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According to the National Restaurant Association, it is typical for restaurants to do some kind of renovation every five to seven years. Why you ask? Money!
Refreshes attract new customers which in turn generate new revenue… which equates to, MORE revenue. A simple bathroom remodel in a restaurant can see an uptick of 7% in sales. A major interior remodel, 20%, and a complete brand refresh? Well, you better hire additional staff. Numbers don’t lie. There are many components to a successful renovation, but there are two very important aspects that are often overlooked:
- Knowing your Return on Investment (ROI). How much are you going to spend? How much more revenue will that generate? How long to pay yourself back and make a profit?
- Complete the work without disrupting ongoing day to day sales. After all, what is the point of trying to increase your revenue if you are going to kill what you already have coming in the door.
Below are step by step best practices to follow in order to put together the best strategy when it comes to budgeting your next restaurant remodel.
Step 1: Hire a Professional
Hiring a professional is key in planning a budget and probably one of the biggest restaurant renovation cost you will have. If you are doing a complete overhaul, you want to make sure you are financially prepared. No matter what your restaurant renovation needs may be or how big or small the cost is, there is a professional (SCGWest Development) who can help you execute to perfection. Also, if your restaurant renovation involves changing the layout of the space, or updating the kitchen, you’ll need to be sure your electrical, plumbing, water lines, heating, HVAC and lighting are all up to code. This is where a professional (SCGWest Development) comes in to make sure that these jobs are done safely and within legal requirements for your area.
Step 2: Know Your Rate of Return
It all comes down to profit whereas knowing how much more revenue you will generate is key. Take into account all the financial factors (your cash flow- whether you’re securing financing, whether you’re going to close down and for how long- decide then ultimately how much you can afford to spend on a remodel. Also, you want to keep in mind contingencies as most renovations go over budget, so your realistic restaurant renovation cost estimate should land at a number that’s less than what you can afford to spend. While calculating the average cost of a restaurant remodel, base your budget on an ROI study in order to understand your cost per square foot, which can be affected by location, labor costs, and the scope. More so, the bulk of a restaurant’s fit-out costs relate to the kitchen. When coming up with a construction budget, this budget will consist of soft costs (architectural and structural), hard costs (demolition, framing, electrical, plumbing, etc.) and FF&E (seating, lighting, equipment). It is crucial to overestimate the time and money needed to complete the project since setbacks are inevitable.
Step 3: Complete Your Work with No Disruptions
Once you know the extent of your planned remodel, you can start planning the timing of your restaurant renovation. This is important because a remodel WILL affect a restaurant’s ability to operate and a major remodel could leave your restaurant closed for weeks. Therefore, you want to plan your renovation, so it has a minimal impact on your revenue. A solid strategy would be to determine your timing by deciding on the date you want to reopen by, then working back from there. For instance, if your remodel is estimated to take three weeks, it is wise to not start exactly three weeks before the date you want to reopen. Delays happen during most remodels, so plan for some extra time into the schedule so you don’t end up closed when the high season rolls around.
SCGWest Development: Your Commercial Real Estate Professional
Overall, the key to making your restaurant remodel as painless as possible is planning and budgeting properly. By thinking through each detail of your restaurant makeover, you can come up with a plan that will attract new customers and wow your reoccurring customers. SCGWest is here to help achieve these results along with guiding you along with the budgeting process to save you not only money, but time! Therefore, planning and budgeting a realistic, yet comprehensive strategy will lead to hiring the right team of professionals and ultimately execute perfection for your next restaurant remodel. SCGWest is here to help achieve these results along with guiding you along with the budgeting process to save you not only money, but time!