The Devil’s in the Details When You’re Digging in the Dirt

Choosing a site for a new restaurant? Here are a few of the picky things to consider.

Because property is such a major line item in a restaurant’s budget, it’s imperative that the purchase or lease be a wise one. It would be nice if there were a dozen fool-proof rules of thumb to go by as you locate your restaurant, but every brand is different and every store is different. There is no magic formula that will translate into guaranteed profits.

That said, here are a few of the picky details to concern yourself with:

• Visibility. Will the signs you want to erect be legal? Will trees bloom and obscure the visibility of your signage or building? Is there room for another building to be built closer to the street, which would block you from the passing traffic’s line-of-sight? The more frontage you have, the more of you there is to see. Great visibility can mean not having to spend an extra $100,000 in advertising or other marketing costs.

• Access. Is there easy access to the location from the major streets? Is it possible for customers to re-access the main highway after they’ve eaten or gone through the drive-thru?

• Parking. Lack of parking can devastate a business. The more parking the better, and the closer the better --- at least five spaces per 1,000 square-feet of restaurant space. (Some restaurants even demand 20 parking spaces per 1,000 square feet of their building.) If you are in a shopping center, you must look at the other existing and potential future tenants' uses and peak times for doing business.

• Easements. Is there cross-access between your site and neighboring businesses? If not, you might be able to negotiate one if you can show that your customers will become their customers. Be careful, as water flow might be a factor, and it might be necessary to build extra retaining walls to compensate for earth you’ve moved for the easement.

• Flood plains and other survey items. Find a map that shows the flood plain of the town or city you’re investigating --- what’s dry today might be underwater when the rain of the decade hits. The survey of the prospective site will also pinpoint buried gas lines and water mains and delineate setbacks from power lines where building might be prohibited. What you don’t see on a property can be more troubling than what’s aboveground.

There are several other factors to consider, like the aesthetics of the location, drainage (you don’t want ponds or an ice skating rink in your parking lot), and even which direction your restaurant faces (northern exposure means colder temperatures).

With all this considered, try to get the best site possible rather than trying to find a steal. The biggest mistake franchisees make is finding sites that strike them as great deals --- but you usually get what you pay for. Half-price land that only produces a quarter of the projected profits isn’t such a good deal after all.

About the authors: Marty Kotis is president of Kotis Properties, a Greensboro, NC-based restaurant real estate development and brokerage firm. Randy Keough is licensed as a real estate broker and an attorney and holds a CCIM designation.

For more information of use when buying a new franchise, visit www.ownarestaurant.com or contact Greg Sanders at greg@qsrmagazine.com for more information about Restaurant Franchising, a new publication from QSR.