Writing for the Examiner is my avocation. My real job is a strip mall developer and owner, and I've been doing it for 32 years. I have some unsolicited suggestions for those looking to open their own restaurant.
Location
During the weekdays, you have two meals a day. If you locate in a suburban bedroom community, you might find lunches slim. We have this problem in several of our centers. If you locate in a business area, dinners and weekends might be difficult.
The best combination is to find an area where there is significant "day-pop" or daytime population and surrounded by homes. Locating close to a government complex is always attractive if there are homes nearby.
Type of Center
Most BBQ places are either freestanding or in a shopping center. The number one consideration for you, after finding a vicinity with both business traffic for lunch and families for dinner and weekends is street visibility. I used to teach marketing at CSU, Sacramento, and back then in the late 70s I told my students that consumers get about 40,000 impressions a day. Make your sign one of them. The importance of this signage cannot be overstated. It will be the most important advertising you will ever have.
Strip malls are fine as long as your sign is visible at 30-40 mph. You can try for a grocery center, but unless you have street signage you're better off in a strip mall with street frontage. Warehouse locations can be great for lunch and catering, but not good for dinners/weekends in most cases.
Rent
Your rent figure is a percentage of your gross; it should not be evaluated independent of volume. The chains take A locations and pay the freight not because they can afford it, but because their rent, or occupancy cost, becomes a smaller percentage of their gross over time because their volume is higher in a prime spot.
Now is a great time to rent. We as landlords hold NO cards and our rents have been cut by as much as half. Even though volumes are down you can get some great deals, but the location always comes first. Try hard to find a dead restaurant. You will save tens of thousands in city fees and improvements.
Contrary to what you might hear, we like to see our new tenants have a rent factor of 18% to 20% of gross sales the first year, and by the third year we hope they are in the 10% - 12% range. Less than 10% is generally unrealistic for a local shop. Rent means ALL rental costs, including base rent, common area expenses, and sewer fees.
Margins
Your margins are set to your competition, not simply to your costs. In a full service restaurant, food margins range from about 22% to 33%. Over 33% with a normal labor factor of 20% - 25% makes it hard to sustain your business.A 25% food cost is a fine and attainable target. Consumers are value driven more than ever. That's why sodas are up to $2.00--most will still order one and that helps the slim margins on the entree. Watch these like a hawk. I can tell you that 75% of my restaurant tenants do not know their margins. They guess. And those are the ones that we will ultimately lose.
I hope this helps. A good landlord wants the same thing as you--a profitable business that will remain in our centers. If you have questions, I'll be glad to give you my best and straightest shot.
John
Original Post
, I think the information you provided would be hard to find elsewhere.