Restaurant Turnaround Consultant Tips on Co-Branding and Real Estate

In the late 1990’s, one strategy by a restaurant turnaround consultant was to maximize the ROI on leased and owned space. This is typically accomplished where a leased space can be used to house two distinct but complimentary brands, such as pairing a KFC (Chicken) store with a Taco Bell (Mexican). The other is to sell the existing real estate owned and lease back the premises at a lower cost that is spread out over 20 to 30 years. Both of these alternative building use concepts are becoming attractive again in this recession. Restaurant owners and operators, who struggle with expanding their presence, should take note. Here are two article excerpts from these foodservice chains that have lowered start-up costs and long term rents: Tips On Co-Branding from a QSR Owner “Having opened his first Nestlé Toll House unit in 2007, Howard Taylor quickly became acquainted with the quick-serve industry and today owns and operates five units in Michigan. Taylor caught wind of the partnership between Nestlé Toll House and Häagen-Dazs in February, and explored the option of cobranding his own locations. In July, Taylor opened his first cobranded Nestlé Toll House/Häagen-Dazs unit, and he is already planning to do the same with the rest of his existing locations.” Read these suggestions from a restaurant turnaround consultant perspective to reposition your location. Valuations in Restaurant Real Estate Up Over 50% “The 10 biggest U.S. restaurants that sell for less than the value of their property, plants and equipment trade at 70 cents on the dollar, according to data compiled by Bloomberg. With the restaurants slumping twice as much as the Standard & Poor’s 500 Index this year, firms from Biglari Holdings Inc. (BH) to Carlson Capital LP and Becker Drapkin Management LP are agitating for board seats at eateries with fixed assets that are worth an average of 53 percent more than the companies themselves. Ruby Tuesday has $1 billion of such assets, twice its market value.” The complete story for restaurant advisors and investors in Bloomberg News can be read here. Need other advice from our food service consulting group? Be sure to subscribe to our newsletter for timely news and ideas for your restaurant plan and more. Are you currently involved as an owner, operator or restaurant turnaround consultant in co-branding one or more foodservice sites? What are the pros and cons you have learned that our readers might find of interest in having two different restaurant concepts within the same building? Please post your comments.