Seeking opinions on multi-tenant restaurant construction

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travelmodel
Junior Burger
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2017/11/09 17:52:54 (permalink)

Seeking opinions on multi-tenant restaurant construction

We're not in the restaurant business (yet), so forgive our ignorance.  We will soon own a historic building on a traditional Main Street, and want to make it appealing as a restaurant.  There are few other restaurants in the area, and the street is a bit run-down, but the trend is upward, and a lot of new mixed development has gone in recently nearby.  Our goal is to create a place where popular food trucks or carts can "graduate" to a fixed location with interior seating (maybe still running their truck).  The space is 2400 SF, and has ceilings high enough we could build loft for some additional seating.  In theory we could rent it all out as a single restaurant, but it feels like a lot of space for a food-truck graduate to take down all at once.  If we rent it as one space, we think we'd have to court already powerful restauranteurs.  If it's 2-3 spaces, we're thinking little guys can afford to get in, and prove to themselves if they can fill a lot of seats or not. 
 
So aiming for food truck graduates, we see two approaches: Separate spaces, or common seating.  Each scenario would have 2 or 3 vendors, so a question common to both scenarios is, is it a good idea to have 1 large restaurant? 2 smaller ones? Or 3 “a little bigger than the truck was” spaces?  We’re assuming that there may be strength in numbers – where a variety of good options attracts more people, for synergy (where 1+1=3x performance).  How many agree or disagree with that?  Assuming 3 can fit, would you go with 1 (2400 SF), 2 (1200 SF each), or 3 (800 SF each)? 
  
Then regarding each scenario…
 
Positives about private spaces:
  1. Each shop can be completely in charge of their own space.  No question who's responsible for bathrooms, tables, etc.
  2. Each space need not be for food (landlord flexibility).
  3. Feels normal, traditional, but maybe also boring?
  4. May create opportunity for table attendants and tips (pos or neg?)
 Negatives about private spaces:
  1. May need more bathrooms, drink machines, etc., consuming table space
  2. If one is more popular than another, they'll run out of seating, while the vendor next door has excess seating.  
  3. May feel low-energy (boring). Hard to create "buzz" if you can't see a lot of people, (because they’re on the other side of the wall).
Positives about shared restrooms/seating
  1. Maximizes space
  2. Creates sense of popularity (if people actually like the 2-3 choices)
  3. More appealing to “lunch crowd?” – no need for everyone to agree on what they want. Choose your favorite then sit down together.
  4. If one tenant leaves, other two just sell more without paying more, until 3rd can be secured. 
Potential Negatives of common restrooms/seating:
  1. Who cleans restrooms & tables?  Does property manager need an employee? Or can an association of tenants work that out?
  2. Is it bound to feel like a 1970’s mall food court?  If we spend generously to create great ambiance, and let each tenant get creative with their own counter space and possibly other spaces, can we create a “dining experience” that can make it a destination rather than just a close-enough place to fill up?
 
If you had your way, what would you do?  Do you see additional positives and negatives?  We want our tenants to make money, so that we don’t lose money.  
#1

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    cavemaneats
    Hamburger
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    Re: Seeking opinions on multi-tenant restaurant construction 2017/11/09 18:56:01 (permalink)
    Hi there Travelmodel,
    It Sounds like an interesting Model/Concept but you may find it difficult to keep truck owners locked into a long term lease. It sounds like what you are trying to do would be similar to a Food Park, just a little more permanent. One of the reasons Food Trucks as part of the restaurant industry are doing so well, is that they aren't bound to just one location. Its possible, and doable but that would be the first hurdle to climb.
     
    Second as a veteran of the "Food Vendor Trenches" I can say that competition is really tight. Getting that many Independently oriented people in one place is a hard nut to crack. The commissary that we use has seen 50 or more new operators come through in the six years we have been there. There are always mix-ups, messes and emotional hang-ups that get in the way of a smooth running business. Also Parking may play a big roll in that as you may think you have plenty of space for customer parking until you park 2-3 25ft food trucks next to each other. And trust me if these guys are wanting to transition to a brick and mortar they'll want to restock their truck if the run out during lunch.
     
    Thirdly, Depending on where you are at there may be some regulatory hurdles to overcome. Stuff like the bathrooms you mentioned or like if just one of the employees in one of the food pods puts a plate of raw chicken to thaw on the top shelf of a shared walk-in that then drips on another pods food items. The Health Department has to shut down the build rather than the bad initial operator.
     
    Although I could go on and on about potential pitfalls this is my last, the math.
    Collective rents would be somewhere between $18-28/sqft/yr for most areas in that up-in-coming retail areas. That's $3600-$5600 per month. Or $43200-$67200 per year.
    1 (2400 SF), 2 (1200 SF each), or 3 (800 SF each)? 
     
    But rather than doing a mall/pod structure you may want to look into a commissary build out instead. in which you could have 10-15 different food related business paying between $600-$1500 a month.
     
    10 x $600 =  $6000/mth    $72,000/yr
    10 x $900 =  $9000/mth    $108,000/yr
    15 x $900 = $13500/mth   $162,000/yr
    15 x $1200 = $18000/mth $216,000/yr
     
    And any food truck operator will tell you most commissaries have waiting list to get in.
    #2
    chefbuba
    Double Chili Cheeseburger
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    Re: Seeking opinions on multi-tenant restaurant construction 2017/11/10 01:15:41 (permalink)
    There are some food truck graduate stalls in Portland,OR each individual kitchen with shared common areas. If you want to get food truck pod ideas, that's the place to look, they re everywhere.
    #3
    travelmodel
    Junior Burger
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    Re: Seeking opinions on multi-tenant restaurant construction 2017/11/10 10:11:50 (permalink)
    Cavemaneats, thanks for the pointers.  I'll look into a commissary kitchen as an option.  However, we have very little parking, so it would be hard to accomodate a lot of trucks.  But maybe there are still ways we can rent out our kitchen(s) during down times.  But we do have the public street just 5-feet from the building, and that may work to accommodate 1-2 trucks for awhile.  Mostly our idea was that some truck operators may want to transition from mobile to fixed, indoor location (and maybe still have an employee continue to operate the truck), and we'd create 3 kitchens and 3 counters so there would be 3 "lines to stand in" during lunch/dinner, and a common area to sit down and eat.  So our idea is mostly that they'd abandon the truck in favor of our food court, or operate in our food court in addition to their truck.  But maybe we could also make it work for servicing trucks.  We do already have a grease separator built into the parking lot.
     
    It's actually an old bank building, so we thought about getting a junkyard armored truck, then just cutting it up as a facade for the counter, so it would look like a bank truck that has been converted to a food truck, but it would be permanently inside the building. (just the skin - no one would have to work inside the cramped space of a bank truck).  Anybody want to comment on that idea?
     
     
     
     
    #4
    travelmodel
    Junior Burger
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    Re: Seeking opinions on multi-tenant restaurant construction 2017/11/10 10:26:45 (permalink)
    Chefbuba, the bit of googling I did on Portland pods makes it seem like they are mostly outdoors?   But you made it sound like there are places with individual kitchens and shared common areas, as if they may be inside.  Are there any inside food-court or food pod locations you are aware of?  Where our building will be built, it's mostly walkable but there aren't presently all that many pedestrians, nor a lot of commercial nearby (mostly residential within a 1/2 mile radius).  
     
    Maybe what we really need is a food services configuration consultant.  Someone who has seen a lot of operating models, who can study our location and situation and help us design the space for however many vendors it would make sense for, and also potentially for commissary uses as well.  Do you have any suggestions of such a person, ideally located in Utah, but not necessarily?
     
    #5
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