So.... You want to open a Restaurant....! (PART III)

Hello my dear readers and welcome once again !!!!

I have been very busy this last couple of days looking for a commercial space for lease for a group of clients that want to open .....you’ve guessed it.... a restaurant in Miami !!! 

I told them about this blog and about this post in particular, so they will be joining us.

Let’s start this PART 3 by talking about square footage, a very complex matter that will expose many issues that you may or may not know. 

            

Someone comes to me and says “I need to rent a space to open a Restaurant and I need 1,500 to 2,000 Sq.Ft.”!!!

First of all... How did this person came up with that number? Well, turns out that these people are not hypothetical, they are real and as a coincidence we crossed paths right at this time that I’m writing this series, so I will use them as a “case study” and they will be very happy about it since they love being in the spotlight, after all....they want to open a Restaurant. 

                                                         Def Leppard at the O2

They were working with another real estate agent that did not know much about the subject and who started throwing numbers about amount of $$$ per Sq.Ft. as in “RENT AMOUNT” and that’s all he cared about... the amount of rent which meant the amount of his juicy commission that now he’s not getting because, my now clients, figured this out before they wasted any more time with him. 

                             "YOU ARE FIRED!!!! "

                                                                                    Donald Trump's photo courtesy of The Apprentice and NBC.com

He stuck by their request of square feet needed without asking them why... See? What happens is that in my field you cannot do it all, you cannot know it all, like I do not know jack about let's say.....marinas for instance, it is just not my thing, so I do not attempt to strike a deal related to something I do not have knowledge of, and that is exactly the beauty of Commercial Real Estate... but let’s stick to the subject of this post shall we?

                                   This Photo Break is brought to you by 

                                    ( ADHD moment )

                       

So, I asked several questions to my new clients and it turns out that 2,000 Sq.Ft. was not going to cut it !!! “What type of food? What’s your business plan like? Is it a high end fine dining concept that you’re thinking about running? What’s your start up capital? Are you going to have delivery service? 

All these questions were answered -luckily and in part- because these particular group of people own one restaurant already (but not here in the US....which is important- and I will be discussing this in the last part of this blog) so they have some knowledge necessary, luckily I met them and they fired their real estate agent, and sure as hell they won’t fire me ! 

As I said, you cannot know it all, or at least you cannot fool yourself that you do (I will blog about this ...”Agent/Rock Star”)

You may be probably asking yourself “What does the type of food has to do with the square footage?” Well, the more complex the menu is, the more efficient the kitchen needs to be.

                                     Venison Mille Feuille w/ mint couscous @ Angie's World Cuisine in Coral Gables, FL

                          Photo Courtesy of MYSELF,  shot with my Nikon and a fixed 50 mm lens that I got from Santa

The menu ultimately determines the size of the kitchen, quality of the food and the amount of “covers” that will be served efficiently with the lowest margin of mistakes, which translates in the quality of service given to the customers. Now....watch this- The Menu dictates the size of your dining room as well, which is the amount of people you are going to fit into your space, according to the concept you will be designing around “The Menu” !!! See how everything is inter related? Do you realize how intricate and complex this thing is? 

           Courtesy of MYSELF, I took this pic when I bought my mew Nikon. Shot with a 18-200mm Nikkor Lens

Do you still want to pursue this illusion of having a restaurant? Let’s continue since my new clients will, and I will tell you how all this turns out-

If you are going to serve fine dining cuisine most likely you will need several people in your kitchen and each one of them will have a station where they are going to perform their duties - Think of the scene of Remy with Chef Gusteau describing from above each one of the positions in the kitchen. 

                                                                              Courtesy of Disney/Pixar

Now let’s move onto the dining room of Chef Gusteau’s restaurant, which is obviously a fine dining experience, and analyze how separated the tables are from one another, see how it all starts to make sense? 

If you think about running a sandwich shop then the mount of space needed everywhere (aside form ADA compliant bathrooms for which you will need aprox. 400 Sq.Ft. standard) is not as in a 5 star high end restaurant- 

Rule of thumb is : 27 to 32 Sq.Ft. per person including kitchen, bathrooms, dining room, and server stations are needed to run any restaurant, then you will need to adjust it around building codes in your city, concept (fine dining, cafeteria, mid range trattoria style etc.) and features such as full bar, a stage, maybe you want to put a nice fountain right in the middle of the dining room, etc. All this data needs to be  on your business plan’s spreadsheet to see if the math adds up; in the case of this new clients of mine it turns out that they will need between 3,600 to 5,000 Sq.Ft. of space so they have to go back to their drawing board and adjust their initial numbers of their original business plan.

On Part IV of this post I will be discussing the lease and landlord issues which is another big piece of the equation to be considered and will definitely impact your bottom line $$$$ .

See you in a few days!!

                             Courtesy of Ratatouille/Disney/Pixar

Cheers!!!

So.... You want to open a Restaurant....! (PART II)

Hello and welcome to “part deux” of this post about restaurants; mind you that I will just be giving you a general overview of this complex subject; I simply cannot tell you everything I know because first of all it is not that much what I know, and second of all it would take roughly 23,456,986 parts or chapters to get in depth addressing every single issue.

To begin with I will start with the obvious, and that is “Location, location, location “ 

                                                 Kemah Boardwalk- Houston, TX
As simple as it may sound and as repetitive or trivial rather, the location of a restaurant is not only important because of the amount of traffic you might or may not get given any specific quadrant or street or corner, but instead it is very important because it is directly related to the food and concept you will be presenting to your potential customers...

...and also you may want to consider demographics before deciding on a certain spot. 

Most likely if you live in the city where you are thinking about opening your restaurant you already figured out what concept would go and in what neighborhood.

                                                          Puglia, Southern Italy


Here in Miami for example there are two different kinds of crowd, tourists and locals, each one of them with its own sub-categories but we are not going to get into that. Will you cater to locals? Will you cater to tourists? Or will you cater to both!

                                                                                       Beacon Hotel -South Beach, FL

Once you are totally ready to commit suicide find a good real estate agent that knows about this things (like me for instance)moz@avantiway.com   Commercial Division Director at Avanti Way Realty in Miami, FL

Then you have to find and architect, a contractor which will recommend a person that “walks the plans” thru the different departments to obtain approval for building permits, then you need to establish your business plan (very important) and design (also very important) - 

The main reason why restaurants fail in the first two years of operation is 
                      “UNDERCAPITALIZATION” 

which is a direct consequence of a poorly prepared business plan because of lack of knowledge. 
Think about it, you put on your excel spreadsheet your expected dining room rotation per day  times 12 months times your projected average ticket of X amount of dollar amount, and turns out that after your Grand Opening you were off by 67% and you are already riding that wave..... Plus you did not include things like insurance premium, security deposits for the landlord, pre paid rent, beer and wine license, coffee machine, etc. Turns out that there is an extra $50,000.00 that you overlooked and were not included in your business plan!!!!
Bottom line is that even If you think that you know what you’re doing, your business plan must be accurate or hire someone to do it for you- A feasibility study for any given area is in order; you cannot just go by the way you think or see that restaurants are doing in a certain neighborhood, like this one in this photo.... 

....that would be the dumbest financial move to make!!! 

Second item relates to another big issue and that is construction costs, I can only tell you what is more or less standard for my area, being Miami one of the largest metropolitan areas in the US, construction cost for a restaurant will start at around $80 per Sq.Ft. with low end finishes that is, once you start getting into high end touches like polished concrete floors, specialty lighting, sound system, etc. you will be in the $200 to $300 per Sq.Ft. range..... easily !! 

                                             Stephan Pyles Restaurant- Dallas, TX

I personally think that the best deal is to find a pre-existing restaurant already built out that closed down so you don’t really have to deal with construction from the ground up but rather some remodeling to fit in your concept and everything else related to a change of name and ownership, plus lots of advertising to make people notice that it is someone else with a different concept in that same spot, I assure you it will be a lot cheaper than building one from scratch. The good thing about this scenario is that you will most likely find all the most expensive and biggest headaches already in place, such as kitchen hood, grease trap, sprinklers, chairs, bathrooms that are ADA compliant and the BAR- Plus you will not have to deal with permits, construction, building inspections, new plans, etc, etc, etc.

These are the most expensive items that I could think of in a restaurant. 

If you still need a brand new space and wish to build it from the ground up then I invite you to read PART III of this series. For now ...... 

Cheers !!!

So.... You want to open a Restaurant....! (PART I)

Are you sure!!!? 

                                                                                       Photo Courtesy of Pari Dukovic

That is my first question to any prospective buyer that comes to me looking for restaurant space, followed immediately by my next one question without even letting them answer the first: Have you ever been in the Restaurant business? Do you know anything about it? Have you had restaurants in the past?  That’s rather 3 or 4 questions but they are all necessary; what happens is that I have encountered many people in the past that have come to me because of my experience and track record in both the real estate field and the restaurant business and I have found many times a common denominator, and that is lack of experience or lack of knowledge together with a strong desire for being in the spotlight; after all owning a restaurant looks very glamorous, elegant, gives you the illusion of belonging to the jet-set, of being part of a high class/VIP crowd, it’s a self esteem booster; all these ingredients together are a strong cocktail which will lead an investor to financial disaster- SO....!! Do you really want to open a Restaurant and do you really know what you’re doing? If so I will be happy to help you find the right spot or even build one from scratch...

                                                                               Apotheke in NYC - Photo Courtesy of Noah Kalina

...but if you have not been in the business, and regardless of all the warnings you are so hard headed that still want to venture in dangerous waters, then there are a few things you need to know which I will be discussing in the following PARTS of this short series. I am dividing it in “PARTS” because there are many topics that need to be discussed and if for you this is something new, and still want to do it, then it is better going slow so the digestion of information will be more effective. 

I will be discussing on PART II and PART III of this post things such as permitting, construction, design and concept, on PART IV we’ll be getting into leasing and landlord issues which are a key factor needed to be taken care of BEFORE getting into a commitment and on PART V we will be discussing what I have been seeing a lot lately and that is foreigners with experience in restaurants....in their country. 

Cheers!

Welcome to my blog!

This year I feel like doing something new, something that really keeps me going, something meaningful. This year I’ve decided to go onto the cyberworld head on and start my own blog! Yes, "another one with a blog" - It will be called “GMV Global” and I will be talking about all the things that I like and all the stuff that makes me feel good- You are free to follow or to Un-follow but please talk about it - I really hope you relate to it, and most of all I really hope you really love it or really hate it, but really make your “click” count.  I will be talking mostly about what I enjoy doing for a living which is Commercial Real Estate investments and high end Residential Real Estate sales....”BUT”, and there’s always a BUT, I will be filling in gaps with interesting (at least to me) discussions about good music, good food and the good life

God bless !!!