You love to cook, you’re an awesome chef, and all your friends and family constantly incite you to open your own kitchen to deliver that unique, signature cuisine of yours to the world. You have a great idea for a new restaurant, investors and a friend in the industry. Or maybe you already have a successful restaurant location, and you’re ready to grow with another location.
After coming up with a sum to invest and scouting out properties, though, you’ve hit some financial roadblocks. Building utilities, permitting, and regulations are breaking the piggy bank, whether you’re planning on building new or remodeling an existing space. Why is this process so frustratingly expensive? Even if you’ve found a space with an existing commercial kitchen, you may need your start-up capital to add your own new specialized equipment or bring the facilities up to current code.
There is a better way.
Nationally, about 25% of new restaurant businesses close within the first year, and about 55% do so under the 3-year mark (forbes). Those who close their doors leave behind an average of $300k in new construction equivalent value in the form of plumbing, ventilation, electrical, and grease traps, even if large commercial equipment is sold off. If you don’t have to build a kitchen from scratch, a budget of $200k can go a long way to cover upgrades to the dining area, equipment purchases, and Building Department and Health Department fees. That makes available existing restaurant real estate ideal for new restaurateurs, but it may not be conventionally listed. Your leasing agent may not be able to help you find this space, but it’s recommended to have agent representation in the negotiation of a lease or purchase.
To add to your property search resources, do some research and door-knocking with food service providers near your preferred locations, particularly those younger than three years or with a renewed lease period approaching. You might find yourself working with an existing restaurant in strategic partnership to negotiate a lease takeover. Many factors can motivate restaurant owners to get out of their lease or sell a perfectly useful commercial food service space. That space might be just what you’ve been dreaming of.
If you’re searching for a space in which to build your foodservice dreams, let APSGC introduce you to our partners in Southern California commercial brokerage, and call us to lend our skills in planning and creating your new space!
APSGC: The Big 3 Before You Sign the Lease
APSGC: Construction Services
Article: 60+ Restaurant Industry Statistics for Restaurant Owners in 2019
Article: 2018 Economic Outlook for the California Restaurant Industry
Forbes: No, Most Restaurants Don’t Fail in the first Year
