What to expect in today’s restaurant market

By David Ashford, CCIM, Director of Southpace Retail Division

With every article you read, you get a different opinion about the retail market. One says recovery is on the way, while another says everything is falling down around us. Stores are closing, but stores are opening. It can be confusing and depends on the industry, but we’re seeing a lot of activity when it comes to restaurants.

If this is your business, you’re in a great position, because it seems like there are more new restaurants opening right now than anything else.

There are a few reasons for this. One is that franchises have become more affordable. In recent years, many restaurants went out of business which created a decrease in pricing. Corporate companies are able to expand with franchisees at a much lower cost.

Long line at Johnny's that opened recently in the old Outtakes location in Homewood

But it’s not just about franchises in Birmingham. We’ve seen local, independent restaurants opening as well, like Johnny’s, Little Donkey, Over Easy and Big Bad Breakfast. And some local joints are looking to expand with second locations. Brick and Tin, El Barrio and Cantina are great examples.

All of this expansion is great news for economic recovery, but anyone who buys a franchise or starts a business knows that they’re not going to make a significant amount of money in the first couple of years. The failure rate is still high for restaurants and their average life span is 7 years.

While executing a long-term successful plan in the restaurant business is difficult, it’s certainly not impossible. Frank Stitt of Highlands Bar and Grill, Bottega and Chez Fon Fon and Chris Hastings of Hot and Hot Fish Club are great stories that prove that continued success is possible.

The reason these guys have done so well is that they’re always visible in their restaurants. They cook and interact with their customers. If you frequent Highlands Bar and Grill, you know you always see Frank standing at the kitchen door and looking over the dining room. He talks to people and signs cookbooks. It’s this type of passion and complete devotion to your restaurant and customers that is required if you want to make it for the long haul.

So if you’re thinking about getting into the restaurant business, now might be the perfect time. But remember that you have to really dedicate yourself to the commitment if you want to see long-term success.

Southpace Properties, Inc. is Alabama’s largest independent commercial real estate firm. At Southpace, we add value to the use and ownership of commercial real estate through services such as office, retail, land, warehouse and industrial sales and leasing, tenant and landlord representation, development, consulting, investment sales, property management and construction management. With nine CCIM designees, Southpace has one of the state’s highest number of CCIM accredited brokers under one roof.

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