"You can have a big traffi c count, but if people can't make a leſt -hand turn, you can kiss it goodbye," Melinaphy says.
BROKERING A DEAL A would-be coff eehouse owner who wants help evaluating
all these variables can always turn to a commercial real-estate broker. But brokers have variables too. Look for one who has experience with coff eehouses, or, failing that, with small restaurants in general. "Th e average broker will tell you, 'I made a deal over there
for McDonald's,'" Melinaphy says. "Th at doesn't mean he understands the food business. Th at means he was able to do a real-estate deal with one of those companies. Finding a good restaurant real-estate broker is tough, but you have to have to pay very close attention, because he has your life in his hands." Even a broker who is experienced with restaurants may not
bring his or her "A" game for a small coff eehouse, Milletto warns. "Th ere's sort of a misconception that most commercial real
estate brokers are really going to work hard for you to try to fi nd a location," he says. "What I've found, with my clients and also for my own coff ee bars and drive-thrus that I've put up, is the fact that they generally don't get very excited about [small coff eehouses]. Th ey will give you the respect to talk to you about it, but you fi nd that they're not working very hard oſt entimes, because it's a dollars-and-cents thing. Th ey're basically not going to make very much money off of that."
WHAT HAPPENED BEFORE? Unless you're planning on building from the ground up,
most of the available locations you'll see will likely be former restaurants, even former coff eehouses. With few exceptions, they're available because the previous business failed. Finding out how and why that happened is crucial. "If you're going into a store that was previously was a coff ee
shop, be very, very careful," Melinaphy says. "Th ose consumers who went there had an experience, and if that experience was terrible, you'll have a tough time overcoming that." On the other hand, a previous shop's
failure shouldn't necessarily be a deal- breaker, Groot says. "I view former use as somewhat
irrelevant," he says. "I've had clients who were encouraged not to sign for a particular spot because 'three coff ee shops failed in that location in the last 5 years.' Although there may be some inherent reason, and due diligence is required, it may also be a poor operator failed to execute well and sold the business to someone who did the same, who sold the business to someone who did the same. All of them thought they could succeed, but may not have had the experience, the tools or the savvy to make a go of what could otherwise be a solid location." Th e key is to have a clear idea of why
it happened—and why it won't happen to you. Becoming aware of mistakes to be avoided can be as valuable a learning experience as studying success stories. "I've learned more in this country
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looking at closed units than I have looking at operating units," Melinaphy says. "Because it shows you exactly the stupidity of people and what they did. It's insane the money was tossed away, picking locations where they violated one of the primary principles." SCR
