The 3rd Corner

So I found a location that suits my needs, it won’t cost me a fortune to operate, has plenty of parking and takes less than 20 seconds to give directions by phone, all that is left is making “The Deal”.

“The Deal” is negotiating with the owner of the business and the landlord to set the purchase price and the lease terms. In this instance there is no ongoing business so I am only dealing with the landlord who happens to own all the furniture, fixtures and equipment since the last tenant left in the middle of the night. This should make things simpler but it doesn’t.

We started our negotiations on October 12 of 2009 and finally inked the deal on January 26 of 2010. All I can say about negotiations is find a good lawyer and stick with your game plan. A lease is a lot like a marriage. If you want to stay happy with your landlord and make some money in the process you need a lease that is going to make that possible. A good lawyer is your best friend in making that happen. The key ingredients to a good lease is long term affordability. Can I survive the slow times? How long will it take to be profitable? What are the hidden cost in your lease? Your landlord should be an affordable expense and not your partner. Many restaurants fail because the landlord feels that his or her property is worth much more than the restaurant can afford to pay. There are hundreds of variables that can affect opening a restaurant with the biggest one being under capitalization (not enough $$$). Your monthly lease payments will have long term consequences on your ability to pay your other bills so negotiate wisely and if necessary walk away from “the deal” if your landlord is inflexible.

The second isuue in the lease is the CAM’s (common area maintenance or triple nets). These expenses include things such as property taxes, building insurance, and general building maintenance. As a general rule these can run from $.30 a square foot to $1+++. A fancy shopping center will have much higher CAM’s due to other factors such as advertising, security, administrative cost and the like. CAM’s are the hidden tax in a lease so beware how you negotiate these. I once had a restaurant in which the property sold several years after I had established my restaurant. The property tax base on this property tripled overnight and my CAM’s went from $.30 a foot to $.70 a foot. The net increase in my total CAM’s was $2000 a month. Ouch!!!!

One last thought. Read everything thoroughly. Nothing is more boring than reading what I call “lawyer write”. Lawyers have their own language and reading a 40 page “lawyer write” document is guaranteed to put you to sleep in record time. Lawyers exist to confuse the rest of us and they are very good at that. However, be patient and read through every word of every document that is presented to you and ask lots of questions. Your future may depend on it.

I could write forever on my experiences in negotiating deals but the idea of this blog is to keep you coming back and not boring you to death so I will move on.

I’ve decided to open a new 3^rd Corner Wine Shop & Bistro in Palm Desert. I must be a glutton for punishment. Why else would I decide to open a new restaurant in a down economy, drive two hours to get there and spend a boatload of money doing it. Did I mention the fact that I will probably be opening this restaurant in June or July when the temperature of Palm Desert is a balmy 115 in the shade? I’ve been opening restaurants for almost thirty years. You would think I would be getting smarter about this process. And that brings us to the reason for this blog. I’ve been asked so often for advice on opening restaurants, that a blog seems the perfect venue to explain the process as well as keeping you abreast of the opening of our newest 3^rd Corner

In this first chapter of my blog, I will chronicle the events that lead up to the opening of our newest 3rd Corner Wine Shop & Bistro in Palm Desert. I will explain as best as I can the reasons behind the location. I will also try to explain the process that goes into opening a new restaurant. There are endless details and seemingly endless decisions that cost a lot of money. By the time we have opened, you will have a taste for the work (and the luck) that is needed to open your very own restaurant. I only hope you don’t get bored with my blah blah blog…

Hey, great idea this 3^rd Corner! How did you come up with it?

The concept of the 3rd Corner involved a bit of luck and good timing. This is the Readers Digest version of how I came up with the idea for the 3^rd Corner. As owner of Thee Bungalow Restaurant, I had a successful wine club that soon outgrew it space. When I decided to close the original 3rd Corner Mediterranean Seafood restaurant (a story of failure for another blog), I gained the space needed for the wine club to grow. I also had a ready built restaurant that needed to be used. When we combined the wine club with the restaurant, the new 3rd Corner Wine Shop & Bistro was born. I never envisioned the success that was to come. I was just trying to pay the mortgage on a building. I wanted a wine shop that served food and got a restaurant that sold wine. The second 3rd Corner was born two years later in Encinitas on the eve of the current recession. This location would be the test of the concept to see if it was good enough to replicate. After our first year in business in Encinitas, it was clear that a third restaurant was viable. And so we come to Palm Desert and the story of establishing a third restaurant.

What’s in a name?

I guess before I get started on the details of opening a restaurant, I should explain some of the basics of the 3rd Corner. Some of you may know the story of the 3rd Corner so bear with me. The name The 3rd Corner comes from the fact that I owned and operated three separate food businesses on three of the four corners were our first 3rd Corner is located in Ocean Beach. My first choice for names was Ludachris. Ludachris was the first syllable of my children’s first names. Lu for Lucas, Da for Danica and Chris for Christopher. It seemed like a whimsical, memorable name for a restaurant (though hard to spell). It actually was a terrible name and I was lucky to find that the dot.com for that name was already being used by a Hip Hop band. Did I mention the importance of having a dot.com for your restaurant in the internet age? So one night while having dinner at a friend’s house, they mentioned the fact that this would be my 3rd restaurant on that corner; why not call it the 3rd Corner? There is no science in naming a restaurant (except good wine) other than to capture the concept in the name, keep it simple (easy to remember), easy to spell and the available .com. With the 3rd Corner we failed the concept test but succeeded the easy to remember, the .com and the spelling challenge. We adjusted the name to fit the concept by adding “Wine Shop & Bistro”. And so the name 3^rd Corner Wine Shop & Bistro was born.

Just a few more words on naming a restaurant. Stay away from names that start with a first letter in the second half of the alphabet. Alphabetical listing are often trimmed somewhere after the letter O or P for space and advertising considerations. Don’t name the restaurant after yourself unless you expect to live there all the time. Stay away from hard to spell names, Those 411 operators won’t spell any better than you. Stay away from names that may have meaning to you but absolutely no meaning to the rest of the world (see Ludachris above). A year ago, my daughter took me to one of those hard to remember named new restaurants somewhere on Adams Ave.. It was a new world Mexican restaurant that was a few months old. The food was fabulous, especially the mole. I went home that night and told my wife about this new restaurant. She asked me the name of this place and I had no idea. I remembered seeing the sign outside and thinking that it was a hard sign to see at night because the name was a little confusing and unusual. The sign was a little to artsy and didn’t really do its job of being easily seen while driving by at 35 miles an hour (Signage is a whole other chapter). A few weeks later I took my wife there and made it a point to carefully look at the name of this place and remember it. Guess what, a year has passed and I have no idea what the name of that damn Mexican restaurant is. Lastly on names, if you have the worlds greatest food with great prices and fabulous service you probably have a line out the door and you can name your restaurant whatever you want.

So how did I get to Palm Desert and why? This search started in Palm Desert 2 1/2 years ago when I was looking for our second store. At that time, Palm Desert was hot and I don’t mean stove hot, I mean scene hot. I decided to stay closer to home with the second location and settled on Encinitas and put Palm Desert on the back burner. Six months ago I started my search for our third location with several trips to Seattle, then Portland, south Orange County, Scottsdale and finally Palm Desert. The criteria for finding just the right spot went something like this.

First I wanted parking. For me, parking is the most under-appreciated facet of the restaurant business. Two things come to mind when I think of parking, first I hate to pay for parking. Why should I pay $20 to have my car parked before I get the pleasure of spending $200 on dinner? Second is searching for a parking space. That means driving around and around the block fourteen times and finally picking a spot 3 blocks from the restaurant. I know this because I hear about this often in our OB location. One of the deciding tangibles in where we choose to eat is the ease of access to our intended dinning destination.

The second biggest factor is the cost of the location. Nothing says failure faster than a bad lease at big $$$. Your landlord needs to remain your landlord and not your business partner.

Next is location. Baron Hilton was once quoted as saying that “the three biggest factors to success in business is Location, Location and Location”. I’m not ready to disagree with Mr. Hilton as I’m sure that location is the key factor for the hotel industry. However for my purposes location comes in at number 3. I tend to look for a location that is simple to find, easily accessible and doesn’t present a challenge for the success of my business.

Palm Desert satisfied my key concerns for potential success. There is abundant parking for several hundred cars conveniently located all around the restaurant.  The landlord understands that it will take some time to establish a new restaurant in this economic environment. Therefore she has given me very generous lease terms that will allow me to grow and not commit financial suicide. The site is well located at the junction of Highway 111 (the main thoroughfare of Palm Desert) and Highway 74 (coming from San Diego this is the road crossing through Temecula and over the mountains that most people take to get to Palm Desert).  The location was the former site of Palomino and was for years a Palm Desert landmark.

Stay tuned…..

Ed Moore

The 3rd Corner Wine Shop & Bistro is a sophisticated neighborhood restaurant with a unique and affordable concept; within the restaurant lies a retail shop with a selection of up to 1,000 bottles of wine that the guest can choose from and uncork at the table for $5. We also feature a full bar and offer wines by the glass. We showcase winemakers from all over the world for wine dinners that pair the wines with special menus prepared by our chef as well as monthly wine tastings.