Food Business in Orange County CA : Location and Other Factors to Consider

February 2, 2020 Madelina Lenore 0 Comments

While many food service businesses, particularly restaurants, have recently closed shop in Orange County, many are simply transferring to a new location; or still looking for the right location in which to transfer their business.

Some still operate under the same name since their current thrust is to grow the number of loyal and regular customers patronizing their food business. Others though, prefer to start fresh by rebranding and overhauling their business model after understanding why, where and how their business failed.

Time and again, business consultants have given advice that location is the first and foremost to take into account when opening a startup enterprise. Yet nowadays, it is also important to weigh whether it is wiser to lease or purchase a property in a target location.

To Lease or To Purchase a Property in a Targeted Business Location?

When deciding whether to lease or buy a property in a location ideal for one’s food business, an Orange County mortgage broker can provide instant assistance by using a rent vs. mortgage calculator. The calculated result determines, which of the two options is a cost-saving approach.

Although lease contracts are easier to land, owning the property will prove to be better in the long run. First off, the sum of all money put into the property will be recognized as the value of a real asset owned by a business. Unlike rent, which is directly recognized as a monthly expense that will eat up much of the monthly income.

A tax consultant will likely support the option to purchase, in light of the tax breaks offered by the new Tax Cuts and Jobs Act. The new tax law allows business owners in any industry and of any structure (single proprietor, partnership, LLC, S-Corp or C-Corp) to use the entire cost of a major asset acquisition in reducing their gross profit on the very year of purchase.

That way, business owners will be encouraged to make additional investments for expanding their operations, which at the same time, will reduce their taxable income for the year.

What Makes a Location Ideal for a Food Business

Generally, locations where there are high volumes of foot traffic, found usually in retail centers, are the most ideal locations for food businesses.

However, the reality is that renting a commercial space is the only option available, which is too capital intensive, especially for startup entrepreneurs. Besides, unless the food service already has an established clientele or offers a food product or a food service that has a high demand in the location, putting money in a commercial space in a prime business venue is a risky venture.

The best approach to determining whether a location has great potential for a business is to know and understand the demographics and characteristics of the consumers in the business location.

In continuing to cite Orange County as an example, in which a population of about 3,010,232 resides, there are certain indicators to take into account when determining the viability of a location for your food business.

Although 39.9 percent of the OC population are white, a great majority is made up of other ethnic or racial group. Thirty-four percent (34.2%) of the population are Latinos while 20.7% are Asians, while the most common jobs held by OC residents are related to Sales, Management, Administrative and other Office Support occupations

Those are only examples of indicators to consider when making a feasibility study about the appropriateness of a location; of whether your food product has great potential in relation to the demographics, as well as the spending capabilities of the consumers in a prime commercial area, or elsewhere.