newbee with a dream and a question

I am in the middle of working on my business plan and am trying to figure out the numbers. What is the leasehold improvement costs you guys see for a sit down pizzeria per foot? I realize that each design is going to cost different but I would love to hear what you guys have seen in your worlds.

Pazzo I see you are in my neighborhood. When is your building slated to be built?

nwcw2001,

First, welcome to the neighborhood. This is a great resource for information and I’m sure you’ll get some fresh insight from the many fantastic operators who donate their time and knowledge to make this forum one that will rival anyone’s.

Secondly:

I am in the middle of working on my business plan and am trying to figure out the numbers. What is the leasehold improvement costs you guys see for a sit down pizzeria per foot? I realize that each design is going to cost different but I would love to hear what you guys have seen in your worlds.

It sounds like you’re asking one thing but meaning another…

  1. If you’re asking how much it would cost to build out your new place, it completely depends on your floorplan, your market, your location in the market, and your contractor. Personally, after getting plans drawn up (and stamped by an architect for most new builds) I’d go to at least 3 contractors with copies and ask them to give you a bid. Generally, they’re all pretty close in price but you might catch one who’s a little desperate for work and he’ll undercut the others to make sure he’ll get the job. Generally speaking, with a layout that’s not too extravagant you can expect to pay anywhere between $30 - $60 per square foot. This, of course, also depends on your market. $30 is the EXTREME low end and if you can find a contractor to do the buildout at a price that low, jump all over it. I’ve actually heard of some buildouts that get near $100/ft.

  2. If you’re asking how much the retail center will allow you for buildout costs, it all depends on the retail center and your negotiating skills. If I’m not mistaken, Pizza de Pazzo is looking at $22/ft. in allowances, which will leave him short on the actual costs of the entire buildout.

My suggestion to you:

  1. Have the landlord agree on allowances of at least $25/ft (and if you can go higher… awesome).

  2. Have the landlord agree to add the remaining portion of your buildout into the lease agreement for the term of the lease.

  3. Have the landlord agree to start your lease term no later than the day you get certificate of occupancy.

Hope this helps. -J_r0kk

how does that work on like the 25.00 a foot for improvements?

j_0rkk - 2. Have the landlord agree to add the remaining portion of your buildout into the lease agreement for the term of the lease.

Can you explain this one a little more, I did not follow this suggestion.

Another quick question, when you say “buildout” are you referring to the putting up of walls, bathrooms, flooring, paint etc. and not a turn key space?

I talked to a local contractor about a buildout and was scared away when I was quoted about $100-125K for buildout on a 2000 sqft space. I later assumed this also included the equipment needed to open as commerical contractor would included these items in a bid. Does this sound correct?

REDBARNPIZZA writes:

how does that work on like the 25.00 a foot for improvements?

Most times, if you’re going into a brand new retail space the landlord has incentive packages to get tenants in there quickly. One of the incentives is a buildout allowance (or leasehold improvement allowance… same thing) to the tune of around $25/sq. ft. This allowance would be provided to cover basic costs, such as ADA restrooms, lighting, plumbing, etc.

Pazzo di Pizza writes:

j_0rkk - 2. Have the landlord agree to add the remaining portion of your buildout into the lease agreement for the term of the lease.

Can you explain this one a little more, I did not follow this suggestion.

Another quick question, when you say “buildout” are you referring to the putting up of walls, bathrooms, flooring, paint etc. and not a turn key space?

I talked to a local contractor about a buildout and was scared away when I was quoted about $100-125K for buildout on a 2000 sqft space. I later assumed this also included the equipment needed to open as commerical contractor would included these items in a bid. Does this sound correct?

In answer to the question about adding the remaining portion of your buildout into the term of the lease:

Let’s say it will cost $20k to finish the buildout and a 5 year lease. You have your landlord pay for it and you pay him/her back for the term of your lease.

Example - $20k / 60 months = an additional $333.33/month in rent

Also, yes… when I say “buildout” or “leasehold improvements”, this is in reference to putting up walls, floors, lights, paint, etc.

In reference to this contractor bidding $100k - $125k on the space… no. That bid was to do only the buildout for you. You’d still have to furnish your own equipment. The way contractors work is they’ll charge you by the square foot whether they need more materials or not. Whatever they come up with for a base cost, they then add about 25% on top so they can make good money off you. In my experience with contractors, they’re all crooks and try to make as much money off you as possible. Chances are, it won’t cost much more than $60k to put up your place… if that. Unfortunately, in this day and age, most city inspectors require a licensed contractor to do the work so it’s a catch 22 situation you’re in.

-J_r0kk

I am in the final stages of my own buildout of 2100 sq feet (phase I of two phases) taking nine weeks so far… My actual costs are in the neighborhood of $55,000. I paid sub-contractors for electrical, plumbing, HVAC, Gas, Hood. I am my staff framed 320 feet of wall, hung sheet rock, drop ceiling in kitchen, bead board ceiling in 785 sq ft dining area/alley, epoxy flooring and much demolition and clean-up.

Trust me. I’ve put in about 300 unpaid hours of contruction work to keep this cost down. It is not cheap to pay someone, but the alternatives are more difficult and take more time.

Maker sure to get three bids on every piece, if at all possible. If using a General Contractor, get three or four bids on the project. You will get a much better picture of the costs range.

We are already behind and the building as not even started yet. What I mean is the retail strip was to start construction on 4-15, but as of last night not a single piece of equipment is at the site.

I was shooting for a November 1 date, but I am already telling friends/family to expect January 1 at this point.

My target buildout cost is $100K or less, this includes the buildout, equipment, tables, chairs, etc. I plan to call in several favors fron neighbors (electrical, plumbing, etc) and do some swapping with them, build benches myself, paint myself, etc, buying used equipment etc. as much as possible to keep the cost down.

Hoepfully with some penny pinching we can hit this mark. I am trying to budget $200K total for everything with us kicking in $60K so our bank loan ins in the $140K range.

If anyone thinks this unrealistic, please let me know. I could be living the pipe dream and be way off base here. Luckily I have signed nothing so own nothing and pulling the plug is always an option, at least at this point.

One thing I will warn you about now is the fact that you’re planning:

I plan to call in several favors fron neighbors (electrical, plumbing, etc) and do some swapping with them
Find out if you need an architects stamp on your blueprints. Chances are also that you need a licensed general contractor to pull the building permit from the city. Of course, there’s a way around everything when it comes to pulling permits. It looks to me like you think you’re going to do the whole thing yourself and have guys come in to help you out on the weekends or something. Unfortunately, there are quite a few building codes that need to be met during new construction and city inspectors frown on a do-it-yourself job if you have no experience.

This is just FYI. -J_r0kk

Nick, where did that $55k go? Was it mostly plumbing, electrical or what?

Thanks for the FYI, believe me you have been a huge help and I am sure I will have more questions/issues as I go down this path.

One of my neighbors is a GC, I am hoping his expertise will help in this area. Also granddad is a cabinet maker by trade so again I am calling on his services for benches, etc.

You are correct about contractors sucking money from you. I about fell over when the one I talked to quoted 100-125K for just a few walls, plumbing, etc.