With all the specialty disciplines in real estate it is understandable how someone can be confused in deciding which specific service they need for their growing business. This confusion usually leads to a decision that most end up regretting. As developments unfold and business owners discover the process, key lessons are learned and then incorporated into the next deal structure. It has taken most enduring brands decades of trial and error to learn their current method for store development. This is where experience matters in this industry. You cannot afford 30 years of trial and error to perfect your growth initiative which is why you’re reading this message now. You need industry veterans on your side that have decades of experience in ‘deal making’ within multiple industries and multiple disciplines.
The term ‘dealmaker’ has been used for decades in the industry to reflect a person who has vast experience in commercial real estate and uses this experience to represent the interests of a growing brand. This individual(s) works with landlords, brokers, leasing representatives, business brokers, etc… in the site selection process for the client and forms the business terms of the landlord and tenant agreement. This person will also ‘quarterback’ the site through the store development process with finance, legal, design, entitlements, general construction & operations. They are not to be confused with a project manager or entitlement expert or a construction manager.
Again this person is ‘quarterbacking’ the site through the process and is usually the conduit between the decision maker and the rest of the store development disciplines. Real estate is this person’s core competency and pipeline development is their mission. Dealmakers are in constant pursuit of the best sites for their client and keep a constant pulse on the market through their relationships with other disciplines in a certain market place. Dealmakers work for the brand only and are compensated to protect the brand throughout the entire site selection and negotiation process. With a well vetted market plan, a good dealmaker can create an impressive pipeline of new to industry opportunities for multi-unit brands.
In some instances, emerging brands will outsource the dealmaker real estate discipline to a commercial real estate broker. Some brokers focus their services to the tenant side of the transaction and create offerings that are specific to the end user of the subject site. The ‘quarterbacking’ process in this scenario usually stops at the lease negotiation phase where the client engages a project management discipline to carry the project through the remaining store development process. Finding a dedicated broker with experience in both tenant representation and restaurant development is not easy.
Just like with any discipline out there, there are really good players in this industry and some really bad ones. The vetting process can uncover some short comings, however you never really know until you start some level of engagement. Without a properly vetted market plan, the exposure to risk increases substantially regardless of what path you take in the deal making process. Bottom line, a good broker will know the trade area(s) like the back of his/her hand and has a constant pulse on the activities taking place in the subject market (movers and shakers). The market plan identifies the areas of interest, the broker investigates all the known (and unknown) development opportunities within the subject areas of interest and the deal maker evaluates for consideration and ultimate direction for the brand.
If you have existing assets in the market place and you are continually adding new locations to the area, a seasoned asset manager will add a great deal of value to your extremely valuable portfolio. An asset manager is a dealmaker with enhanced skill sets in both financial acumen and contract negotiations. Optimization is key to any asset portfolio and determining the long term reinvestment plan of any existing business requires a discipline with certain skill sets. These disciplines work on capital reinvestment plans for the company, stay in step with all pipeline development initiatives and is in constant contact with the operations team. All disciplines are operating under the company’s strategic plan and are 100% in sync with each other.
It is important to note that market planning is not listed above as a real estate discipline. There is a reason for this. Too often, multi-unit developers rely on real estate disciplines to provide market intelligence to guide them to a decision. This is important on site by site analysis but very misleading in the development of an actual market plan. Market plans are to be conducted by experienced professionals in this industry that have years of experience in data analysis and strategy development. Due diligence is a very important component of the real estate process but is not market plan worthy. It is extremely important to keep these disciplines separate from each other as the industry has done a poor job at this and the hybrid results of real estate disciplines performing market plan services has yielded mass confusion for decision makers. Please view the ‘market planning’ services section of this website for more details on this matter.
Real estate is a tough business by itself. If you are considering a multi-unit store development initiative within the restaurant industry, your real estate team needs to be experienced and joined at the hip with all other disciplines within your business. If your team is not aligned or if the strategy is not 100% clear to everyone, problems are guaranteed. Experience matters in real estate and the lessons learned by the veterans in this industry have been costly for most. The impact of an underperforming restaurant can be detrimental to a company. You are committing your brand to a space for multiple years for long term fees that can turn any stomach. Do not try this on your own! Heed the advice from folks that have seen the good, bad and ugly side of this industry. There is no shortage of gun slingers out there who have simplified the real estate process to simple traffic counts and site characteristics. There is a lot to this business and it can be very complicated even for experienced professionals. Do not try to short cut the market planning or site selection process for the sake of putting your flag in the ground sooner than later. Do your homework, perform due diligence, consult with experts before committing to an attractive deal. Do not bet on blind luck in this industry. Your odds are probably better in Vegas! Restaurant real estate expertise is out there for you to take advantage of, so there are no excuses.
For more information on our unique approach to real estate services, please do not hesitate to call us direct anytime or shoot us an e-mail with your questions and we will be sure to promptly respond.