Best U.S. cities for starting a restaurant

Let’s toast to Texas

Even if your new restaurant offers a stellar menu, a hardworking staff and a strong business plan, without the perfect location, your dining room still might be empty come Saturday night.

For aspiring restaurateurs who are seeking the right location, look no further. NerdWallet examined U.S. Census Bureau data on 530 cities that each have a population of 50,000 or more. We found the top 10 cities to start a restaurant based on the success of local economies and demand for new restaurants in those areas.

texas-flagWhat did we find? Everything really is bigger in Texas, especially the restaurant scene. Four cities in the Lone Star State cracked the top 10 list. No other state had more than two cities represented on the list. One feature that nearly every place on this list had in common was proximity to a major metropolitan area. Some of the best places to start a restaurant are in the suburbs of Dallas, Austin, Atlanta, San Jose and Nashville.

Some of the top cities on the list experienced big increases in population over a three-year span, such as Fishers, Ind. In one Texas city, Cedar Park, the number of restaurants doubled when the population surged over 20 percent.

With more people, there are more mouths to feed.

 

In addition to a great location, successful restaurants know how to get funding to launch and grow. Finding the right business loans can be the difference between having a business that flourishes and one that shutters. Once you have financing secured, consider one of NerdWallet’s top 10 cities to start your restaurant.

Top 10 cities for starting a restaurant

Rank City Median annual income in 2013 Median annual income growth 2010-2013 Restaurant sales per resident Restaurant growth 2002-2007 Payroll as a % of revenue Restaurant wage growth per employee
#1 Cedar Park, TX $55,933 11.40% $1,125 107.89% 25.52% -5.85%*
#2 Mission, TX $37,421 12.87%* $1,146 55.56% 23.53%* -2.59%
#3 Franklin, TN $59,338 7.24% $3,326 49.28% 29.86% 1.63%
#4 Smyrna, GA $50,677 2.45% $2,763 25.20% 27.85% 1.46%
#5 Round Rock, TX $46,743 10.94% $2,421 49.64% 27.72% 14.23%
#6 Frisco, TX $71,839* 9.05% $2,297 138.89%* 29.04% -2.60%
#7 Alpharetta, GA $65,460 4.78% $6,081* 42.44% 30.60% 5.18%
#8 Fishers, IN $61,803 2.31% $1,566 47.56% 29.23% -1.49%
#9 Milpitas, CA $60,991 9.95% $3,186 13.68% 28.92% 0.90%
#10 Southaven, MS $42,381 3.36% $2,482 83.64% 27.44% 4.73%

* Highest rank in this category on the top 10 list

Methodology

NerdWallet analyzed 530 U.S. cities with populations of 50,000 or more using data from the U.S. Census Bureau’s American Community Survey and the Economic Census.

Restaurant demand, which makes up 60 percent of the overall score, is based on seven metrics weighted at 8.6 percent each. Those metrics are population growth from 2010 to 2013, population density, percentage of residents ages 35-54, median annual income, median annual income growth, sales in restaurants per resident and number of new restaurants opened from 2002 to 2007.

Operating conditions, which make up 40 percent of the overall score, are based on three metrics, each weighted at 13.3 percent of the score. Those metrics are payroll costs as a percentage of revenue, restaurant labor cost growth per employee and median monthly housing costs.

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Anna Helhoski
Anna Helhoski is a staff writer at NerdWallet, which provides clarity around decisions that help you start or grow your small business. NerdWallet aims to provide clear, unbiased information, entrepreneur-focused advice, and tools for small-business loans, tax and legal issues. They also connect you with experts who can answer questions about growing your small business.