Why Restaurant Chains Bend to Fit into Historic Areas
Opening in a historic district can be complicated for a restaurant chain, but the payoff is there.
By Lisa Bertagnoli, Contributing Editor -- Chain Leader, 11/25/2008 1:26:00 PM
Historic districts are the siren songs of commercial real estate: They're cute and quaint, and often huge tourist draws. But the path from signing the lease to opening the doors can be rocky.
Few operators know that better than Ton Lee, San Diego area developer for Tropical Smoothie Café, a 275-unit smoothie, salad and sandwich concept headquartered in Destin, Fla. Lee hoped to open his first store on July 4 at Liberty Station, a historic Naval Training Center turned into a mixed-use commercial-residential development. Drawing a mix of tourists and residents, the site "fits our demographics very well," Lee says.
The 20-seat cafe actually opened Nov. 1--a delay that cost the restaurant about $300,000 in sales.
Lee blames Liberty Station's historic review board for the delay. "We weren't really informed, in all honesty, how difficult it would be to do commercial construction in a historic landmark," says Lee, co-owner of the restaurant along with business partners Alex Raymundo and George Tateno. "The historical review was a slow, tedious process."
Trouble Signs
Lee says he and his partners weren't informed of how long the process would take and what it would entail. He says the review board demanded capricious changes, for instance, reworking the Tropical Smoothie logo in only two colors, yellow and white, rather than the traditional four, which also uses green and purple. "In a [traditional] commercial zone, you wouldn't have the same restrictions," Lee says.
Matt Hietbrink, project manager for McMillin Commercial, the San Diego-based developer of Liberty Station, says tenants are informed, via the lease, that there will be three review processes: one with the site's historic preservation office, one with the National Park Service and one with the city of San Diego.
"There is a little bit of what I call a marathon--it's not like you sign a lease and the next day you're open," Hietbrink says. "The review can take some time."
To make up for the six-month loss of sales, Lee and his partners are doing heavy marketing in the area, including at schools, where, he says, the chain's "eat better feel better" mantra sells well to students and their parents.
And, despite the hassles, Lee is happy the store is open in the historic location. "It's an honor and privilege to be part of the community. It's absolutely worth it," he says. Come summer, Lee expects the Liberty Station to gross above the chain's average of about $40,000 a month.
Mike Geiger's give-and-take with the historical review board of Pittsburgh's Market Square included repairing barrel tile on the building and making the Moe's sign work around it. In return, Geiger wasn't forced to repair the transoms above the building's plate-glass windows.
Over a Barrel
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Mike Geiger is also pleased that he forged ahead with plans to open his third Pittsburgh-area Moe's Southwest Grill in the city's historic Market Square. The 38-seat, 2,100-square-foot restaurant opened July 3, two weeks behind schedule: "They had a lot of guidelines we had to follow," says Geiger, a Moe's franchisee along with his business partner, John Iaquinta. Moe's, a 400-unit casual Mexican chain, is owned by Atlanta-based Focus Brands.
Geiger says he tried to be "proactive" with Market Square's historical review board. "We talked to them first before we made decisions in concrete," he says.
The approach allowed a design give-and-take. On one hand, the review board refused to give Geiger permission to remove the vintage barrel tile from the building's roof, which means that the Moe's sign perches high above the street. On the other hand, Geiger persuaded the review board not to force him to restore the transoms, now boarded up, that sit above the restaurant's plate-glass windows.
All told, "I expected it to take more time than suburban buildouts," Geiger says. The project also went 15 percent over budget. But the store's performance, compared to his suburban locations, "is fantastic," Geiger says. "Dollars per hour open, it's on par if not better."
He advises operators mulling historic districts to work with, rather than against, the review board. "They have a job to do," Geiger says. "Find common ground, and it will be a whole lot easier."
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