Why Choosing Second-Generation Restaurant Space Makes Sense

“When it comes to a restaurant for lease, the best strategy is to be the second operator in that space.” This sage advice comes from a veteran commercial real estate investor, and it holds true for many experienced restaurateurs who prefer second-generation restaurant spaces over building from scratch. By moving into a location previously occupied by a restaurant that has since closed, you can save a significant amount of money and allocate it to other areas of your business.

Can You Save on Costs?

Building a brand-new restaurant from the ground up entails substantial costs for equipment, municipal fees, and obtaining a liquor license. Historically, the failure rate for new restaurants is high, especially in the first year. By choosing second-generation restaurant space, you let the previous restaurateur bear the cost of buildout, significantly lowering your startup costs and increasing your chances of long-term success.

Reusing Existing Elements

Second-generation restaurant spaces often come with existing light fixtures, tables, chairs, and décor that can be reused. While you may not reuse everything, you can save a considerable amount of money by retaining some of the design work and store interior. It is important, however, to ensure that the place still feels fresh and exciting to customers.

Evaluating Real Estate Significance

When a restaurant fails, it’s essential to determine whether it was due to the location, shopping center, or the restaurant concept itself. An experienced tenant representative broker can help you assess the location, visibility, co-tenancy, and access of a potential site. They may also gather insights from industry colleagues to gain a better understanding of the previous operator’s situation. This investigation will enable you to identify any potential real estate issues.

Considering Infrastructure Upgrades

Infrastructure considerations are crucial when selecting a second-generation restaurant space. You need to investigate whether you’ll need to upgrade the sewer connection or HVAC system, as these expenses can be significant. Additionally, take into account potential expenses related to complying with Americans with Disabilities Act requirements for the restrooms.

Convenience and Amenities

In today’s world, convenience is a top priority for restaurant patrons. Consider how people will order and receive food from your restaurant. If a second-generation space lacks a drive-through or curbside pickup, this could pose challenges. Investigate co-tenancy lease provisions and municipal restrictions to ensure you can provide the amenities your customers seek.

Leasing second-generation restaurant space offers significant advantages, although building a brand-new restaurant can also be a viable option. Many experienced operators explore second-generation spaces as part of their site-selection process because they know the bones are in place. Collaborate with a knowledgeable broker to ask the right questions and make an informed decision.

If you’re interested in finding a second-generation restaurant space for lease, contact Ambassadeur Hotel today!