5Qs for Bruno Hanelt on restaurant expansion
If there’s one thing both tenants and landlords of shopping centers agree on these days, it’s that you can’t have too many good restaurants. Food and beverage chains are on expansion sprees, but equipment, materials, and workers are hard to get. During 20 years at S&R Commercial, VP of operations Bruno Hanelt has helped brands such as Starbucks and Blaze Pizza keep growing with new concepts in more markets. We asked him how he’s kept the pace up dealing with today’s myriad delays.
What are some of the biggest causes of delays in restaurant buildouts today?
There are different causes at different stages in the process. Early on we are seeing slowdowns in the permitting process, with county officials grappling with manpower shortages and taking longer to schedule and conduct inspections and issue permits. Once things are moving, the biggest problems arise from material delivery issues.
Restaurants can’t just lease empty space and fill it up with merchandise like specialty stores. Doesn’t that make their buildouts much longer to complete?
Restaurant tenants are particularly vulnerable to supply chain disruptions and delays because some of the specialized systems and big-ticket appliances used in commercial kitchens are more likely to be backordered or slow to arrive. Labor shortages can also lead to delays from subcontractors and trade specialists who may be experiencing labor challenges. And getting across the finish line is also trickier. Final health department sign-offs and inspections for use and occupancy are taking much longer than they did in the past.
What about materials? How does your team deal with delivery delays?
Material shortages and supply chain disruption are unavoidable, but small design changes can make a big difference on the bottom line. For instance, using layouts and designs that consolidate plumbing lines or reduce the need to trench through an existing concrete slab can be helpful. We are working with clients to suggest alternative finishes that provide a similar aesthetic, but at a greatly reduced cost. One good way to avoid delays is to try to secure comparable alternatives for building materials and products.
How is inflation affecting the retail construction side of the business?
It’s a significant issue. We used to be able to hold prices for 30 days easily, and extending that window out to 60 days wasn’t uncommon. Now we can’t reliably hold them for more than a week or two. Sending letters to notify clients about price increases is a regular part of the process these days. When we start out with a client, we let them know exactly how long a given quote is good for. In some cases, developers and construction professionals might not be able to be specific and may need to include market pricing language. For instance, we’ll point out that the cost of a plumbing line item could change as affected by the fluctuating price of copper.
Are there any other tricky situations delaying restaurant openings?
Calling a supply house and asking about timelines can be misleading, because, by the time you sign with them, the delivery estimate could end up being two or three times what they originally quoted. In a market already so chaotic and unpredictable, even the smallest and seemingly most innocuous decisions could end up having an outsized impact on costs and timelines. It’s now more important than ever to communicate clearly with an experienced construction team that understands how to navigate these uncertain times.