27 Apr Recipe for Success – Add a Dash of PAVE
A recipe for success. Last week’s most clicked article was one that hits particularly close to home with my personal practice within ICONIC. An aspiring restaurant couple, rolls the dice, signs a lease and hustles, in hopes to make it as the next great restaurant. Luckily for the couple featured in the article, it does seem to be paying off.
Something in this article gave me deep concern, very little of the article talks about the amount of planning that actually goes into opening a restaurant (or other retail business for that matter). They reference the time and planning, but don’t get into it on any form of detail. We have all heard the old adage, location, location, location but what does that mean?
Let’s do a cursory look at SOME of the details that need to be accounted for when deciding on that location.
When I work with restaurateurs one of the most important things that I ask in the early stages of site selection is: “How much do you think you can do in sales volume here?” Why is this question important? Well to start, it lets me know if this person or group have done their research on potential volumes of restaurants in this area? Yet, its much deeper than that. Being able to accurately project your restaurant (or business sales) volume is the basis for understanding what the business can afford in operation expenses to be successful. To put it more simply, operators need to know what they have coming in before they can determine why this location is the best for their concept.
At ICONIC we train our agents to assess sites using a PAVE analysis. This may seem simple, but it is important. Position, where does this location sit in the market place? Access, how are customers going to get to this location? Visibility, how easily seen is this site, from all angles? Energy, what is the level of excitement? After answering these questions, or scoring them, we can start to understand why we want to be in a particular location. The higher the scores the likelihood the price to acquire is increased as well. Which brings us back to understanding sales volumes again. With the analysis under our belt and armed with a projection we can start to make offers on sites that we find attractive, with the goal being to create the highest sales volume location with the lowest real estate expense.
What becomes interesting is that just because a site scores all 10s on a PAVE analysis, does NOT necessarily make it the best location for the business. In the article, they mention taking a former deli space, this may have had some perks with respect to the shoe-string budget they were working with, but it may also have cost them in demolition if that equipment had passed its expiration date or still required demolition to remove because it was no longer viable.
With restaurants in particular, taking over a failed location can often be problematic for other reasons. Perhaps the previous group over estimated their sales volume or didn’t know that a surface rail line, like Detroit’s M1, would cause construction in front of the business for extended periods of time, contributing to falling Access, Visibility and Energy scores this coupled with insufficient operating capital or properly negotiated landlord concessions may have helped them succeed. What if it was something else?
As real estate brokers and agents a key component I try to instill in all of my team is: be sure to provide and understand the value you bring. Do not assume that your client knows the market the way you are trained to, that they have access to all the information you do. Ask the appropriate questions and help them find the answers if you don’t know them right off the cuff. Whether your client is opening their first or the 30thlocation, there are significant dollars at stake, we must provide value.
A PAVE analysis is only one of the tools we use to help client’s get their businesses in ICONIC locations, if you’re thinking about opening a location, let us help you get the most out of your next ICONIC location.
Thank you for reading, I look forward to hearing your thoughts on the topic, so please comment, email or call!
Kees Janeway – Managing Partner, ICONIC Real Estate
Most read article from last week’s Newsletter was from Forbes 4/19/18, Meet The Entrepreneurs Who Started Their Bistro On A Budget And Found The Recipe For Success.