How Google determines local ranking
Local results are based primarily on relevance, distance, and prominence. These factors are combined to help find the best match for your search. For example, Google algorithms might decide that a business that’s farther away from your location is more likely to have what you’re looking for than a business that’s closer, and therefore rank it higher in local results.
These 4 paragraphs are from a web page entitled Improve Your Local Ranking on Google.
Relevance refers to how well a local listing matches what someone is searching for. Adding complete and detailed business information can help Google better understand your business and match your listing to relevant searches.
Just like it sounds–how far is each potential search result from the location term used in a search? If a user doesn’t specify a location in their search, Google will calculate distance based on what’s known about their location.
Prominence refers to how well-known a business is. Some places are more prominent in the offline world, and search results try to reflect this in local ranking. For example, famous museums, landmark hotels, or well-known store brands that are familiar to many people are also likely to be prominent in local search results.
Prominence is also based on information that Google has about a business from across the web (like links, articles, and directories). Google review count and score are factored into local search ranking: more reviews and positive ratings will probably improve a business’s local ranking. Your position in web results is also a factor, so SEO best practices also apply to local search optimization.