Q: How can I reduce buildout costs for my second location?

If you’re smart, building your second location can cost less than the first. Of course, that’s going to vary depending on how smart you were with your first location. If you did things well the first time, your savings the second time might not be as great. But often we find that, for whatever reason, operators have spent a lot more than they needed to the first time around, and there are better ways of doing it.

There are so many different factors that go into your buildout costs—from what kind of national program you’ve taken advantage of or not taken advantage of to the type of vendor you’re using on site, your contractor. There are a lot of different things to look at, but let’s start with materials. Materials are one that we always look for, the low-hanging fruit that you can pick off.

A lot of the time you can imitate what people perceive as quality finishes at a much better price. Not only that, but from a maintenance and long-term perspective your costs are much less. For example, we had one client recently that was putting flooring in a restaurant. They wanted all-wood floors at about $15 a square foot. As it turned out, it was a maintenance issue. Every time water gets on it the wood gets damaged. We went in and gave them a vinyl-plank product that looks just as good at a fraction of the cost, about $5 a square foot. That’s saving $10 a square foot right there, and the customer doesn’t know the difference.

There are a lot of examples like that. When choosing your materials and finishes, you need to ask: Do I really want to do that? Am I going to get a return on that investment? Is there really a solid reason for doing that? If it isn’t speaking back to the brand or telling your brand’s story, then it’s not giving you any bang for your buck. You can spend $75 a yard on your booth fabric instead of $35 or you can go do a $400 mural at your store entrance that speaks more to your brand. We call that markitecture, marketing your brand through your built environment. It’s all about picking and choosing what’s going to count, where to spend the money, and telling your brand’s story to your consumer.

The best advice we can give to an owner is sometimes you’ve got to set your ego aside and use materials and finishes that speak to the brand and speak to the customer, not necessarily to your own personal taste. A lot of the time you get excited about the project—as well you should be—but you want to use a higher-end finish or higher-end material than you really need to use. That’s where you’ve got to appeal to the business side and say, “I really don’t need that; the customer won’t know the difference.”

Also, look at the contractors you’re using. Are you using contractors that actually do this for a living, or are you using your uncle that builds these beautiful high-end homes but doesn’t specialize in rollout? You want people who specialize in retail rollout. They know what they’re doing. They can build a good, quality product.

We also find that single-store operators sometimes have the contractor building some of the case goods on site. That eats up time and money. If you get everything that you possibly can off the truck from your case-goods manufacturer and just snap it into place on site, it’s going to save on your construction time. Try to modularize and turn things into components as much as you can. That way, while the general contractor is doing his buildout on site, a good portion of the store is being fabricated off site, brought in, and then put together. That can eliminate your framing, your drywall, your taping, your mudding—all those different parts and pieces of that store can be built off site and dropped in. That way you’re that much further along on construction, and you’re going to save a lot.

Another area of savings is vendors. Are you buying with national accounts? For example, if you’re a franchisee with a national franchise, typically the franchisor has negotiated accounts with vendors and gotten the best pricing available out there. Are you taking advantage of that, or are you going out there and using someone different? Even if you’re an independent, there are still national accounts out there that you can work with. Contact national vendors, distributors, and reps instead of local resources for products such as lighting, flooring, and paint. Try to cut out as many of the middlemen as you possibly can. Every time someone else touches that product there’s a markup in there. You should always try to source as direct as you possibly can.

You also need to look at your efficiencies. Are you maximizing your floor space? How much can you eliminate and still create an accessible or nice dining environment? It depends on what your brand is all about, but in a lot of quick-service restaurants there is probably room to downsize. You’ve got to look at the type of equipment you have in the back of the house. Are there better ways of doing it? Most big franchisors are looking at that closely.

What you don’t want to do is sacrifice the experience to try and save a few bucks on rent. A lot of times when people are trying to cut costs they look at the numbers and don’t consider the overall brand presence. When you are cutting things out you need to keep brand impact in mind so you’re not just going for the higher numbers and eliminating one of your hallmark brand elements. You need to bring the entire team together when you’re doing a value engineering exercise. Too often cost-cutting decisions are made by the guy in the finance department who has nothing to do with branding, and you end up diluting your brand.

Other than that, everything is on the table. There’s plenty to be saved—up to 20 percent, depending on how well you did with your first location. It might end up being more like 5 or 10 percent, but on a $400,000 or $500,000 buildout those numbers are significant.