Does anyone have a clue what a ballpark cost would be to take an empty building and turn it into a restaurant?TGIFriday Style.Say …4500sqfeet?From architect to contractor to finishers.$100K ? $1MIL ?
Hello,
It is hard to say as there is a lot of variety in restaurants. The last one we saw outfitted, and I will note that it was more of a high end restaurant and not a chain, was over $2 million. It was pretty fancy though.
I would think just outfitting the kitchen with a good quality chef’s stoves and venting systems can run over $100K.
I sure do appreciate the help.Do you know the square footage of that restaurant?
It was a downtown Phila restaurant, footprint of the building was about 50x150 feet. It inlcuded a small area that on the second floor as but this was only about 50X20 feet in size, the rest of the second floor was opened for tall ceilings. Total sq ft was between 8000 and 9000 sq ft. This included kitchen and dining area, lobby and second room area.
I have to emphasize that the restaurant was very high end, the chef owner is as high profile a chef in the US and maybe Worldwide as they come and the other owner is about the biggest name in the restaurant game in the Eastern Markets. It may not be a good comparison.
We also worked on a proposal for a crab house in the Balitmore Maryland area. The fit out costs for that were estimated at $150K. We did not further our involvement because we did not think the building in question could be fitted out for that price. The kitchen might of been but the entire restaurant would have been more. There are lots of little things that were left out of the equation and underestimating these seem to be a contributing cause why so many restaurants do not make it through the first year.
One technique that might work to lower costs is to buy out the kitchen facilities from an unseccessful enterprise. Most restaruants will not make it and when the lender takes back the assets they will be gald to liquidate them, especially equipment and fixtures. You can disassemble a commercial kitchen within days and reassemble on your location. Just an idea, used equipment is a lot cheaper and even cheaper if being liquidated, especially if you are willing to remove from the location. The Phila restaurant was fitted with some of the most highest end equipment out there, all new, and would probably over kill for a chain restaurant like a TGIFs.
I was quoted $150sqft today by an architect and that did not include the actual kitchen equipment?any ideas?
I would look at used equipment or search for a restaurant that closed and needs to liquidate the equipment. I would not buy new unless you are sure the restaurant will work. The price difference between new and used equipment can be a lot and the used equipment can function just as well.
Restaurant business is tough. In one respect, no other industry offers an opportunity to so easily make folks happy, give them good food and lots of drinks. But, only one out of ten will succeed past their first year. A restaurant is one of the toughest commercial projects to pull off. Much of the profit is in the bar but adding a bar to a restaurant brings an entirely new set of problems including acquiring a liquor license (one may not be available) and liability. It also takes a long time to build a positive cash flow with one and the need for expendable capital in that first year can take its toll, especially when staffing levels and the freshness and quality of inventory needs to be maintained.
From a development point of view, and not an operating point of view, it might work if a long term lease is signed with a chain that can guarantee. A good chain as an anchor might bring other retailers as tenants. But, restaurants are built out to a specific use and if the tenant is not successful, it will cost to convert the space to other uses. Every person we know in the restaurant business lives in their restaurant and works it every hour of every day. Very tough business.
Here is one strategy that might work. Do not develop an individual restaurant but a mixed use property. We have seen buildings developed with retail or restaurants on the ground floor and either residential or office above. Instead of trying to rent, all the units are made into condos and sold, including any commercial space. Once sold, you are out as the developer and do not have to worry about the performance of the tenants. Just an idea.
JAAMJK,
I sure do appreciate the response you have been more than helpful.It sounds like you have experience in the food industry.
We have more experience on the financing and capital side of things and have worked with locating investment capital and arranging venture partners for a few restaurants, brew pubs and breweries along the way. We also have several smaller restaraunt clients that we help with an assortment of short term and seasonal needs.
It is an interesting industry and those that have survived in it tend to be very good at what they do. But it is an industry that will sort things out very quickly. One of the best things I can recommend is becoming friends with other local restaraunt owners in your market. We have learned about restaurants and the food industry as a product of evaluating risk. Just as with most things, it is easy to see all the good and promising things about them but sometimes it is not so easy to look at the weaknesses. It is often those overlooked little details that come back to be the biggest problems.
You’ll either do really well or end up dead broke. I’d stay far away, things like that to me are out of my comfort zone as far as calculated risk goes. :-\
Rich_in_CT
Boy arent you a ray of sunshine ;D
If everyone had the negative outlook that I have a lot fewer people would have gotten caught up in losing deals. I don’t let my negative attitude stop me from chasing my dreams, I just take the much more cautious road.
Also, when it comes to restaurants I can show you at least a half dozen buildings in my small town that have had restaurants go through like a revolving door. Most of them in the past 4-5 yrs have had 3-5 different restaurants open and all of them failed. There are very few that are making money and staying in the black long term. Most that are able to stay afloat are national chains that have the infrastructure and name branding to keep them alive, all of the other little ones fall by the wayside.
There is no doubt that operating a restaurant is a risky enterprise and only under very special circumstances would we want to deal with one.
But, in defense of restaurants, a lot do succeed. If you have the right components come together under the right model, it can be very successful. We see lots of small eateries succeed in our market. Like most things, you want to be in the right market with the right product at the right time.
Also need a clear idea of what is needed. Some people try to open up a sandwich shop on a street that has 3 sandwich shops already and wonder why they fail.
i hear a lot about succesful restaurants and how to build one.
i aim in these Business for over 20 years now.
if you are looking to build the restaurant and put a franchise like TGIFRIDAYS or similar the best is to find a pc of land in a good comercial area and locate a big comercial rea estate agency to help you what franchises are interested in your area.
if you want to build one and run your own that is a totaly diferent animal.
you have to ask yourself few thinks.
1)Do i have any experience in managing a restaurant?
2)who is going to be the chef , dining ,beverage manager
3)do i want to have personal life?
a restaurant to be succesfull it takes alot of sacrifices in life.
to make a long story short everything is posible to be done if there is a will there is a way.
and the aproximate $$ to build a restaurant is about $120-$145 per square foot.that is how the insurance companies estimate rebuilding the restaurants.
Interesting comments and topic.
Im in NYC and have a 3 floor restaurant with 6 apartments over it. Let me just say that the restaurant business is a tough business. Like someone had posted before me…you can either become very rich or very broke. Ive been lucky enough to come out ahead a little bit. The tenant I had rented out the space to recently renovated all 3 floors of the restaurant…total cost was a bit over 4.5M.
SOme months I dont know how theyre able to pay the rent but they do…
I was lucky enough to have bought the property with the restaurant already existing. But if it had not been I would have net leased the building out and let the tenant pay for its construction, etc… Of course the lease would have to be a minimum 10 years, but it would be worth it .
I agree! My wife and her parents are in the restaurant bussiness. It has been successful but they live there. In fact they are selling it because of their health. They started with a shack and built it up over time. They’ve had it about 10 yrs. It is actually a convience store with a cafe in it, but the cafe is what makes the money.
Why work your buns off in a restaurant when you can sit and eat cheese in your underwear as an investor.
It may run between $125 and $250/SF depending on the level of finishes and exterior architectural changes that need to be made. If you’re going for a higher end tenant, they’ll spend up to $400/SF.
Most restaurants, however, will be happy with a $75-$125/SF tenant improvement allowance and will fund the rest of the build out with their own capital.