Location, Location, Location.

Location. The old adage says that nothing is more important to the success of a new venture than the choice in real estate. Of course it depends what sort of establishment yours will be. A destination restaurant? A mainstay, tourist haven? A take out taco joint? Whatever it is, the location is of utmost importance. We have yet to choose a location for our restaurant but are considering the process as the most crucial early milestone.

The two main location options for a new restaurant are, 1) A full build-out of a non-restaurant space (i.e. converting an old automobile garage into a beautiful space like Spruce did) or 2) Move into a space that houses an existing or recently closed restaurant. Both options have pros and cons, of course: In San Francisco, non-restaurant spaces require a "change of use permit" for the real estate to be zoned for restaurant use; many inspections by fire/health/building departments to ensure that public cooking/eating would be appropriate in the space; approval by the neighborhood to add another restaurant; various alcohol permits.... etc etc. Lots of red tape. Of course it can be and is done all the time but usually requires a a great deal of knowledge and/or experience to navigate the authorities. Option 2) is simpler, in that an existing restaurant has managed to get all its permits and approvals, has the proper utility hook ups for cooking etc in place, and the landlord of the space is OK with a restaurant in her building. BUT--and this is a big but--existing restaurant business will often ask for "key money" to buy them out of the space. Key money takes into account code compliance, existing lease terms, entitlements, condition of premises and equipment, past success in that location, and other factors. Typical key money for restaurant spaces in SF range from $50k-$2M, but seem to fall in the $150-$250k range in most cases. More details on this coming soon....