Benefits of a Second Generation Restaurant
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*This episode was recorded remotely, sound quality may be affected.*
Some high-profile restaurant franchises prefer building restaurants from the ground up, but in today's episode of The Restaurant Realty in 10 host, Michael Carro, shares why that may not be the best move for up and coming restaurant entrepreneurs.
Find out what steps are required to turn a typical retail space into a restaurant and some of the pitfalls that can create for a restaurant owner.
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Want to check out the full interview…keep reading.
Michael Carro 0:01 Welcome to The Restaurant Realty in 10. Ten minutes of uncensored straight talk for restaurant entrepreneurs twice weekly The Restaurant Realty in 10 dives into restaurant operations, facilities, real estate and investments.
Michael Carro 0:13 Welcome to The Restaurant Realty in 10. And on this episode, I really want to discuss the benefits of taking over a second generation space. Now there's benefits to just about everything. A lot of well funded restaurant groups prefer taking over a location that has never been a restaurant space or prefers to build ground up.
Michael Carro 0:32 I'm going to focus on second gen space, which is really most ideal to those on a limited budget or just looking to save money. And not only money, but you save time so we're going to discuss hood system, grease trap, plumbing, electrical, gas, parking and drive-thru. So let's talk briefly about each of these items and why they're unique to restaurants and how you can save money and time.
Michael Carro 0:56 Let's start off with a hood system. What the heck is it? And why do we have those in a restaurant? Well, a hood system is put in to pull out grease laden air to help prevent fires from happening inside of a restaurant. It also kind of clears out all the smells out of the kitchen in the smoke and things of that nature. And within the hood system is called an ansul system, which is your fire suppression system. So the roof requires a penetration and then to be sealed. So when you buy a hood system, and a normal hood system typically is $1,000 to $1,500 dollars a linear foot installed, and some of them include makeup air, and some of them don't. And make up air is they put a fan on the ceiling that draws air out of your building. The hood systems can include a positive or makeup air back into the building to make up for all of the air they're taking out. So that's essentially what a hood system does. And these are pieces of equipment that need to be inspected on an annual basis in some areas even more frequently. So you'll to check with your local municipality.
Michael Carro 2:02 The next item is a grease trap. Well, what's a grease trap, it's typically a simple structure that's placed inside the ground or in some smaller areas or downtown areas could be in the floor of your restaurant. And the plumbing goes through this. And it takes out all of the grease laden or, a lot of times, dairy laden items out of the water because they weigh differently. And so they collect in this grease trap or grease interceptor and doesn't allow those products to go into the general plumbing system. And so if you think about a grease trap, think about your plumbing system like your arteries, and grease is your cholesterol. If that cholesterol builds up into our municipal water system, it clogs causing that major heart attack. So your local municipality or water district requires each restaurant to have a grease trap or grease interceptor to take these grease laden products, make sure they're separated, let the water go through into the system. And then every so often, whether it's monthly or quarterly, or twice a year really depends on the amount of grease your particular business puts off, or even the size of your grease trap. Now I have lots of different sized grease traps as large as 1,500 gallons. And those are like big, I'm gonna say concrete mini pools, right, they just get put in the ground, or I just bought these three different ones called trapzillas that are much smaller, but they still are more efficient. Just to give you an idea, I bought those three trapzillas for this one project, and I believe the cost was about $30,000. So that's another thing that you would not have to do if you took over a second generation space in all likelihood.
Michael Carro 3:46 The next topic is your plumbing. Now all buildings have plumbing. But restaurants typically have a bit more. Think about all of the different needs for plumbing. You have a three compartment sink you might have multiple three compartments. Hand washing sinks a lot of times they're all throughout the kitchen area, maybe a produce sink. Even your icemaker they require water to go in and a drain for your excess water going through your restaurant, floor drains, restaurants will have floor drains throughout the kitchen area. A lot of times they'll even have them in the dining room area. So you see how many other fixtures are typically needed in a restaurant versus a normal retail space?
Michael Carro 4:26 Electrical. Again, every business has an electrical box or a panel well how much more do you need if you have a restaurant because a lot of times they have so much more equipment that requires electricity. And so if you think about the hood system that we mentioned a moment ago, just think it's pulling out all this air. It's trying to make up the air but it might be taking out conditioned air all of this kitchen equipment is producing heat. So what do you need to cool down your restaurant even more? Typically, you need more air conditioning. So while a retail space may need one ton of air conditioning for every three, four or 500 square feet, it's not uncommon for a restaurant to require one ton for every 150 to 250 square feet. So additional tonnage just on your air conditioning unit is many times needed. And remember, air conditioning is cubic feet. So if you decide to have these super high ceilings in your restaurant, while it may have a great look, it's going to cost you more in air conditioning and electricity just for conditioning, that excess space. So those are a few things that you have to consider. Can you have an all electric kitchen? Absolutely, they exist all over the place because there's a lot of locations that don't have gas. However, most chefs and most businesses in the restaurant category really prefer gas. And in many cases, gas is more efficient or lower cost than electricity. In other areas, electricity can actually be less expensive. It's just kind of interesting. A lot of the restaurant folks prefer gas for their cooking.
Michael Carro 6:00 Let's get into parking parking typically has a higher amount of spaces per square foot in a restaurant and every area calculates parking differently. So just be mindful. If you're going to try to take over a location that was not a restaurant, make sure that the parking at least matches the code. But more importantly, I really want you to focus on when you do your analysis, you can only produce so much in sales based on the amount of parking that you have. Now, I will tell you as we get more and more off premise dining, whether it be through delivery, curbside pickup or drive-thru that is putting less pressure on the parking field and may even be more advantageous in the future.
Michael Carro 6:43 And finally, I just want to touch on drive-thru drive thru definitely helps with parking, but it also allows a lot more cars to flow through your business without the need for parking. But things to consider it's not always very easy to add a drive-thru to an existing building. Not because your space isn't on an end cap. But think about there may be a whole line of parking that would have to be taken out to get the drive thru put in and then does that throw your parking ratios off. In addition, where is your speaker going to be I was in a location just last week in Destin, Florida where I was blown away where this speaker box was located in this closed restaurant. And I gotta tell you, it didn't surprise me that the restaurant was closed because it had a one car stack. And what that means is when you have a drive-thru how many cars can be in the drive-thru at one time without going into another area. Another area could be the parking lot, it could be into oncoming traffic, it can be into a street or whatever. This particular location had the drive thru all the way at the end of the property line. So other than the car in the restaurant drive-thru the second card would be blocking traffic. I've never seen something so poorly designed in my life than that drive-thru system just things to be considered.
Michael Carro 8:02 Please keep in mind that there are a lot of well funded restaurant groups, like I mentioned earlier, that preferred new construction for other reasons and we'll tackle that in a different episode. So again, thank you for listening to this The Restaurant Realty in 10. Thank you for listening to The Restaurant Realty in 10. If you're interested in restaurants, whether operations, facilities, buying, leasing, or investment The Restaurant Realty in 10 is for you. Please subscribe to this podcast and you can also visit TheRestaurantRealty.com for show notes, topics, and additional information.