in praise of sardines: Wild Ride, Part III: Meet the Brokers

Wild_ride6_3 As I mentioned in my last Wild Ride post ~~a few days a week a month ago~~ er, um, in July, there are two ways to buy a restaurant space. There's the smart, relatively quick way and then there's the way I'm doing it.

Today we'll look at the smart way. Buy a previously existing restaurant which needs relatively little renovation, no more than a new paint color, a few decorations, and a new sign. This is called "turn key," because you can theoretically stick the key in the door and hang up your "open for business" shingle. In San Francisco, the cost of such a space for a 40 to 60-seat restaurant ranges from around $99,000 to over $600,000, depending on location (the highest listing I saw was in Cole Valley a few years ago, the lowest on outer Mission). Most hover in the $200-300,000 range.

To find these places you need to establish a relationship with at least one broker or preferably - despite what your mother may have told you - with every broker in town. All at the same time. It may sound somewhat kinky, but here's a little secret. Having multiple brokers can be fun! Seriously, though, just remember to protect yourself and practice what I like to call Safe Search. By Safe Search, I mean two things. First, use caution in all your dealings with brokers, because, as I mentioned previously, they only represent the interests of their sellers and themselves. Second, hire a good attorney and accountant with experience in restaurant dealings to review all your contracts before you sign anything.

Restaurant brokers, at least in our city, are a curious breed, straight out of a Coen Brothers film. Here's a quick summary of my experiences over the past year or two.

Because he has the most detailed web listings in town, I started my restaurant search with the Invisible Man. I call him that because I spoke to him often, but never actually met him, not even when I entered into a deal to buy a space through him. I talked to a lot of people and never found one who had actually seen him. (Maybe he should become a restaurant critic?) If you are working with the IM, pay particular attention to what I said about practicing Safe Search.

Next I met the Mafia Don. Unlike most brokers who tend to work alone, the Don has a whole gang of people working under him. After a meeting in his office with him and his associates, I was confident I had found my man. Then I drove around and saw the places on his list. No, across the street from the Convention Center is not exactly what I meant when I said I was looking for a "small neighborhood restaurant." Nor was the 250-seater on Geary. Nor was the place next door to the projects.

I call him the Don because one day he called me and urged me to buy this particular restaurant on Valencia Street immediately. That day. He said the sellers were lowering the price "to a steal" and expecting multiple offers that day. "It will be gone by tomorrow," he warned me. "If you don't take this one, then you will never open a restaurant in the city." "But, um, sir," I countered, "don't you think the rent is a little high, about double anything else in the area?" "It is this one or nothing for you." Needless to say, I never bothered to call him again. And, by the way, that restaurant is still on the market 6 months later. Heh.

After the Don, I was happy to find the Kind Uncle. Uncle is jovial, sympathetic, and encouraging. "Take your time. Don't sign anything you are uncomfortable with." A breath of fresh air to be sure, but most of his listings were run down or poorly located. He was the broker I worked with back in March when I almost bought a spot that needed hundreds of thousands of dollars of work.

Towards the end of my search, I finally got in touch with the Smooth Operator. In that Coen Brothers film, he would be played George Clooney. I had tried for months to reach him, as his listings nearly always carry juicy descriptions, like the one that read "Gem in the Marina. Recently remodeled. Low rent." I called and emailed daily, yet never heard back. After months of being jilted and driven to near madness, I finally searched the Web and, shockingly, found a cell phone number for him. "How did you get this number?" he barked. When I explained, he instantly warmed up, as if we were long lost friends. "How can I be of service?" For the next few weeks, Smoothie called me back often, each listing better than the one before it.

Unfortunately, I met Smoothie too late. I had grown weary and frustrated of buying a previously existing restaurant using brokers. I had convinced myself to take the road less traveled. Yes, I had already begun negotiations to take over a space that was not currently a restaurant.

Tune in tomorrow - and yes I do mean tomorrow, as in Tuesday - to learn the more complicated way to open a restaurant and to find out the story behind the space where I am actually going to open my restaurant.

Read previous Wild Ride posts: Prequel, Intro, Part I, Part II

Food|and Drink|Restaurants|Opening Restaurant|San Francisco