Maximize the value of your restaurant’s real estate
Whether you want to remodel or sell
Restaurant real estate looks a lot different than it did a couple of years ago. As operators have accommodated more streams of off-premise business, dining rooms have decreased in size, pick-up
lanes and windows have been created both indoors and out, and even kitchens have changed shape to adapt to shifting consumer habits. The added pressures of inflation and a potential recession are making this a time when every square foot of a restaurant’s real estate footprint needs to earn its keep.
So how do you ensure you’re making best use of your space? In a recent webcast from Restaurant Finance Monitor entitled “Creating Enterprise Value Through Real Estate,” three restaurant industry experts in investment banking, restaurant portfolio optimization and restaurant law spoke about how to navigate through the current environment.
They said that now is an important time to give your real estate strategy a reality check and identify any opportunities you have to operate more efficiently and generate greater value from your property. “You should do a deep dive into variables like rents relative to market, occupancy costs as a percentage of sales and new restaurant growth prospects,” said Joe McKeska, senior managing director and leader of the restaurant industry practice at A&G Real Estate Partners.
Once you do that, you may discover that you could use a portion of your dining room space for a more profitable purpose and you should get going with a remodel before costs escalate further. Or perhaps you’re better off finding a new location that can be more easily adapted to your needs. You may find that you have leases you should try to renegotiate – or even stores you should close to help consolidate labor and resources.
Perhaps you’re in the market to sell – and that carries its own action items at a time of high inflation. Greg Grambling, a managing director at Salomon Partners, where he specializes in food retail and restaurant investment banking, said the current economy may make potential buyers choosier about buying companies that have too many variable costs in their leases that could jump along with inflation. “As a potential seller,” he said, “you can generate leverage and value by acting now” – specifically to make more of your costs less reliant on the Consumer Price Index, whether that includes rent, Common Area Maintenance or lease terms.
Foodservice CEO is provided for informational purposes only. It is intended to offer foodservice operators’ guidance regarding best practices in running their operations. Adherence to any recommendations included in this Guidance will not ensure a successful operation in every situation. Furthermore, the recommendations contained in this website should not be interpreted as setting a standard of operation or be deemed inclusive of all methods of operating nor exclusive of other methods of operating.
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