Hideaway places

30 March 2004 by
Hideaway places

Everyone would like to think that they know the location of the hidden gems of the culinary world long before the madding crowd do, such as that great little bistro off the beaten track discovered one rainy Sunday afternoon.

But when it comes to being the owner of said bistro, choosing to operate below the madding crowd's radar is a finely balanced decision. While there may be savings on overheads, are they great enough to sacrifice the oldest adage in property ownership:
Location! Location! Location!

"Well there is off-pitch and then there is down market," muses Trevor Watson, specialist projects director at Davis Coffer Lyons. "If you are talking about a Michelin-starred restaurant in Camberwell, then the answer is no. However, opening a restaurant in an off-pitch but quality location is a different matter entirely."

Watson says where a restaurateur chooses to open his restaurant should not really be driven by thoughts of cost savings: "Operators should be driven by a strategy that is based upon their customers and product. While costs are of course a factor, you would not open a high-class brand in Brixton rather than Clapham just because the rent is cheaper."

Richard Negus of Fleurets agrees: "Restaurateurs are driven by trading opportunity and the potential to make profits," he says. "Operators able to trade at £20,000 a week in Guildford and Mayfair, respectively, in the same types of property, will earn similar profits before rent.

"While the higher rents in central London may make it less attractive to operators, the fact is that the higher rents indicate the greater earnings potential of busier location."

But Emma Davis of Berkeley Simmons Davis points to the growing consumer preference for a more exclusive dining experience: "It is fair to say that most branded restaurants rely on passing trade and nearby retailers and offices, but many independent restaurateurs operate destination-based restaurants to service a discerning customer base that seeks out an innovative environment offering good food or value for money."

Certainly, there is ample evidence that destination restaurants can work. Hakkasan in Hanway Place, London, springs immediately to mind. Owned by Alan Yau, it is a Michelin-starred restaurant in a basement in what is, effectively, an alley off Tottenham Court Road. "If a restaurant agent was being honest, they would say that this should not work as a location, especially to house a Michelin-starred restaurant - but it is always fully booked," says Davis.

Although she does concede that operators such as Yau have, during the course of a career, built a loyal following of customers who will go where he leads.

"Many operators rely on tourist trade from nearby hotels, for example, and cannot afford to be in a quirky location," she says. "It is an obvious bonus if the unit is easily accessible and central so that it can be considered for business lunches, the theatre and tourists to build up a regular clientele, which is, of course, the mainstay of any successful restaurant."

But smaller markets also appear able to sustain restaurants in relatively maverick locations, according to Rodger Till, a licensed property valuer at Storeys:ssp. "The city of Sunderland is a good example of restaurants moving into proposed regeneration areas in advance of other uses," he says.

He points to three upmarket restaurants that have opened in the east end of the town in an area that historically offered nothing better than a "few basic boozers".

"Two of them, Joe Rigatonis and Don Giovanis, are in new buildings by the river and the third, The Quayside Exchange, is in an attractive old building a few hundred yards away," says Till. "They all trade well and ease of parking is one of the factors why this edge-of-town, former ‘very rough
diamond' area works."

Making the smart move Watson agrees that choosing an off-pitch location can be a very smart move: "The first operator to go into an area can do very well. If the first one trades well, invariably other operators are attracted to the area, which can in turn lead to that area becoming an established pitch."

Simon Hawkins, an associate at Gerald Eve, agrees that the phenomenon of operators taking a risk on unproven locations is all part of the commercial cycle. "Once a few independents trade in a peripheral location, the area eventually becomes established and begins to attract the national operators. They then drive up the rents, forcing the whole cycle to start again," he says.

Watson does point out, though, that choosing to risk going to an off-pitch location is an option that is really only open to independent operators.

"An individual can spot the opportunity long before the chains can and will have the guts to do it," he says. "They will use their intuition rather than a corporate strategy, which the branded chains have to use."

There is, however, also risk to opening a restaurant in a prime area, according to Trevor Shelley of Shelley Sandzer: "In many such areas around the country, retail values have exceeded restaurant values," he says.

By way of example, he cites former celebrity hangout The Pharmacy in Notting Hill, owned in part by artist Damien Hirst. It has now been replaced by a Marks & Spencer Food Store, and similarly the Duke of York Pub in Westbourne Grove has now been taken over by exclusive women's retailer Nicole Farhi.

Shelley says operators often have no choice but to consider off-pitch locations:"We have lots of enquiries for restaurants and pubs in prime locations but many restaurants have now changed to retail use and the local authorities are not granting any new consents or consents to replace the loss elsewhere within their boroughs."

Davis, though, believes that while you can speculate endlessly over whether a location will work, the fundamentals of good business remain unchanged no matter where you locate: "The key to success will always be based on a consistently good product, served in a satisfactory environment at the right price. It is only when the basics fail that nothing - not even the location - will keep a restaurant alive."

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