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Posts Tagged ‘restaurant leasing nyc’

Grease Trap or Grease the Wheel- NBAT-The Kinder, Gentler, City Agency Offers Help for New Food Businesses

December 29th, 2010 No comments

The daunting task of negotiating the maze of city agencies has gotten easier. As reported in the New York Times article of December 28, 2010, before opening, a new food business might have to face up to 11 different departments, and secure up to 30 different permits, registrations, licenses, and certificates, and pass 23 inspections. The New Business Acceleration Team helps new restaurateurs through the jungle of the permitting process.

According to administration officials, the 200 establishments serviced so far, have opened, on average, 10 weeks faster than planned. Nice, considering how little free time is often offered in a new lease. Currently the team is comprised of four inspectors, plus supervisors from agencies that issue permits, like the Depart of Health, Department of Buildings, Fire Department and Landmarks. The hope is that at one point there will be a single restaurant license that would replace all others. A long range goal is something like a Mayor’s Office of Hospitality.

NBAT works with qualifying businesses to schedule and coordinate most required inspections and, when appropriate, to schedule multi-agency inspections on the same day. For example, NBAT works with the Bureau of Fire Prevention to ensure the timely submission of plans and equipment documentation as well as provide inspections regarding range hood devices and other hazardous installations. NBAT inspectors are also trained to conduct Department of Environmental Protection grease interceptor inspections ensuring that grease traps are correctly sized to handle grease discharged by cooking and kitchen equipment. NBAT works with the Depart of Health to ensure that all food service establishments are properly permitted and operating safely. NBAT, and the Department of Buildings, work together to ensure the safe and lawful use of buildings and properties while facilitating the issuance of Certificates of Occupancy and Place of Assembly permits.

The ideal participants in this program are generally; new restaurants, bars, bakeries or butcher shops seating 50 people or less. Qualifying bars must serve food. However Batali’s mammoth Eataly found a way to be serviced. While a new venture, it is hardly a small place, and ownership is hardly inexperienced. As always, there is a way around certain limiting requirements. Therefore I suggest all who are opening a new food business to seek this valuable help. For complete information, as well links to the specific city agencies involved, go to: http://www.nyc.gov/html/nbat/html/about/about.shtml

Good luck- get picked and get open quick.

A VENT ABOUT VENTING

October 2nd, 2010 No comments

Gossip and half baked notions about government rules and regulations run rampant in the restaurant business and restaurant brokerage. The inability to cipher truth from tall tales is often a recipe for ruin. Installing venting is a prime example. On average, for a five story building it costs $30,000, and a month or two for permits. The permit time is often absorbed within the rent concession period, so it is generally not a factor. Believing horror stories, tenants are often willing to pay $1000 a month or more in rent, to avoid putting in their own venting. Rent is the most critical factor for success at retail. Finding the right space in the right neighborhood at the right price is a difficult task in any economy. Only a limited number of landlords allow cooking in their buildings. This loss of logic in excluding a large swath of potential locations is inexplicable. A simple consultation with a kitchen engineer can result in massive savings in rent, and a much more expedient search for space.

Retail Math

June 8th, 2009 No comments

By Steve Rappaport

Being a veteran of 30 years of luxury retailing in numerous Manhattan locations, and having survived relatively unscathed, the following are a few insights I have gained into this business that might help others involved in store leasing.

It is now clearly a tenant’s market. This is the new fact of life of commercial retail leasing. Landlords are generally reconciled to the idea that they must accommodate prospective users of their increasingly vacant spaces. However, most landlords have only a rudimentary idea of what these needs are, for instance, whether a particular location is suitable for the retailer’s product. Requisite sales figures and attendant costs are generally a mystery to both brokers and landlords. Knowing these details creates a shared understanding between parties that facilitates negotiations. Armed with correct information, brokers can help landlords understand the economic specifics underlying the decision to rent a store. On the tenant side, brokers can truly be empathetic to the requirements of those they represent.

Retail Math

Image source: http://www.journeytomastery.com/new-agent-articles/do-the-math/

To do this, we must learn the new math. We all can figure out what 3.3% of the aggregate total of a lease is. It is imperative to discover some other calculations. If brokers know what the costs are to run a store they can be effective allies of both tenants and landlords. We can become informed partners for either side. Further, we should understand the numbers behind sales projections. With this knowledge we can guide tenants to make educated choices, and we can help a landlord understand the facts of retail in New York City. If both sides realize just how much business has to be done to support a certain rent, there is the possibility that they might manage their expectations in a different manner.

The old saw that rent should not exceed 10% of a store’s business no longer cuts. Over the years, New York retail rents have soared, making 15% a more accurate estimate. However it does not suffice to say that a unit that rents for $300,000 a year must produce annual sales of $2 million. How is the number achieved? Let’s analyze that $2 million target more precisely.

It equates to $38,461 per week in sales, or about $5,500 per day. Consider that the average retail cost per item is $150. That would be 36 transactions per day, or 256 per week. Now think what that translates to if the average item is $75! And if the average cost per item is $25, it is 1,538 transactions per week, or 219 per day. Now imagine standing in a store and waiting for all those customers. It hardly happens easily and sometimes hardly at all. In the current economic climate there are not that many customers entering a store, much less purchasing an item.

Another important yardstick of retail viability is receipts per square foot. If the store under consideration is 1,500 square feet, it would need to produce $1,300 per square foot per year—far higher than industry average.

Whether or not sales projections are met, there are still plenty of bills to pay. What are the costs beyond rent involved in running a retail operation? We all know there are utilities, salaries, advertising and a host of other costs involved. But what are they exactly, and how much do they each cost? This data supplies the necessary perspective to evaluate any retail situation.

The most basic cost for retailers is that of the merchandise being sold. The difference between what an item is purchased for and what it is sold for is gross profit. That difference is called the markup. And if the markup is not sufficient, the gross profit is not large enough to cover all the other costs. And when that happens, it is called losing money, which is what most retail stores have been doing lately.

Although both are considered retail, there are different numbers involved in running a restaurant than for operating a dry goods store. The following charts show current average estimated costs for either a clothing store or a mid-priced restaurant in New York City. Knowing and understanding these numbers can enable brokers to be effective advocates for all parties in the retail leasing market.

The charts can be found on pages 2 to 5 of the following file: Retail Math.