Commercial Real Estate (CRE) property value in every category and in almost every major market across the country has made a full recovery since the Great Recession. CRE investment activity has been moving along at a steady boil and vacancy factors are consistently in the single-digit rather than double-digit range. However, recovery doesn’t necessarily equal growth and in the competitive restaurant industry, growth is one of the keys to success. Without it, the restaurant will likely not survive. It is estimated that 60% of new restaurant concepts don’t survive for more than 3 years. And yet, there are some that have not only survived, they have thrived! So how do they do it? What is their secret ingredient?
Tim Sleeper, who is the Principal Broker and CRE Acquisition Specialist for ITRA Global / Logical Move in Salt Lake City, Utah, has seen a number of restaurants roar out of the gate, stall, and then crash or lose market share to competitors. He recently had a chance to sit down with Jeff Jacobson, Chief Operating Officer of Costa Vida Fresh Mexican Grill, which is a chain of fast-casual restaurants that has experienced rapid growth despite the highly variable global economics of recent years.
Starting with the first location in 2003, Jeff has managed to execute rapid growth strategies through good economies and bad, continuing to expand their business. As a result:
• There are currently 65 Costa Vida locations in 12 U.S. states and Canada• There are 500 more planned by the year 2018• The current expansion focus is on Mid-western metropolitan areas
“Over the last 18 months, we’ve seen a major uptick in the number of potential sites across the country that would be a good fit for the Costa Vida brand,” says Jacobson. “General economic growth in the U.S. has fueled opportunities in new demographics for us.”
“We’ve really tried to stick to the fundamentals of our management group,” Jacobson states. “Our decisions are data driven and we follow best practices that we’ve learned through experience and then pass those on to our franchisees.” According to Jacobson, ‘best practices’ regarding the procurement of new locations involves a steady hand. “We always ask ourselves, what do the numbers say? Don’t make emotional decisions or give in to the hype surrounding a particular development. Don’t get caught up on $1-$2 PSF when something like the direction of rush hour traffic can make or break the store for you.” Jacobson personally inspects every new Costa Vida location and has seen it all when it comes to the good, the bad, and the ugly.
With data reporting being another crucial ingredient, Costa Vida has strengthened their foundation for rapid growth with the utilization of Point of Sale (POS) and Enterprise Sales systems in all of their restaurants. The Spark Solutions Group, a company that emphasizes customer support and specializes in providing customers with staff that has extensive restaurant and POS technology experience, has been part of the team effort in creating and sustaining this highly successful business.
If there were truly a secret ingredient to the company’s success in growth, it just may be Costa Vida’s exclusive use of Tenant Representatives. These brokers are vitally important during site selection and lease negotiation because they support the buyer, not the seller, and end up saving them thousands of dollars in unnecessary costs. Terry Jennings, Director of Real Estate for Costa Vida, is on the front lines of new store development. “We have been very busy vetting and aligning Costa Vida with the strongest Tenant Reps in all the markets we are in. The brokers we have selected all have over a decade of experience in their markets and come with the highest recommendations. They also represent other restaurant chains and are familiar with the nuances of putting a restaurant deal together.” Jennings has helped Costa Vida triple their locations over the last 4 years and has structured selection-to-occupancy turn around times as short as 3 weeks.
ITRA Global is an organization of real estate professionals specializing in representing tenants and buyers in the leasing, acquisition and disposition of office, industrial and retail facilities. With coverage in major markets around the world, ITRA Global is dedicated to representing tenants and occupiers of commercial real estate. Clients benefit by having an experienced professional as their trusted advisor, providing conflict-free representation with total objectivity.
For more information about Logical Move, contact Tim Sleeper at 801.871-5644 or by email at tsleeper@itraglobal.com. For more information about ITRA Global, contact Beth Wade, Executive Director at +1.706.654.3201 or by email at bwade@itraglobal.com.
