I think you should consider how your users are interacting with your website and how they search for your services/products/locations and follow that. For example, Yelp is focused on local reviews. People will filter first to their city, then the category naturally. You would never filter down to restaurants first, because if you're in Huntington Beach, CA you really don't care what's in Portland, OR. If location is secondary to your product, then it makes sense to start with the category. For example, let's say you sell ATVs and other off-road vehicles and gear, but some showrooms only have ATVs while others also carry dirt bikes. Customers who are looking for a dirt bike care more about reaching a showroom with dirt bikes, so that category structure would be preferable.
Note that I'm assuming in both of the above examples that your navigation is following the structure of your website for usability purposes. In terms of structure, one way is not inherently better than the other from a ranking/algorithm perspective, but if your structure is confusing it can be detrimental to SEO. For example, outreach is a lot harder if you have a garbage navigation that contributes to poor user experience on your website. Any piece of Google's algorithm that measures user satisfaction with your website (Rank Brain, pogo sticking, etc.) will either directly or indirectly affect you depending on how user friendly your website is.
One last thing: in both instances you have the geography in the URL, so if you're hoping for a boost for local phrases from an exact match URL I think you're already tapping that. EMDs are nowhere near as effective as they were in years past, so I wouldn't make that my focus.