Finding the Perfect Restaurant for Your Property

Find the perfect Restaurant for Your Property

A recent report by IHL Group entitled Debunking the Retail Apocalypse included a recent chart showing the planned expansion for major restaurants for 2017.  Demand appears to remain strong for fast food and quick serve restaurants.  Restaurants continue to be popular commercial real estate investments as many restaurant leases are triple net (NNN) that more passive investments allowing the owner to receive a monthly rent check, while the tenant is responsible for taxes, insurance, and maintenance.

Every restaurant has a set of requirements when considering a new location.  It is important to understand how your building or land matches to a specific restaurant’s requirements.    Factors to consider include:

Demographics:  What is the number of residents or daytime population within a specific radius or drive time of a site.  What is the average household income for the area?  What is the spending for their specific type of cuisine?  Understanding these aspects related to your site will allow you to target the appropriate tenants.  One source for this type of information is Site To Do Business (STDB) commercial real estate’s advanced digital toolkit, providing essential data and tools to support financial, market, spatial and competitive analysis.

Zoning:  Is your property zoned to accommodate a restaurant?  Does your zoning allow for a drive-thru?

Physical characteristics:  Is your site on a corner?  Is your site on a main thoroughfare?  What is the traffic count for the location, typically expressed as Average Daily Traffic (ADT)?  Where are the curb cuts to enter or leave the property?  Is there a traffic signal or turn lanes?  The side of the street could influence the type of tenant.  If you’re on the right side of the street when people are leaving for work, it may be more appealing for breakfast or a coffee shop.

Competition or complimentary tenants:  What is the current mix of restaurants in the immediate area?  Certain restaurants have similar selection criteria and tend to cluster together, could one of these restaurants be a good target?  If there is a concept that is thriving, would a competitor also be interested in a nearby site?

Ultimately, the right restaurant for your location is one that will be successful and able to pay rent for the term of the lease and hopefully beyond.  Understanding the strengths and weaknesses of your location will give you a better chance of finding a successful restaurant as your tenant.

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