Note: Some of these items are particular to Philadelphia. Special thanks to Real Estate Broker Harris Eckstut, and Architect Joshua Otto for their contributions to this checklist!
Before you start looking for a location, it’s a good idea to spend time on feasibility and financing. What’s the best target market for your concept, and where are they? Can you raise enough capital to finance the project? Will you reach your personal income goals? Once you can answer these questions, you are ready to start working with a realtor. But when the realtor starts showing you available spaces in your price range, how do you evaluate them? Here are some important considerations before you start lease negotiations:
First, is it a good RETAIL location? Does it have visibility? Can you get traffic counts? No steps up or down?
Is it zoned properly? If not, is it worth the time and cost to go through a zoning hearing?
Even if it is zoned properly, was it previously a restaurant, or will the “use” change trigger code compliance issues that will add to the budget? If the Use is changed, what building code required updates will be necessary?Will an automatic sprinkler system need to be installed, elevator or other ADA compliance?
Will variances be required for Take-out? For restaurant use above the first floor? Any kind of variance or Zoning change will require Registered Community Organization (RCO) support.
Will the location require the use of Union contractors? This will add significant costs to the construction budget.
Does the location qualify for grant funding (revitalization programs)?
For exterior renovations/ improvements, is the building located in a zone that requires Art Commission approvals? Historical Commission approvals?
Is there an opportunity for outdoor seating? Is it located within the City’s permitted outdoor café zone? If not, the process is long and cumbersome. This is especially important since COVID (if you aren’t take-out only). You can seat guests comfortably outside nine or ten months out of the year, even here in the Northeast, by using fans, misters, and heat lamps.
Is there an opportunity to construct a Streetery in the street? If so, would neighbors be amenable to extending the streetery in front of their property?
Is the existing electrical service sufficient? A minimum 400amp service will be needed for most restaurants, and selected equipment may require 3 phase power.
Is the existing plumbing sufficient for your needs (incoming water supply, drain size, incoming gas size and pressure, etc.)? Water heater size?
Is there an existing exhaust hood? Is there make-up air? If so, is it up to current code? If a new hood will need to be installed, is there an available path to the roof for ductwork (interior or exterior)? This may require coordination with landlord, other tenants, etc.
Is there any existing plumbing and ventilation? If you need a hood and there isn’t one existing, the cost can be exorbitant, depending on where you are. Existing plumbing (3-bay sinks, hand sinks, indirect drains and floor drains) can save a bundle.
Is the entire space accessible (ADA-compliant entrance, travel pathways, bathrooms, service counters, etc.). If you are planning more than cosmetic upgrades to an existing space, expect to bring these into code compliance. This should be a point of negotiation with the landlord.
Is the code-required number of bathrooms provided?
Are the restrooms up to code? Depending on the amount of work you have to do, you may be required to bring them up to code.
Is the HVAC sufficient for a restaurant space or was it installed for office space? A HVAC engineer should be consulted to determine if an existing system provides required air flow and outside air requirements.
Check for any water damage that indicates roof leaks, façade damage, or foundation damage. These should also be the landlord’s responsibility.
If you have an opportunity to purchase existing equipment, you’ll want to get a kitchen equipment repair person out to inspect before you purchase.
What was in the space before? How long were they there? How about before that? If it has been a string of businesses that keep turning over, that’s a red flag. Understand the neighborhood and what its needs are. Does your concept fulfill those needs
Are utilities separately metered? You’ll want to make sure they are before taking possession of the space. Will the landlord arrange for it?
How will garbage be handled?
Is there an existing sign? Typically, you can replace what is there with the same size and type of sign without any approvals. If not, what are the Zoning limitations and approval process? Will an Art Commission review and approval be required?
What repairs need to be made at landlord’s expense before you’re willing to move forward with lease negotiations? Your Letter of Intent (LOI) should state all existing building services being provided (service sizes, etc.) and any work that the landlord will provide.
What is the insurance requirement?
Is there a tenant build-out allowance?
How long is the build-out period before you have to start paying rent?
Familiarize yourself with the local Health Department requirements and approval process.