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
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
- 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
- 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.