I am sure you have heard that restaurants have a large turn over so it might be obvious to say you should do your due diligence prior to getting into the restaurant business. Perhaps not everyone knows what that due diligence entails. Here are some tips for you.
- Know how much you can afford per month. Rents are normally figured on a per square foot basis. If a 1000 square foot space goes for $10 per square foot,per year, that will cost you $10,000.00 per year. Divide that by twelve to get your per month rent. Talk to your real estate broker about utility and maintenance costs in "like" spaces if there is no history of these costs in the space you are considering.
- Estimate construction costs. We advise that you don't do this by having a contractor walk the space with you prior to having design drawings. If the space isn't designed yet, it is likely the contractor will make an estimate on lessor materials in hopes to get the work. This could put you in a position where you don't budget enough money for the design you actually want. Your research should be based on average per square foot construction costs for the area you are considering. Understand that construction costs don't include furniture or equipment.
- Study the traffic of the space you are considering. Sit there at every time of the day, for several hours at a time and observe the pedestrian traffic, see how many people drive and park for basic errands and understand the visibility and accessibility of the space you are considering, How close is the space to public transportation? Is it a busy bus or train stop? Do a large number of locals walk their dogs on that street? Are there other restaurants that are getting a lot of walk in customers?
- Identify your target audience. Look only in areas where they exist. Don't get caught up in looking at all spaces in all neighborhoods without finding out if your business will thrive there.
- Have a design professional walk through the space to evaluate code compliance which includes local, state and federal codes, proper zoning and ADA compliance.
- Be an investigator. Find out why the space is vacant or why the current tenant is leaving. Find out if the landlord is easy to work with and responds to issues quickly. Ask the neighbors what the pros and cons of doing business in that neighborhood are. Find out if there are known complainers in that neighborhood.
- Count on experts to lead you though the process. Don't try to do it on your own. Real estate brokers and real estate lawyers are very useful. They will make the process go more quickly and will advise you on what you should be doing. This isn't something you should choose to learn the hard way. It will cost you time and money which most new restaurateurs do not have.