News Courtesy of Yoast.com:
Adding a different location to your URL than your actual location
“Does it hurt your SEO? No, but it might hurt your visitors when they come and visit your site because they expect you to be in city A and you’re not. So, I’d always tend to go to the side of honesty: just say that you’re in the city that you’re actually in.
You’ll find that actually being close to the center of the city that you want to be found in is very important in terms of local SEO. It’s very annoying, but that’s how most of the local rankings work. So, don’t lie, put your real location in your website URL if you can. See how that reflects on people and just say on your page, “We’re very close to ‘whatever the name of the city is’…”, because that’s the honest truth that usually lasts longer than any tricks around that. Good luck.”
Ryan’s Take 
I disagree with Yoast’s assessment that putting the city name in a URL can have a negative impact on your customers. Unless you require customers to come to the business location to get a product or service, there is no harm. Maybe you’re a bakery with a physical storefront that people can walk into and purchase goods. If you deliver to nearby cities and not lying about the physical location there should be no downside to the user experience. A lot of grocery stores offer delivery to nearby neighborhoods. The trend of home delivery is ticking upwards and you can only benefit from it.
The problem is if you try to deceive visitors by misleading them on your actual location. Saying you’re located in Town A when you’re miles away should be an obvious big no-no. Customers will call to verify the location and when they found it that your business is not in their town they will most likely get annoyed. Possibly even write a bad review. However, saying you service a town or area is a great way to boost exposure for that particular location. As long as you’re clear that you have to travel from your base location and mention any possible long-distance travel fees, you’ll certainly gain more customers.
