For those of you who have or have had a store front, or who are thinking about it...How did you choose the location?
There is a new construction, mini strip mall that has a few vacancies about 5 minutes from my house. The cost is $17 per square foot, per year. There are 185,000 households within a 5 miles radius and the strip mall sits on a main highway that sees 51,000 cars on average, per day.
I want my focus to be cupcakes (I bet you amazing cakers are so tired of us cupcake people,lol) but I will also do specialty cakes and have a couple of specialty desserts each day.
There is nothing like this in this end of town. You would have to drive 20+ minutes to find something like this (and even then, it's those chains cupcakeries that aren't very good). The only bakeries in this end of town are the type of bakeries that specialize in donuts.
This, to me, sounds like an amazing location...So, I ask those of you with experience, what do you think? Words of wisdom and advice would be greatly appreciated.
Just curious, what state/city are you in? It sounds pretty good.
My partner and I were JUST talking about this tonight! Literally, like 2 hours ago. I, too, would like to know where you are located. To me $17 a sq ft sounds like a lot. But, I am in the suburbs of Atlanta and can find space for about $10. Also, what is the per capita income in your area? I know that cupcake shops are the "in" thing right now, but would you be able to charge a premium for your product in order to cover such prime rental rates?
I'm in Louisville, Kentucky. The location is within the city, not a suburb.
Oh and the average household income for the location is $53,000 per year. Tons of young families...Lots and lots of teens...There are about 15 high schools within the 5 mile radius.
I am in a little town that is not doing well in this economy and rent is $19.00sf with 4.00sf maintenance. This is my home area, not my market. Have you checked on buildout? It will probably be close to $100,000. You need to have plenty of equity over and above buildout and rent to get something this size off the ground. If you have this kind of experience, great. My daughter is moving to Louisville, so let us know if you decide to do this. We will be your customers on visits.
I agree with SCP1127 said. Do a business plan and plug in those square foot numbers and all the other expenses.
In the end my location was picked for two reasons. One it had all the plumbing installed. I am going to have to put in the electrical for two phase 3 ovens and some other minor light switch changes, but everything else is set up.
And the other reason is it is the only space available where I want to be. We have a good economy here and real estate in my neighborhood is tight. Go figure because every other town has plenty of available real estate.
I haven't signed the least yet and this is the third time we are in negotiations with this man. I really shouldn't say this place is mine until I sign, it fell through twice before.
Bear in mind with a new strip plaza you are getting an empty shell, completely empty. You will be required to build the walls, floor, lighting, ceiling, etc. And then there is the stuff you need to build a kitchen. When I went looking for location, I only looked at completely built out places with a kitchen. I saved about 100K doing it that way. When SCP1127 says 100K, that is for the kitchen alone and maybe some other construction depending on what an already built out space looks like. You can probably tack another 100K on top of that for an empty shell.
Does the $17 include triple net or not? If not add about $4 to $5 more to the $17. That will be your true annual rental rate. If you feel the area can support your business with the amount of traffic then that is great. Also, is the strip center going up in an area that people are prone to stop and shop or is it a thoroughfare that people won't even slow down to notice?
I have seen many a small strip center open and seem like a great location only to die because eventhough the traffic flow is very high the traffic does just that, it flows right past them. If there are traffic lights close to the center then you will fare better because the traffic has to stop.
Marketing is key! Build out of raw space is so much more expensive than going into an existing kitchen space. And even if they say "will build to suit" That does not mean they are paying for that build out. Generally $10 to $15 per square is all you will get in build out allowance and that generally will only get you basic eletric, lighting, plumbing, AC and 4 exterior walls finished, all other build out will be on your dime, not the landlord's. So having enough liquid capital is paramount.
I wish you much luck in your venture!