Beyond Bargains: Why Second-Generation Restaurant Spaces Aren't Always the Savviest Choice

As a seasoned retail real estate broker handling multiple listings, I'm no stranger to the allure of snagging a deal, especially when it comes to restaurateurs eyeing the remains of shuttered diners. But before you leap at the opportunity to inherit a former restaurant's space at a bargain, let's sprinkle a bit of caution into the mix.

1.????? Recipe for Renovation: Sure, second-gen spaces come with a kitchen and dining area, but transforming it to fit your concept might demand a hefty investment. The costs and time involved in revamping a layout designed for a different cuisine can burn through your budget faster than you can say "grand opening."

2.????? Building Code Buffet: Building codes evolve, and what once passed muster might now be a recipe for headaches. Outdated plumbing or electrical systems may force you into pricey upgrades. And if your vision includes structural changes, brace yourself for the expense of bringing the space up to code.

3.????? Brand Ambiance: Your restaurant's success hinges on more than just its menu – it's about crafting an enticing brand image. Inheriting the ghost of a failed eatery can spook potential customers, tarnishing your brand before you've even opened your doors.

4.????? Equipment Quagmire: While you might find some kitchen gadgets left behind, don't count on them being top-notch. Outdated or malfunctioning equipment could leave you scrambling to foot the bill for repairs or replacements.

5.????? Lease Landmines: Beware the fine print! Leasing a second-gen space may come with strings attached, like restrictive lease terms that tie your hands when it comes to making necessary changes down the line.

6.????? Location, Location, (Mis)Location: Let's not ignore the elephant in the room – sometimes, a restaurant fails because it's simply in the wrong place. Don't inherit someone else's mistake.

7.????? Mojo Matters: Call it superstition, but some spaces just carry bad vibes. Ignore the mojo at your own peril.

In a nutshell, while the prospect of scoring a bargain may be tempting, the hidden costs lurking within second-generation restaurant spaces could devour your savings faster than a hungry patron tackles a plate of hot wings. Before taking the plunge, crunch the numbers, weigh the risks, and ensure that the savory aroma of success outweighs the potential pitfalls. After all, in the restaurant business, success is about more than just filling seats – it's about crafting an experience that keeps diners coming back for seconds.

Shawn Massey is an adjunct professor at The University of Memphis where he teaches a graduate class in real estate development and undergraduate/graduate in real estate investment. When he is not teaching, he is a full-time retail real estate advisor with TSCG. He holds the following designations CCIM, ALC through the National Association of Realtors and CRRP, CLS, SCLS designations through ICSC. To contact Shawn Massey please call (901) 461-7070 or via email at [email protected]

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