With more and more Bostonians eating out than ever before, the restaurant industry is sure to experience sustained growth in full-service and multi-unit restaurants. This likely means that prime restaurant sites are going to be harder to find then ever, particularly in the most urban neighborhoods of the city. This shortage of optimal space is forcing restaurant operators and developers into locations they may not have typically chosen in the past. And with the additional complications of looking to locate a restaurant in or around the metro Boston area, a restaurateur needs as much guidance and advice as possible at the beginning of the site selection process.
Even though selecting a site is one of the most important aspects of developing a restaurant’s ultimate vision, it need not be a dreadful experience. A lease negotiation should be considered just another standard piece of the process – one that will benefit from as many qualified consultant opinions as needed. If a restaurant owner is careful to consider all aspects of site selection and lease negotiations, and consider the following tips, it can be a lot easier to find the right spot for the restaurant.
Location, Location, Location
The first rule in restaurant development requires a restaurateur to stake out several different sites in order to find the best location to attract desired clientele. Each location has particular pluses and minus that have to be weighed against the owner’s program and mission. One proven method is to follow the pack. Typically, when looking for a place to eat, people tend to go to areas with a variety of restaurant choices. While this may seem like a strategy that will increase your competition, the reality is that areas with more restaurants and options will actually help fill the tables at your establishment.
A restaurateur must also consider where they are going to draw their clientele from before settling on a neighborhood. When dinner and weekend crowds are critical, avoid downtown areas that empty out on weekends. For example, there are a lot of great opportunities available on the waterfront in South Boston, but because it is an up-and-coming neighborhood, it still does not have a large quantity of residents to draw from for the dinner and weekend crowds. Although parking is ample, public transportation options are not, making it off the beaten path for attracting casual diners and pedestrian patrons. If your heart is set on a neighborhood like this, be ready and willing to sit back and wait for reputation and word of mouth to grow business.
After a general neighborhood has been chosen, a restaurateur should determine the conditions that will attract their target clientele to their restaurant over others in the area. For an urban establishment, seek a location with good foot traffic, in a good (but possibly underrated) part of town, with little threat of crime. In Boston, this might mean looking into a space on Boylston Street in Back Bay or Tremont Street in the South End, where increased foot traffic might outweigh the potential competition factor. In the rare event that a restaurateur finds a location in the city where ample parking is available nearby, they will need to make sure clients will be able to find their way, with clear access, from their cars to the restaurant; if not, the restaurateur might consider the cost of hiring a valet service.
In Boston, it is important to consider the constantly changing street traffic patterns and complicated construction turn-arounds to determine street accessibility to the restaurant. With the ongoing construction to the Surface Artery road, an extra U-turn might be the difference in guests overlooking your restaurant in favor of one that is easier to get to. Although a restaurateur cannot be expected to be a mind reader when it comes to these changes, selecting a site away from a potential construction zone on an easy-to-find street or near a main cross street might be a wise choice. One might consider selecting a location near a fairly accessible MBTA station or bus stop, a small consideration that, given confusing street signage and lack of parking in the city, will help people find and get to your location in an easy manner. If the restaurant depends on a heavy lunchtime crowd, you should consider a location close to a high-rise building in the Financial District. Similarly, if attracting the tourist demographic is important, opening a location close to a known tourist attraction (Faneuil Hall, Newbury Street or the Freedom Trail) is the best bet. If opening a site within one of the downtown shopping malls, one must be sure that the consumer demographic of the mall fits with the clientele the restaurant wants to attract for its best success.
Another critical site selection decision is what type of storefront the establishment can support. A street-level location will offer maximum visibility with few accessibility issues – but while the opportunity for extensive signage and al fresco dining are attractive, it can be costly (and in Boston, very difficult to permit for). Pad site locations offer visibility, but development costs can be higher and lease negotiations more complicated. Mall locations present the greatest restrictions but also the lowest initial investment. For a little more flavor and a unique focus, look beyond the traditional and consider sites such as old armories, churches or historic buildings. For example, the old City Hall on School Street has been used for many years as a very unique dining venue and currently is occupied by Ruth’s Chris Steak House. While such locations may require extra expenditures and logistics, the one-of-a-kind setting can be worth the extra effort.
Rules and Regulations
Another important step in the selection of a new space is to research the zoning laws and regulations that will affect you, as these can differ from state to state or even town to town. Local codes and permitting requirements may dictate huge changes to the restaurant’s design. One important regulation to be aware of is the cost and availability of a liquor license. In Massachusetts, a liquor license is a commodity passed from holder to holder without a constant or regulated cost. As such, there are only a limited number of liquor licenses to go around (a certain number per neighborhood), meaning that this can turn into a costly and difficult process. This also ties into site selection, as a liquor license in the Back Bay may be exponentially more expensive than one in the Fenway or Jamaica Plain neighborhoods. Certain districts within a neighborhood also may have different prices, so careful research is recommended.
The regulation of signage is another major way zoning laws can affect a restaurant. Because signage is a key factor for any restaurant, specifics need to be known during planning to determine if there are any limits to the size, brightness, sidewalk placements or the number of signs allowed at the site. The lease should also be checked to see if the landlord has his own set of signage restrictions.
Consider All Costs
After a restaurateur finds the perfect location that fits their personality, program and mission, they need to make sure it can work within their budget. A restaurateur usually knows the approximate upfront costs of opening a restaurant before getting to the level of specific site location, but it is the hidden, back-end costs that may have a great impact if not factored in ahead of time. Dumpster removal, delivery and trash collection will be daily routines once the restaurant is open, but constricted or restricted access can raise material delivery and removal costs. In some Boston neighborhoods, one must consider whether trucks and deliveries are allowed to park outside during delivery hours or if they will need to be scheduled during costly off-peak times. If the new restaurant site is surrounded by other restaurants, perhaps a deal could be struck between them and a service company to share the costs of deliveries or removals. Also, be aware of sensitive environments, such as downtown malls, high-rise office buildings or residential buildings, which might restrict work hours and require overtime premiums.
Most importantly, once the site has been selected and the costs have been accounted for, a restaurateur should promptly engage a contractor who can help review the lease for language that may impact construction costs, give preliminary cost estimates to make sure the proforma works correctly, and review the status of the site to evaluate logistics costs and schedule impacts on construction. This is particularly important if the opening of the unit is based on the landlord’s completion of work. A key point to remember about a lease is that it is not only a business terms agreement. The lease also includes a lot of issues that deal with construction and design, and it is extremely prudent to have a construction and design team minimally review the portions of the lease that impact their expertise. All too often operators have legal and real estate folks review the lease but leave the design/construction consultants out, which, in the end, costs them either more money, a change in design elements or, in many cases, both. For example, having a contractor review the lease early can identify exposures for a restaurant build-out. A $150,000 to $200,000 “smog hog,” or precipitator, sometimes is required to clean exhaust and grease prior to expelling fumes outside. Restaurants in hotels typically install the device so that hotel guests do not overlook smoke stacks from their windows. The addition of this type of device would be a costly surprise if not budgeted for prior to the lease signing. A lease may also sometimes require the return of the space to the original condition, and if the operator needs to install new mechanical systems to support the restaurant, such as floor drains, there might be major costs associated with the termination of the lease (such as the removal of under-slab piping, which is invasive work). A restaurateur should encourage their lawyer to welcome the assistance of the design/construction professionals in the lease negotiations, whether in written form, on the phone or at the table. Many times your landlord will not have the same expertise on their side of the negotiating table and will either concede to your experts or offer to get back to you, ensuring that a restaurateur’s interests are protected.
