Does bad real estate equal bad karma?

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Permalink Reply by KellyE on February 18, 2008 at 6:24pm

Dear Judy,

Great question! This is one that's always fascinated me. It's always been said in restaurant circles I've been part of that there is a "curse" on a location that's had more than one store fail. My experience is that restaurateurs take the superstition pretty seriously, and many wouldn't touch a place after it's got the curse. However...

A curse is just restaurant shorthand for "bad real estate." I don't think they're worried about actual voodoo, just that it's clear others haven't been able to make a go there and every time another place folds, the community's opinion of the location as a good place to go, sinks. When the community writes a place off, it's an uphill battle to get them to take a second look, and there are enough uphill battles in starting a restaurant.

I think inherited stigma is a great part of the answer, but it's likely there are factors in the earlier failures, that may come back to "haunt" a new owner (traffic, neighborhood, parking, etc.).

No hard data here, but bad location karma interests me so I keep an eye out; I can only remember one place really thriving after taking on a location I would have advised against, because it had seen three places go under in a short space of time before them.

There's a major food "strip" near where I live, with TGIFriday's and various other mega-chains in one lot (four or five restaurants); this strip is packed to the rafters every night. One of the stores closed about two years ago, for what I believe was the third time, and noooo-body has signed on to try again in spite of the enormous traffic. This adds to the voodoo, of course, because the longer it stays the abandoned sore spot, the more that image burns into potential customers' minds.

Regards,

Kelly

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Permalink Reply by Don Barrick on March 5, 2008 at 5:11am

I agree with the other two responses that have been received, thus far. I would add only that some turn-arounds I have seen have occured because the prior styles of food, or types of food operations should never have been installed in the location, to begin with. Would you put a high-priced, white linen restaurant in a secondary strip center, and hope for optimal results? Or, would you put a fast food-oriented operation in a location that requires drive-by traffic, in a spot that is more appropriate for a "destination" restaurant? Would you put a "grab and go" operation in a site that has no parking, so that the patrons have to walk a considerable distance from their cars, to buy a meal that is intended to offer the ultimate in ease and speed?

I don't buy the jinxed location as much as I think many locations are not thought out for their intended use. There are other considerations, and this is not engraved in stone...but nothing in this business seems to be!

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Permalink Reply by Amanda Vroom on March 7, 2008 at 5:23am

We have bought sites where there was a former competitor. Some are a huge sucess- which means that they didn't do something exactly the way the community wanted them to; some are open, doing sales, but not exactly what our proforma indicated- these locations are still etablishing the "trust" of the community.

I believe if the concept moving in is a right fit for the community it is in, all will be fine. We do extensive research and surveying before we take over a former competitors location.

There isn't bad real estate...only poor decisions in how to make the right impact in a location.

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Permalink Reply by Adam R. Cox on March 14, 2008 at 12:55pm

I think that there are bad spots that do not work will with Traffic Flow. If you have to circle the block just to get in and it's also the out, then that's bad. People do not want to hassle to get into a place.

There is one place that I go by all the time and every 3-4 months there is a new concept or different owner opening. First it was pizza then burger joint then two mexican places. Went to all of them. The first mexican restaurant was fabulous. They did Guacalmoe tableside. First time ever I had that! Had steak, ceasar salad and any numerous flaming desserts, but that was a first! It rocked too! I make my own,but this was fantastic. I was bummed they closed. My friend knows the owners and they have not reopened yet....just waiting!

ALso, you have to wonder if the owner/business partners got into bad rents or deals and that closed the site down. Never know.

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Permalink Reply by Matt Urdan on March 14, 2008 at 1:37pm

I haven't opened a restaurant in a revolving door area, but definitely I've dined at several: One of the worst traffic locations was for The Meeting Place in West Bloomfield, MI. It was at the corner of Orchard Lake and Pontiac Trail. In the morning, rush hour passes by. At night rush hour passes by. At this busy intersection, no one can get in or out. It was very successful in the 50s and 60s until W. Bloomfield became trendy and population grew. Then traffic precluded anyone from wanting to be in that intersection. It switched concepts and ownership many times and eventually went out of business for good. Great location at one time, on a lake, but the traffic pattern is what killed it.

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Permalink Reply by Steve Paterson on March 26, 2008 at 12:56pm

There are always exceptions, but from what I've seen personally, the answer to your question is yes,

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Permalink Reply by Roy MacNaughton on June 19, 2008 at 12:31pm

Hey Judy:

Often, in my experience, restaurateurs will be attracted to a 'more difficult' location because it is cheap...or a sharp real estate person knows s/he can "sell it" over and over again.

They have not asked the first question: "WHO lives close by in this trading area? Who might be my target market? Is that the target market I WANT TO APPEAL TO IN MY RESTAURANT?

If they don't ask or know the answers to these questions, they are wasting their time......and lots of money.

Any location -- if it has a proper plan and marketing-oriented owners/operators executing that plan -- stands the best chance for success.

By this I mean there is a "right" way and the other way of approaching the opening of a new outlet in a location where others have failed. The past failure(s) may have been a direct function of not asking or knowing the answers to these same questions. If it's done right, its chances for success increase.

If it is chosen without the appropriate and necessary clear-headed thinking -- in advance -- it will likely add to the statistics we read about each day.

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Permalink Reply by Cooking Kman on June 23, 2008 at 8:47am

I love this post. When I was looking to open my first restaurant, I purposely looked at spaces that were cursed. All of my friends told me I was out of my mind and well on my way to going bankrupt. A crazy psychic dropped by to let me know that there would only be bad things involved with the place. And I just ate it all up, because the one thing I knew was that everyone knew the spot.

We moved in and gutted the place creating a very comfortable atmosphere. Our menu was simple and we steered clear of any of the things that were the staples of the former inhabitants. There were 11 restaurants in 12 years in that very spot. I kept things tight for the first year or so by working a lot of word of mouth and relying on those people who followed me there from other restaurants I was involved in.

After two years I ran advertising listing all of the former places on a tombstone and mocking the theory that the spot was cursed. Because it wasn't the location that was cursed, it was the succession of restaurant hobbyists that thought it would be glamorous to have a restaurant that had filed through the spot for so many years.

Also, a place like that is a great chance to negotiate a lease that is to your advantage. The landlords tend to be sick of the revolving door headaches and are open to ideas and willing to take a reduced rent in exchange for the promise of a stable tenant.

I rant that place for eight very successful years and it's still going strong in the hands of the new owners. Unfortunately for them, upon buying the place they also had to sign a new lease at more than double what I paid for so long.

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Permalink Reply by Adam R. Cox on June 23, 2008 at 9:01am

Aweseome! Love that. Great Marketing/Advertising! Also great investment for you!

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Permalink Reply by Allan Marquardt on May 11, 2010 at 7:26am

I've seen many examples where closed restaurants (sometimes for many years) were reopened and performed very well. Sometimes it takes a while for whatever stigma might be associated with a location in the minds of consumers to wear off. Many times a long closed restaurant simply resulted from a trade area's having "moved" with the entry of a theater or lifestyle center. Or more likely, a market just got overseated and nobody could make money. Eventually organic growth (in population) catches up with such situations, and when neighboring retaurants are sufficiently old and stale, anything new entering the market can draw everyone to it. It always boils down to the concept. If it's well conceived and positioned (in terms of offering and price point relative to demand) and well executed, it can preform well in terrible real estate, because it will be a destination.

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