At first glance, renovating a space may seem cheaper and less complicated than building a new foodservice operation from the ground up. That's rarely the case, however, and renovations require extensive up-front research, coordination and more to ensure projects go smoothly.
Times are tight, yet opportunities still exist in the foodservice segment. Rather than invest in a new build, many foodservice operators are choosing to remodel their current facilities or move into existing locations previously inhabited by other businesses.
"About 5 years ago, only the top 10 percent of our city's restaurants were expanding," says A.J. Barker, principal of Think Tank Hospitality Group in Seattle. "Now we're seeing more operators spruce up and open additional locations to keep their brands relevant."
While renovations can offer several benefits — chief among them, eliminating the expense of constructing a building from the ground up — these projects can present a host of challenges, and hidden problems can quickly bust a budget.
"The most common misperception is that a renovation will be cheaper, and this is never the case," says Brad Belletto, CEO of Vision 360 Design in Dallas. "We figured out that one of our most recent renovations would have been $500,000 cheaper if it was a rebuild instead [due to the added costs of code compliance]."
Whether remodeling an existing space or moving to a different, pre-existing location, foodservice designers say operators need to consider a number of factors and steer clear of a few common mistakes prior to the start of a project.
Poor planning and premature spending can quickly and easily derail a renovation project. "Sometimes, with an expansion or remodel, it can be more difficult to follow a plan than with a startup that has a full bill of goods," Barker says. "There tends not to be the same amount of care and attention given with remodels."
Another common renovation mistake is not considering the return on investment when budgeting for new equipment. "My job is to figure out the ROI, since many operators don't want to spend the money up front," says L. Charnette Norton, owner and principal of The Norton Group, a foodservice consultancy based in Missouri City, Texas. "Most of the time, when the long-term costs are considered, operators will make the correct choice."
For example, on one of Norton's projects, consolidating two floors into one resulted in greater efficiencies and lower operational costs. After considering the ROI, the budget was doubled from $5 million to $10 million. The consolidation made sense because it not only reduced the restaurant's footprint by 25 percent, but it also saved on operational costs, such as heating and cooling, over the long term. An induction cooking unit was added, not only to increase energy efficiency, but also to save on air-conditioning costs.
"The client understood that a one-time expense was better than dealing with continuous costs throughout the operation's lifetime," she says. "It made sense."
In addition to looking at the ROI, operators sometimes neglect to consider the impact a remodel will have if the business continues to operate through the construction phase. Renovations bring dust, noise and substantial environmental change to an operation. A sufficient plan will be necessary to ensure minimal service interruptions.
"When foodservice operations will be substantially changed, operators can't plan enough or too early," says Ralph Goldbeck, AIA, partner of Kitchens To Go in Fresno, Calif.
For example, if the renovation takes place at an existing location, operators must decide whether to suspend business, which also impedes profits; stay open, which can extend the time it takes for the remodel and potentially compromise food safety; or, for facilities like hospitals, schools and prisons, utilize an outside foodservice provider, which is an added cost. "At the end of the day, customers expect the same food quality," Goldbeck says.
Another option is to set up a temporary on-site kitchen utilizing mobile or modular units. In these instances, Goldbeck suggests replicating the operation's back of the house. "That way the staff doesn't have to be retrained on different equipment," he adds.
Temporary kitchen modules tend to be 12 feet wide and 24, 42 or 56 feet long, while trailers are 8 feet wide by 56 feet long. Operators can shift utilities, including power and water, into the spaces, which include exhaust hoods, makeup air and fire suppression systems. Leases for the temporary kitchens can be as short as one month to as long as several years. Shipping and assembly costs must also be considered.
Throughout a renovation, the usable equipment typically dictates the menu, yet designers say no hard-and-fast rules exist to help determine what to keep and discard for the finished project. "The changes that are needed will depend on the cooking needs," Belletto says.
From an economic standpoint, it is prudent to look at the mechanicals, electrical and plumbing to stay within the equipment's necessary parameters. Above all, the age and condition of the equipment will indicate whether each item can be reused or needs replacing. Designers will look at the cost of maintaining an older unit compared with the ROI for a new model. Energy efficiency also comes into play, particularly with equipment like new dishmachines, which utilize less water than older units.
"I also ask for the last 12 months of expenses in maintaining used equipment," Norton says. "Once those records are pulled and carefully reviewed, it will be evident which equipment is always down or constantly needs repairs. This helps determine if purchasing new equipment is preferable to dealing with ongoing repair costs."
Most operators try to utilize as much of the current equipment as possible. Items like steam-jacketed kettles can typically be kept as well as stainless steel tables. Older units, such as dishmachines and refrigeration units, may be outdated and thus may cost more to operate in the long run. Walk-ins can typically be reused but may require new compressors and condensors. It pays to do a complete and thorough inventory prior to the remodel, which will help assess the condition of all equipment.