Wednesday, November 3, 2010

Our Big Break

“The world of achievement has always belonged to the optimist.” -- Harold Wilkins

October 15th, 2010, was an unforgettable day. After a long, tiresome, and painful journey we finally succeeded in securing our first real estate location. This time we have a signed and fully executed agreement!

In many ways, getting a signed lease agreement is the most important step in a retail business, particularly when you’re a start-up and are struggling to get things off the ground. For those with limited commercial real estate experience, as was the case for me not too long ago, signing a lease is a big deal! The process is much more onerous than the standard residential leases most of us are familiar with. I’ll spare you the details of all the different negotiation points, and just highlight some of the major things that make a commercial lease such a big deal.

For starters, a commercial lease is a long-term commitment. A typical lease is 5-years long with options to renew for additional 5-year periods (assuming no defaults). Next a lease typically entails some form of guarantee where the tenant agrees to pay rent even if he goes out of business! Think about that…imagine, you’re a start-up and after a few months you realize you’re aren’t doing so great (as is typical for start-ups); well it’s not so easy to just close shop and pack your bags, because you need to continue to pay the landlord a whopping amount of money in rent. Lastly, signing a lease is a ticking time bomb that forces you to open for business as soon as possible since not only do you have to start paying rent but often times you’ll get slapped with fines and other penalties if you unnecessarily delay. So yes, signing a commercial lease is a huge deal! But ultimately it’s the cost of doing business and it wouldn’t be a business if it didn’t entail risk.

As for us, we couldn’t be happier with our location. We will be in the food court of Philadelphia’s premier commercial center, The Liberty Place, on 16th and Chestnut Street. For those, unfamiliar with area – the Liberty Towers (and the adjoining Westin Hotel) is in the heart of Philly’s business district and is on the block with the highest pedestrian count in the city. Also, since we’re in a food court we know there’s already a ton of traffic on a daily basis – now the onus is on us to build a product with the right value that reels customers in…a risk I’m willing to take.

So October 15th marks a monumental step in this constantly evolving journey to start a restaurant! Since singing the lease we’ve been working frantically to get all the architectural designs, work permits, and other approvals in order so we can break ground and bring our vision to life…but I’ll talk more about that process later. I also have some juicy details to share about a new job that I recently started. If you’re thinking that I’m back in the world of private equity then you’re in for a big surprise…