If you’re looking to open a new restaurant or expand your current operation, finding a second-generation space – one that previously housed another restaurant – is easier now than it’s been in the past.

With the unfortunate reality that we lost thousands of restaurants over the course of the pandemic, there is significant interest in that real estate from both first-time restaurateurs and existing restaurant chains or owners looking to expand.

Before you jump in, there are pros and cons to consider when looking at second-generation spaces. Here are some things to think about:

     – Business Model

If you want to build a fine-dining restaurant and you’re looking at a space that was formerly occupied by a deli, the layout is likely going to need a lot of changes. For example, did the previous concept have a walk up counter but you offer table service? What a private dining room for parties? Bring a general contractor with you so you have a sense of costs. Sometimes the changes are minor, but other times the changes needed could be cost-prohibitive.

     – Food Distribution

Different concepts have entirely different methods of distribution to the customer, and the former restaurant’s method may or may not match with your own. Go through your step-by-step process and look at where the equipment is. Will the way you produce and distribute your food work within the current design?

     – Concept Flexibility

Consider your non-negotiables. You might have your heart set on a drive-thru, but the municipality (or the tenant next door) won’t allow it. If you are working with a specific idea but the existing space doesn’t lend itself to that concept, would you change your concept or is it more important to look for a new space? Work with your real estate agent and general contractor to determine what’s possible before you sign the lease.

Keep In Mind

The normal considerations for restaurant construction apply to second-generation spaces as well. For example, location always matters, whether you are building a ground-up restaurant, commissary, fast casual space, ghost kitchen or full-service restaurant.

While there will likely be a cost savings associated with going into a space that had the same concept previously, you’ll want to try to determine if that concept failed due to location or if there was another reason. You will also want the space to feel new, so you’ll want to consider the design carefully.

In addition, the size of the overall space – and especially the size of the kitchen – will really help determine if the space is right for you. If you’re looking at a space that used to be a large steakhouse but you want to create a smaller and more intimate model, it’s not going to be a fit.

What else is there to think about with a second-generation restaurant space?

     – Utilities

Spend some time thinking through your utility needs. Will you need to redo pipe sizing for your water needs? What about the sewage connection? How old are the HVAC units? Do you have enough electric to do what you need for your concept? The answers to these questions will help you determine the budget you’ll need to make the space work for you.

     – Equipment

Take a look at the equipment that is still in the space. Are the sizes of existing walk-in freezers and coolers right for your needs? Do you need a hood for ventilation where perhaps the previous restaurant concept did not? Check out our blog post on new or used restaurant equipment for more considerations here.

     – Contingency

  • When you open up walls, you never know what you are going to find, so have some money set aside for surprises. You might find wiring isn’t up to code for example, and you’ll need bring that up to par to pass inspection. Hope for the best but plan for the worst.

There can be significant savings when it comes to second-generation restaurants but be sure to look out for the hidden costs as well.

We always advise anyone looking to bring a general contractor with them to look at the space before you sign lease.

Your GC can provide a valuable set of eyes on the property and alert you to potential issues. Contact us if we can be of assistance.