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Page 12 — Retail Properties Quarterly — November 2017
W hen our team purchased
the Colorado franchise
rights to Newk’s Eatery in
December 2015, the retail
market was hot. A year
later, when we started researching
sites, Denver’s market was on fire
– a landlord’s market with retailers
clamoring to get into the hottest
centers.
Luckily, Newk’s was ready. Our
corporate construction team spent
the better part of 2016 reviewing
every line item in the construction
budget, then making the tough
choices necessary to streamline the
process. As a result, construction
costs for our first Denver locations
– in Arvada and Lone Tree – were
approximately 20 percent less than
when we signed on as franchisees.
That’s big savings, particularly at a
time when Colorado’s average con-
struction cost index rose by about 3
to 6 percent, according to Morten-
son Construction Cost Index.
Three major factors helped us
accomplish this feat.
1. Look at everything. The Newk’s
team reviewed every line item on
the construction budget, then went
out into the field and reviewed
them again with vendors, contrac-
tors, developers and landlords.
The process was not for the faint
of heart. At the time, Newk’s was
building in 14 states using differ-
ent architects, contactors and subs
in each market. We learned some
valuable lessons from those count-
less meetings, though. In some
cases, we learned the contractor
wasn’t for us. In most cases, it was
Newk’s processes we had to “fire.”
Slack in our design process was
leading to expen-
sive delays and
change orders,
so we created an
airtight schedule
that keeps the full
design, construc-
tion, operations
and training teams
informed through-
out the process.
The process
worked like clock-
work for our
Arvada and Lone
Tree locations, which opened right
on schedule. Our cash registers
opened on time, and our landlord
recognized its revenue more quick-
ly and with far less hassle.
2. Involve the design team early.
Before the lease is even signed,
Newk’s real estate team engages
architects, landlords, contractors
and developers in the process.
When we sign a lease, we want to
build a building; by engaging the
full team very early on, we can
ensure that the site works for our
customer base and, just as impor-
tantly, that it will be cost-effective
to build.
This allows us to reject sites that
may cause unseen costs – a sec-
ond-generation restaurant rehab,
for example – or conversely, iden-
tify cost savings and troubleshoot
issues in the sites we do choose to
prevent overages or delays.
A recent example involved an in-
line location in a new strip center
(not in Colorado). In most cases,
the developer would pour the con-
crete slab before the tenant began
construction. But with the eatery’s
unique floor plan – with an open
kitchen in the middle of the din-
ing room instead of locating it at
the back of the space – would have
required contractors to cut into
the slab and relocate the plumb-
ing, which costs time and money.
By starting early, we were able to
make sure the landlord didn’t pour
a slab, and instead ran our plumb-
ing first and poured our own slab,
with a credit from the landlord.
Our construction costs were low-
ered, our timeline was shortened,
the landlord didn’t have to hassle
with the slab and not a single
change order was needed.
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Fitness concepts increaseretail competition
ergers, including 24Hour
September 2015
Photo courtesy:Wellbridge
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Leasing
Chris Cheek
Chief development
officer, Newk’s
Eatery, Raleigh,
North Carolina
Newk’s Eatery
As a result of careful reviewing, construction costs for Newk’s first Denver locations – in Arvada
and Lone Tree – were approximately 20 percent less than when they signed on as franchisees,
even though Colorado’s average construction cost index rose by about 3 to 6 percent in the same
time period.