallet writer Kelsey Sheehy, whose expertise aided in compiling this expansive overview.