Ira Spilky & Associates

Real-estate 101: Operators sould set sights on locations that deliver long-term goals

By Ira Spilky
Published in Nation's Restaurant News, May 2003

 

Expansion, growth, development, bigger, better--those continue to be common buzzwords among both chain- and independent-restaurant operators as they strive to maintain a competitive edge and expose their brands throughout their industry segments and market trade areas.

To accomplish those objectives successfully--especially given the sluggish economy, the limited supply and huge demand for prime locations, and the ever-changing landscape of our domestic population--the following "scientific realities" must be acknowledged within any effective business plan:

  • Operators and tenants must create win-win deals and relationships with their landlords
  • Operators must complete thorough due diligence, including accurate and detailed demographic reports, traffic studies, and plans for parking sites.
  • Operators must verify that all land entitlements, licenses and governmental permits are in place.
  • Operators must meet with city planning departments to get assurances on being able to achieve construction or remodeling plans.
  • Operators must make sure chosen prime locations will meet anticipated economic projections.
  • Operators must analyze their restaurant competition and their bottow-line performance in a trade area to determine what the operator's estimated market-share percentage will be.
  • Operators must live in the trade area for seven days and seven nights to obtain as much information as possible from all segments of the demographic profile.
  • Operators honestly and objectively must determine through research and instinct if there is a marriage between the demographic profice of the area and their customer profile.
  • Operators should note that "location, location, location" means visibility, accessibility and positioning as they develop their site-selection programs.
  • Operators must have a detailed paper trail that consists of letters of intent, counter offers, exhibits, site submittals, government regulations, and lease drafts.
  • Operators must negotiate deals so that their companies do not compromise the cost of fixed overhead, since that cost is constant whether restaurants are open or closed.
  • Operators must determine the availablity of both inderect and direct labor in the marketplace to facilitate staffing requirements.
  • Operators should make sure they have existing company and unit infrastructures in place to move forward effectively.

If that sounds like restaurant real estate 101, it is! You must always go back to basics to ensure that your company is traveling down a road in alignment with your business and marketing plans. It is best to walk away from opportunities or deals that do not make sense or that make you feel uncomfortable.

The bottom line is that this decade will offer an abundance of growth opportunities to review, evaluate and consider. Make sure you examine the realities of everly transaction for the long-term benefit of your company's expansion and brand development.

 

Ira Spilky & Associates   tel: 310-558-3241   fax: 888-588-5933
16130 Ventura Blvd. Suite 512, Los Angeles, CA 91436