Which location do you like?

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JustGarlic
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2014/06/03 20:47:37 (permalink)

Which location do you like?

OK, not for a restaurant, but for a cooking class business.
 
Location A: In a strip mall that was just about dead for the longest time, but has slowly been adding stores over the last year. There are about 25 stores, and 4 - 5 available stores. The one I like is about 1350 SF. It seems like business is picking up, but by no means is it crazy busy. Obviously lots of parking. Rent is slightly less than location B. Far more road traffic on a daily basis, but zero foot traffic.
 
Location B: Is a small artsy town near me. There are tons of antique stores, restaurants, food specialty stores, flower shops...... Also about 1300 SF. Rent is slightly higher. Far less road traffic, but lots more foot traffic. Parking can be rough on the weekends as that is their busy time. Also, come winter, foot traffic is cut by 50%. But in my opinion, a place that has cooking classes would fit right in with the spirit of the town. Essentially everything is on the same street, but some stores sit up to 1/4 of a block off the main street.
 
Both areas have household incomes of about $120K per year, plus or minus a bit.
 
I am leaning towards the town, but by no means am I locked in on it....
post edited by JustGarlic - 2014/06/03 21:05:06
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    Midnights
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    Re:Which location do you like? 2014/06/04 13:17:24 (permalink)
    Unlike restaurants, cooking classes aren't something that people usually just walk into your shop and jump into. With that in mind, I would imagine walk-in traffic is less important. But walk-in traffic would help drive new customers to your shop, even if they couldn't just jump into a class. You might have basic, short teaser classes throughout the day to give people a taste of what to expect. That could be a way to use the walk-in traffic to your advantage. The downside of the town seems to be the parking issue. Personally, I hate going to such places. If I have a class scheduled and I can't find a parking spot, what will you do? Will you reimburse me for the class? If you charge me for the class, after I spend 45 minutes looking in vain for a parking spot, I will not only never come back, but I would be very vocal to both my friends and social media.
    Sorry I can't be more helpful, but such decisions take in mind so many other variables that you didn't mention.
    #2
    Foodbme
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    Re:Which location do you like? 2014/06/04 14:30:44 (permalink)
    Definitely "B"!
    "Artsy" people would be more likely to attend a Cooking Class. A place like yours would fit in better with the other kinds of outlets nearby. People who shop in those kinds of stores are your target market. Foot traffic is always the best way to grab attention. Be sure to have an attractive storefront and entrance with brochures readily available so people can pick them up and learn more about what you do. Offer one FREE "Observation Ticket" that allows a person to sit in on one of the classes but not participate in any cooking. Offer cookies to anyone dropping in to learn more about you.
    Definitely "B" is the way to go.
    #3
    JustGarlic
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    Re:Which location do you like? 2014/06/04 17:27:00 (permalink)
    Foodbme

    Definitely "B"!
    "Artsy" people would be more likely to attend a Cooking Class. A place like yours would fit in better with the other kinds of outlets nearby. People who shop in those kinds of stores are your target market. Foot traffic is always the best way to grab attention. Be sure to have an attractive storefront and entrance with brochures readily available so people can pick them up and learn more about what you do. Offer one FREE "Observation Ticket" that allows a person to sit in on one of the classes but not participate in any cooking. Offer cookies to anyone dropping in to learn more about you.
    Definitely "B" is the way to go.

     
    I had decided to go that way. And I called today, and the place I wanted was rented out over the weekend. In this case, one guy pretty much owns every retail store on the main street. He was buying them up when the town was really in a bad way. Now the whole street is filled with mid to pricey restaurants, and the other things I mentioned. I am not sure right now, if there are ANY other places to rent there.
     
    However, that said, I did today get good news on the other location. They just signed 2 tenants, and one of them might be a good source to feed me potential clients. That place is called Kimberton Whole Foods. Organic stuff, grass fed..... whole foods. They also have an Indian market opening up, that is stocking the shelves already. I cook Indian foods, lots of them. So, while I would certainly not expect to teach Indian folks how to cook Indian food, I could teach people to cook Indian, and then send them across the parking lot, where they can find all the ingredients.
     
    The landlords are fine with what I want to do. I'm just not sure if the rent is fair. It is about $35K a year including space, insurance, CAM, and taxes.  With starting out, I hope to gross 75K - 100K the first year. A similar place I am modeling myself after is grossing almost 300K a year in their 3rd year ( I know that because if you read their website you can easily do the math..... $60 per person, and he is almost booked solid for 300 nights a year, 12 people per class - $216K just for night classes, but he also has morning classes all year that cost less, and are not all full ).
     
    Considering he is using residential equipment, which costs far less, I think he is doing OK. Maybe not making a mint, but doing OK. He seems to be the only person getting paid, as I don't think anybody else works there. He also has other ways he makes money according to his website.
     
    I'm not really in this for the money... I mean sure, I want to be successful, but I retired at age 47. I am almost 52. After 5 years of not working, I am bored to tears, and cooking, and socializing are my passions in life.
     
     
    #4
    MetroplexJim
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    Re:Which location do you like? 2014/06/04 17:35:21 (permalink)
    One of my tenants is a culinary school; they do very well operating from a (relatively) inexpensive location on the second floor of a 'historic landmark' center in the Arts District of Ft. Worth.  They have the benefit of high traffic, adequate parking, and a well-known location which, among other things, includes three fine restaurants. 
     
    On balance, I'd choose "B"; "A" seems too sterile.  And, a coooking school next to mani-pedi joints and dry cleaners just seems 'wrong'.
    #5
    FriedClamFanatic
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    Re:Which location do you like? 2014/06/04 19:56:40 (permalink)
    Garlic..........take a drive down my way and look at downtown West Chester. You could set up on Gay St.......trendy hip bars and stores.............or out on the far end of market.......one really really good fried chicken place(lunch only) and all the arches and carwashes you could ever want.but plenty of parking.........and some interesting characters
     
    Got to believe that up your way it's the same........Not sure about the Whole foods place..those seem to come and go.the indian...yeah may last a while (Thai rest. last 2-3 years here).....but is that gonna be your clientele?
     
    A bit further south near me is Dinner Affaire in the Olde Ridge Shopping Center.  Their concept is similar.a cooking class where you get to prepare a weeks worth of meals (you can "hire" a substitute chef)  You might wanna pick their brains.  This is prime Chi-chi realestate....a Whole Foods across the street, a Wegmans going in 1/2 mile away.every Republic and Docker and other outfits folks with tons of $$$$ can drool and spend on.  Might be worth your time......i have never attended one of their nights, but they look like interesting menus from all the Emails I get
    post edited by FriedClamFanatic - 2014/06/04 20:10:35
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    Foodbme
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    Re:Which location do you like? 2014/06/04 19:58:41 (permalink)
    Do the Math!
    $35K Rent - $2917 a Month. $25.92 a Sq. ft.!!!!!!!!! Ridiculous!!!!!!
    $75K 1st year income
    46% Rent Factor!!!!!!!
    You will lose a ton of money!
    Have you done any P&L Pro-Forma's or a Business Plan?
    If not, DO NOT PASS GO! Stop in your tracks before going any further.
    DO NOT BUY or RENT ANYTHING!
    Unless you have money to burn and are doing this for fun, you'll lose your shirt (AND your retirement funds.)
    No business for profit can survive with a 46% Rent Factor.
    Check with Commercial Realtors in the area and see what Comparable Commercial rents are in the area.
    Rent divided by sales = Rent Factor. 
    http://www.sba.gov/community/blogs/community-blogs/business-law-advisor/6-tips-negotiating-commercial-property-lease-wi
    http://womeninbusiness.about.com/od/leasingcommercialspace/a/b4usignlease.htm
    http://blog.capitalretailgroup.com/2011/06/retail-occupancy-costs-to-sales-ratio/
    post edited by Foodbme - 2014/06/04 20:30:08
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    MetroplexJim
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    Re:Which location do you like? 2014/06/05 07:58:12 (permalink)
    I agree.  That rent is way out of line for your projected gross.  Hell, it's out of line for a $300K annual gross. 
     
    Here is a 'virtual tour' of my tenants' premises.  They pay significantly less than $20/rsf!  
     
    And, they enjoy the company of 'high end' tenants and parking lots are chock full of Lexus, BMW, Benz, Rover, & Escalades.
    #8
    JustGarlic
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    Re:Which location do you like? 2014/06/05 12:07:55 (permalink)
    Jim, these are pretty much standard rates near Philly.  Just like houses in Dallas cost 40% of what they do in Philly.
     
    I am working the numbers through software called Stratpad. I also have an attorney who think she can negotiate a much better price, but the asking price is very typical where I live.
     
    Right now, my projected gross is just a guess. I know what I said, but that is a guess.
     
    There is a place not far from me, where I can get much cheaper rent, but there is the issue..... while the town it is in is nice, and has a good household income, the landlord refuses to fix up any of the property. For instance his parking lots are just filled with holes - big holes.... and I think customers shy away from the businesses that go into his properties. So they go out of business at a much higher rate than normal.
     
    Hell, I would love to pay $1500 for 1300ish SF, but that is not reality here. I have a guy I know who owns a muffler shop on a busy corner and he's paying almost 15K a month. 3 bays plus parking.
     
    I will continue to do my homework. Honestly, I would like to make money, but breaking even would be OK. God bless Netflix stock, LOL. :)
    #9
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