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Repurposed Real Estate: Deal or No Deal?

For foodservice operators considering entering a space previously occupied by another restaurant, veteran service agent John Schwindt offers a few pointers on evaluating existing infrastructure items such as hoods, grease traps and walk-ins.

Building a restaurant isn’t cheap, so it’s natural for operators to look for bargains.

Real estate that was previously occupied by another restaurant concept may look like just such a deal. After all, these spaces can come with a hood, utility hookups, a grease trap and even a walk-in already installed. That’s can easily total six figures worth of infrastructure. Why not take advantage of it?

Indeed, there are deals to be had, but operators have to perform their due diligence to make sure they actually get a deal and not more, and more expensive, problems, says John Schwindt, vice president of operations for Englewood, Colo.-based Hawkins Commercial Appliance Service and current president of the Commercial Food Equipment Service Association (CFESA).

“We run into this all the time. ‘Oh, there’s a restaurant in there, we should just be able to move in and do our thing.’ But just because it’s a restaurant doesn’t mean it’s the type of restaurant that can facilitate the kind of stuff you want to put in there.”

The hood provides the perfect example of this. Some operators may think a hood is a hood: 12 feet of hood space should be able handle any 12 feet worth of equipment, they believe. That’s simply wrong. Each hood system is designed and built for the specific equipment package that will go beneath it. Design factors include BTU outputs, fuels, the type of fire suppression system required and even the number of elbows in the duct work. If an operator signs a lease for a space with an unsuitable hood, it can actually be more expensive to have the old hood replaced or modified than installing a new one in a building without such infrastructure, says Schwindt.

The same applies to a restaurant’s grease trap. These are specified at specific sizes based on what’s on the menu. If a space goes from a soup and salad concept to burger joint, “all that stuff is going to get washed down through the dishwasher and it’s going to clog up your drainage system,” says Scwhindt. Resolving this problem means paying big to have the grease trap emptied frequently or hiring a contractor to rip out the old one and install a new one.

Operators also have to take a restaurant’s utilities into account. The most basic issue is gas vs. electric. But even if there’s a utility match with a specific piece of real estate, there are further questions to ask. The size of the gas line coming into the building needs to match up accordingly with the operator’s equipment package. If the gas line’s too small, the hot line won’t function properly and may not work at all with too many pieces running at the same time. Similarly, if the operator plans to run an electric kitchen, the space’s electrical panel must be able to handle an oven, fryers and more all working at once, says Schwindt.

Finally, there are the walk-ins. Consider a few basic factors when looking at a walk-in built for another operator. One is size: Too small and the operator will have to invest in additional refrigeration, Too large and the operator will pay extra to cool empty space. Operators should also look for signs of wear and tear. Are the seams between panels even? Is there excessive condensation or rust on the interior? These can be signs of a unit that’s closer to the end of its lifecycle than the beginning. Finally, there’s the cooler vs. freezer question. Does the unit have the exact type of storage the operator needs? If not, they may have to pay for a conversion, or tear the whole thing down and start over. “A refrigeration package is very specific. If it’s not designed for what you need to do you have to replace it,” says Schwindt.

Best Bet

With so many different factors to consider, it may seem like moving into a space with foodservice infrastructure in place is more trouble than it’s worth. That’s not entirely true, though.

An operator’s best bet, says Schwindt, is to find a space that was previously occupied by a similar concept. In that situation, the infrastructure has a good chance of matching. Breakfast place to steakhouse probably won’t work. Breakfast place to breakfast place, though, can succeed and save the operator huge amounts of money.

Even if an operator finds a match, though, they’ll need help to verify what they’re working with. Before the lease is signed, Schwindt recommends hiring outside experts to evaluate the infrastructure that’s in place and determine if it’s suitable for the new restaurant’s needs. Design/build dealers, kitchen design consultants and service agencies that are members of CFESA can all help with these issues.

“You have to take your emotions out of it and start thinking logically or hire somebody who can,” Schwindt says. “Everything may look awesome on the surface, but if you get another set of eyes to look at it and all of a sudden it might not be so rosy.”