By Paul Giggi
Today I’m here to talk about things that I’ve done in the past that haven’t worked out so well. I’d love to stand here and share my successes, but I’d probably bore you to tears, hearing me either talk about things that I have done, that if I had the chance, I would do differently. So the one experience that I want to share with you today has to do with the area of site selection.
I was building restaurants, and the very first one in the city where we were going to build, we decided we wanted to make a big splash. We looked for sites that we thought would do exactly that; we started looking for freestanding sites. We had the parameters that were given to us by the Franchisor, which were the size of the facility (we were leasing), and the areas to look in..
We found a freestanding location that we thought was terrific. It met all of the real parameters of site selection, that you want to look for such as heavy traffic, located at a lighted intersection, it had good exposure, good signage, and there was a lot of retail around us. We were at a freestanding out-pad in a strip mall. Even though the strip mall was not fully filled, across the street, there was a strip mall that had very strong retail in it. We had received some feedback from the Franchisor that maybe this site might be too big in terms of square footage, and that we may want to consider looking for other alternative sites. We decided to disregard that advice, because we had convinced ourselves that this was a no-lose proposition, because of all the site selection criteria that we thought we met, so we went forward, and we built it out.
Come to find out, we should have listened. It was too big. It was too big by almost six or seven hundred square feet, and understand, you’re going to pay the square foot rental on that extra space that we really didn’t need. We built out four sides of the building, and at the end of the day, this site became much more expensive to build out than we had planned against our P&L, and the revenues that we believed we would get from it.
We did not meet those revenues, and we spent more money for the building than we should have, so our ROI on this stretched out far beyond the five years we told you to look as the ceiling. We learned a lesson. What would I do in retrospect now? Obviously, I wouldn’t do that again, but we would have looked for other sites. We would have found sites that fit the criteria, that the people that know the business told us to look for. We would have been eight hundred square feet less. We may have been on an endcap, and as long as it had good signage, and good access, and exit from the site, that would have sufficed.
Instead, we convinced ourselves, and we ended up paying the price for it. My suggestion from this experience is to make sure you take all of the advice you are given in site selection, and listen, and don’t get emotional about a site. Don’t pick a site just because you think it’s going to work. Make sure you listen to everybody. People have good ideas. The people with experience, they’re sharing that with you, so you don’t make the mistake, so listen to them, and act accordingly.