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Attract the Right Job Or Clientele:
How to Find Ideal Real Estate for Your Restaurant
NOTE: Brian Kidder provides today’s guest post, ‘How to Find Ideal Real Estate For Your Restaurant.’
Brian Kidder started in finance as a retail broker. At the age of 25, he started his own office, co-headed an investment banking department, launched with Gexa Energy funding in 2002, acted as a chief compliance and anti-money laundering officer for multiple firms, institutional sell-side broker, then ran an OTC equity trade desk. He has put together or participated in over 100 equity offerings and held 8 federal licenses including 3 principals’ licenses.
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How to Find Ideal Real Estate for Your Restaurant
Ready to turn your skills into an eatery with dozens of five-star reviews?
Finding the right commercial space is the ideal place to begin.
The dining and restaurant industry is enjoying a boom, and more prospective restaurateurs are looking for commercial real estate for rent.
Whether you’re graduating from a food truck or on your way to a Michelin star, finding the ideal real estate and home for your culinary dreams is essential.
Photo by Unsplash
We’ll take you through the essential steps of researching the best location, your lease options, and other major decisions you’ll face along the way.
To find the ideal real estate begins with the essential question, ‘What can you afford?‘
A Recipe for Crunching Your Lease Numbers
While leasing a commercial space shares some similarities with renting residential space, there are also some major differences.
For example, your total costs may change annually.
Keep these factors in mind when researching your maximum annual lease budget, and don’t hesitate to over-estimate certain costs if you suspect they’ll exceed the average for their category.
- Restaurateurs typically spend 5-10% of their revenue on rent and utilities.
- If you expect to generate $40,000 each month at your casual cafe or poke bowl takeout, then you should spend between $2,000 and $4,000 on rent and utilities.
- Cuisine presented in an upscale shopping district or neighborhood is usually projected to draw $100,000 in monthly revenue. Start with a minimum monthly rental budget of $5,000 – $10,000.
- Ask existing restaurant owners in your area what sort of rent they’re paying. If they’re agreeable, ask what sort of lease they signed.
- Learn about the different types of commercial lease options. (We’ll go over that in more detail later.)
Now it’s time to find the ideal commercial space for your restaurant. Here’s where you’ll start.
To Find Ideal Real Estate Includes Location, Location, Location
While it’s important to research an area’s demographics, which will tell you the average age, income, and family size, this is just a starting point.
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A casual establishment that occupies space near a university or popular tourist district
often converts plenty of pedestrians into repeat customers.
Don’t just think of who will probably comprise the majority of your diners; think of why they’ll come in and why they’ll return.
Finding ideal real estate location requires that you consider all the following.
- What type of customers do you expect? For example, does your cafe bring in singles and couples? Will your restaurant cater to families?
- When deciding on a radius (the maximum distance customers will travel to visit you), many successful restaurant owners choose the 20-minute drive time radius. Beginners often decide on a smaller radius, which can be a mistake.
- Many successful restaurant owners claim that customers return for the experience, not solely for convenience. Will you have popular retail neighbors or attractions such as a beach nearby?
- Traffic may not seem important, but if you’re specializing in a certain type of meal, it is. For example, if you’re serving breakfast and lunch, look for commercial spaces on the side of the busiest street in the morning.
- Bargain-priced spaces rarely pay for themselves. Few restaurant owners can create a “destination restaurant” off the beaten track. Even if you have a big marketing budget, this route can be very risky.
The ideal location will be convenient for your prospective customers in several ways: easy to find, easy to access, and easy to park (or easily accessed by public transportation).
Be prepared to spend the time required to find this space and the money required to lease it.
Leasing a Former Restaurant Space
You may find commercial space to lease that was a restaurant in its former life.
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Depending on the former tenant,
you may be able to keep renovation costs to a minimum when leasing a former restaurant space.
While this may save you a considerable sum in renovations and fixtures, especially if some kitchen fixtures are included, it’s vital that you ask these questions.
- The first question is obvious: what happened to the previous occupants? Did they close up shop because business was poor, or did they decide to retire without selling to a new owner?
- If you speak to the former occupants, remember that they may not be 100% honest when you ask why they closed the business. Few want to admit to failed health inspections, bad reviews, or poor choice of location.
- If possible, check out online reviews for the former restaurant. If most are negative, beware. While your restaurant may be 100% different, some will assume that the former reviews also apply to you.
- Overhead is another consideration. How much will your rent and utilities cost? Will you need major renovations to bring the premises up to the current restaurant code? These can ramp up your starting costs considerably.
Whether your ideal commercial space was a restaurant in a previous life or will require you to start from scratch, it will require that you sign a lease.
Once You Find Ideal Real Estate – Will You Be Ready to make it legal?
Generally, commercial real estate leases are written in one of the following forms.
- A gross lease charges a flat monthly rental which includes maintenance, utilities, and any other operational costs. This will protect you from unexpected costs.
- A net lease charges lower monthly payments than a gross lease, but you will be responsible for other operational costs. These may or may not include property taxes, maintenance, utilities, and insurance.
- With a net lease, be sure you’re 100% sure of which operational costs will be yours before signing.
- With a percentage lease, you will pay a fixed rental rate and a percentage of your business’s profits. Usually, this percentage won’t kick in until your business reaches a certain income level.
- A percentage lease can be a win-win, as you pay a lower fixed rent rate when getting established, while the landlord may end up with more profits in the long run.
No matter which type of lease your landlord proposes, it’s well worth hiring a specialist attorney to review your lease before you sign.
A professional second opinion can provide lasting peace of mind, so you can concentrate on cooking up a lasting clientele and superb reputation.
In Conclusion: To Find Ideal Real Estate
Establishing profitable retail and corporate businesses and creating an environment where staff and customers want to be, it’s necessary to find ideal real estate. At the same time, the premises are affordable, with funds set aside for improvements over time.
For More Insights: Visit Elinor’s Amazon Author Page
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” Nice Girls DO Get the Sale is an International Best-Selling and Evergreen Book – among the classics;
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Sales Tips: Find Ideal Real Estate for Your Restaurant
- Ideal real estate for your restaurant helps tremendously as does excellence in communications.
- Create a strong presence online for marketing and branding purposes.
- Communicate how your food may differ from others providing similar cuisine.
- Offer specials for select occasions.
- Review all elements of your restaurant location, including safety, comfort, and appearance.
- Be aware of the foods ordered most often to expand upon the cuisine offerings.
- Reward staff with meals and outside events to earn their loyalty.
- Continually monitor the space for updates and patron satisfaction in all regards.
- Patrons who visit often will turn into your salesforce by heartily recommending your restaurant.
- Celebrate Success!
Today’s insights are provided to help you achieve the Smooth Sale!
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