Right Site February 2012

Willow Shambeck & Jason Kaiser

Whether a restaurant is relocating or a new concept is moving into a new market, the right location is a key to its success. Even in today's economic climate, many restaurants are thriving and taking advantage of reduced rental rates and shuttered restaurant spaces. Still, prime restaurant locations can be difficult to secure. Timing is everything and proper site evaluation is a must. Here are 10 factors to consider.

1. Your ideal market
Second-generation or previous restaurant space is certainly preferred due to lower up-front costs including town-assessed impact fees and the presence of grease traps, ADA compliant restrooms, food exhaust hoods and fire sprinklers. If the perfect market exists, but an available restaurant location does not, you may be forced to retrofit the space. This can be very expensive and should factor into any business plan. You will also want to consider a longer lease term to guarantee the amortization of your costs over the term. Be sure to find out why the prior restaurant failed.

2. Parking and visibility
Seek centers/buildings with more than adequate parking and good visibility. If you can afford it, opt for the most visible section of a center such as an out-parcel or visible end-cap. Also, check the traffic patterns to be sure the ingress and egress of the center provide convenient access to your restaurant.

3. Business and demographic trends
Evaluate the daytime versus nighttime business and demographic trends. Be sure the population density of the area is sufficient for your sales projections. Study the demographics; look at daytime populations, income levels and age brackets. Be sure these demographics fit your target customer.

4. The food court concept
Do not be overly concerned about multiple restaurants in the same location. They are there for a reason, as the market has determined a need for a restaurant hub. Many restaurants succeed best with other restaurants around that complement and don't directly compete. Even though the enclosed mall may be losing its strength, the food court concept is not. It is mutually beneficial for landlords and restaurants to look to fill this gap by grouping restaurants together.

5. Anchor tenants
Look for high-traffic centers with solid anchor tenants. Movie theaters are a favorite co-tenant of restaurants. Also look to be close to high-volume retailers like big box stores.

6. Local liquor laws
If you plan to serve beer, wine or liquor, research the local liquor laws. For example, in Atlanta, you cannot serve beer, wine or liquor on Sundays. In many counties in Florida, you cannot be located within 1,000 feet of a church or school. These sorts of restrictions can greatly impact a restaurant's bottom line.

7. Lease timeline
Negotiate a strong lease. Protect yourself in the timeline; be sure you have enough time to get through the permit process and the potential in construction delays. Many concessions may be available.

8. Your neighbors
Do your homework on neighboring tenants. It is important to consider their success, customer base and business trends and how they will relate to your business.

9. Reaching out
Talk to the chamber of commerce, visitor bureaus and local city officials to learn about your market. These outlets are not utilized nearly enough and are fountains of knowledge for area newcomers and even seasoned residents.

10. Asking for help
Talk to a local commercial real estate agent to find out the history of the area and market statistics including comparable rental rates. At the end of the day the lease terms and rent have to make sense for your business.

Willow Shambeck and Jason Kaiser head commercial real estate firm Cursor Realty Corp. from, respectively, Winter Park, FL and Bridgehampton, NY.