Renovations Worth the Cost
Restaurant renovations are all the rage. But the price of being pretty sometimes defies the practicality.
“Getting a good return on investment is a significant part of the determination,” says Dennis Lombardi, executive vice president, foodservice strategy at design firm WD Partners in Columbus, Ohio. “When renovating, you need to look at each of the major areas and all of the components. Then ask, ‘What is the likely return on this?’ It creates discipline to do a cost-benefit analysis on the project,” he explains.
The equation could include finding a better use of space in the front and back of the house, or installing energy-efficient lighting, plumbing, kitchen equipment, and climate controls. While these costs may take longer to recoup, they can save money in the long run and generate other benefits.
“If I can tighten up the kitchen and use state-of-the-art equipment, I can operate with two or three people during slow periods, not five or six,” says Paul Mangiamele, president and chief executive at Bennigan’s Franchising Co., which has undertaken a chain-wide makeover that includes remodeling existing units and creating a new prototype for future ones.
Most of the Dallas-based chain’s 80 units are owned by franchisees, who must shell out a hefty investment, roughly $200,000, to fund their renovations. But operators are encouraged by the success of the first remodel, in Chicago, which is recording double-digit sales gains.
“I’d rather create an atmosphere where franchisees want to do this,” Mangiamele notes.
Want to vs. need to is another aspect that has to be addressed. And these days, it typically makes economic sense to remodel an existing space rather than build new. That’s what renowned chef-operator Richard Sandoval did when he opened Zengo New York in 2010.
“The (prior) owner spent $5–6 million building it out, and we went in and spent $2 million,” he says. “The budget is lowered incredibly [when working in an existing restaurant space] and you want to spend most of your dollars inside the restaurant, where it impacts the diner.”
Sandoval’s organization, which operates 30 contemporary Latin-cuisine restaurants worldwide, looks to renovate its units every six or seven years to keep them fresh. “Food trends and diners’ tastes change, and operators must stay in step with that,” he says.
This year, he spruced up Maya, the Gotham restaurant that launched his career 15 years ago. Maya was closed 10 days for the redesign, which includes a new tequila bar next door.
“We look at the projected investment to see if it makes sense,” Sandoval notes. “You have to do the calculations to be confident in what your return will be.”
Atlanta’s cutting-edge Southern cuisine restaurant, Food 101, flagship of the seven-unit 101 Concepts Group, underwent a major renovation in November that required a 10-day hiatus. The project was largely driven by a need to upgrade the outdated kitchen, which now has 70 percent new equipment, but the company also remodeled the front of the house including a switch to butcher block tables from tablecloth.
“People eat differently now than they did 13 years ago when we opened,” says co-owner Chris Segal. “Dining has become more casual, and consumers are increasingly seeking healthier offerings that require different cooking techniques.”