Whether you like being an entrepreneur or not, opening your first restaurant, bar or bakery business can come with a huge learning curve, if you have never done it before. Some say opening your first place of business is like studying to get your MBA, but with a greater risk of failure.
Each week I receive several calls, emails and referrals from people that have an amazing concept, now they want to start looking at retail space for that first business. Now, before we jump the gun, we need to find out a few details to understand the reality of New York City retail real estate and can it work for you and your concept. As everyone says, location, location, location, but do you have the money and does it make good business sense for that location you want. This is where I ask, are you funded or do you have capital in your company bank account? As I hear about 85% of the time from new operators, well I am going to get a bank to finance me.
Well, not to burst a bubble, but that is very unlikely as a new operator in the business with no track record and no company tax returns. So before you even start looking for retail space, you need a business plan and money in place in order to potentially make the next step in actually isolating your new place of business. Now this is where I say, are you realistic or not with what the New York City retail market is? Manhattan, as well as several areas of the surrounding boroughs is very expensive and they will dictate decisions you make as an operator. Are you realistic with what the real estate market is dictating? This can lead into several other questions and important issues you will need to address however let’s keep it simple for the time being. All the following are some questions you should ask yourself if you are looking to operate a business when preparing food.
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What is the minimum and maximum size square feet you need to operate your restaurant concept?
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Do you need venting for gas cooking? Can you prepare the food with an electric kitchen?
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Do you even need a kitchen and/or can you use a commissary kitchen at cheaper location?
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Will you need a liquor license at your place of business?
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What preparation equipment will you need for the kitchen itself?
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Are you willing and able to pay key money if it makes sense?
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What does your business plan budget for you as what you can afford for rent?
I would love to sit here while writing this and tell you it is easy as a new operator to open a new food retail business in New York City, but it is very difficult, great concept or not. Any landlord feels they will be taking a risk on someone new to the business with no track record and any records to validate you as a tenant. They may not even allow food or cooking usage, they may not want you to sell alcohol or you just plain out can’t afford it and they don’t want tenants only lasting a few years in business. You need money in place because once a spot is isolated, you will have to show you have to money to start the business, build out the space and operate it. This is just the tip of the iceberg for the questions that come from this brief article and what it takes when looking to open your first place of business in the New York City area.
Yes, location and what you need to run your business are very important, however each operator needs to be realistic with what the retail commercial real estate world is dictating and understanding your budget and concept need to be realistic as well. Retails rents are very high and if you want that specific location, you are going to pay a high price for that space. There are so many other questions, considerations and aspects involved in opening your first place of business; however this can be a good starting point. Remember, when going through this process, you will learn a tremendous amount and be smarter because of it. As any entrepreneur will tell you, is it a deal breaker to your concept, or is it something you can deal with?
