Monthly Archives: November 2011

The Three Biggest Mistakes in Retail Real Estate

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Are you tired of hearing people use the phrase “location, location,location?”  It is an insult to both the speaker and the listener.  It’s like saying the most important thing in pro sports is winning, or that the most important outcome in investing is making money.

Now that we’ve survived another round of massive store closings and bankrupt retail and restaurant chains, let’s see if we can shed some light on the path forward for real estate planning and site selection.

I would argue that mistakes are made at three levels:  market selection, market planning, and site selection.  All three are critical to the success of a chain store real estate program and the types of mistakes that cause pain and death are different for each. Continue reading →

Resolving the Restaurant Discount Dilemma

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I attended the Restaurant Finance and Development conference in Vegas a week ago and it was interesting to listen to the “hot” concepts talk about the reasons for their success.

“Great food, great service, clean restaurant” is the standard line that you hear from those who are growing units and sales.  Who can argue with this recipe for success?  Easy to say, hard to execute, and it’s really just a way to respond politely without giving away any trade secrets.

Sounds like the baseball player interviewed after the game:  “We were confident that we could do what we had to do. We knew that if we kept our focus we could win the game.” Thanks, dude.  I hope the other teams didn’t hear you give away your secret on national TV.

But there was another interesting recurring comment from some of the hot companies:  “We don’t discount.  We know that coupons are the road to ruin and we’re fortunate that we haven’t had to cheapen our brand through promotional discounts.” Continue reading →

Analytics vs Modeling: “Democratizing” Decision Support

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Mistakes are expensive.  Everyone wants a model to help them avoid mistakes and repeat successes.

We want a good business model that provides a framework for success.  If the business model works and we stick with it, we will make money.

In the chain store business, we want to make good site selection decisions.  Avoid bad real estate; pay the right price for good real estate.  We want a sales forecasting model that will help us estimate the top line number to plug into our pro forma operating model for a store (which is based on our business model, of course). Continue reading →