November 2010 - Central Florida Chapter Associated Builders and ...

a shift in the buying and building strategies
of many of the area's largest restaurateurs.
A new focus on renovation and remodeling
of old and existing restaurant space is giving
quick-thinking contractors an infusion of new
work on projects that were completely off
the radar for corporate and private restaurant
owners only a few short years ago.
“About 30 percent of our restaurant business
today is remodel or buildout work,” says Brian
Roehn, project manager for Schmid Construction
in Clermont. “When I started with the
company five years ago, we had plenty of
projects, but virtually none of them involved
the renovation of existing space, especially
not in the restaurant sector. It’s a different
story today, and we’re seeing a major shift
toward cost-effective use of old or existing facilities.
Fortunately, it’s helping to offset some
of the new, vertical construction business that
has yet to re-materialize.”
Buffalo Wild Wings Grill and Bar, together
with the company’s local franchisees, has
been a major Schmid client for several years,
and the sports-themed eatery’s recent expansion
strategy is a perfect example of the
emerging balance between building out and
building up. Schmid recently completed two
new ground-up restaurants for the company,
one in Kissimmee and another in Clermont.
Meanwhile, two more Buffalo Wild Wings locations
are on the horizon for Schmid, but the
new stores in Lake Buena Vista and Daytona
will both be retrofits of existing freestanding
restaurants that had gone out of business.
Schmid’s success with Buffalo Wild Wings
and its other restaurant clients is the result
not only of aggressive bidding, but a change
in the contractor’s working relationship with
the property owners themselves. Brian reports
that he and his colleagues at Schmid
are working much more closely with owners
directly and getting involved in projects, both
new vertical and remodel, sooner than they
have in the past.
The owners who are still expanding or renovating
are looking for more value than ever
before,” Brian says. “That means we’re meeting
directly with them early in the pre-planning
stages of projects to evaluate potential
costs and give them as much value for the
dollar as possible. Nothing gets overlooked.
Fixtures that cost $25 each instead of those
that cost $100 make a big difference, and
those types of decisions are being scrutinized
harder and sooner than before.”
It’s a similar experience at Window Interiors,
a provider of cutting-edge window treatments
and shades to a variety of commercial
clients, including several of the largest fastfood
and casual-dining restaurant chains in
the country.
Kafé Kalik – A recent Window Interiors project.
“Owners are relying on subcontractors a lot
more now to keep costs down and find new
ways to trim net operating income once the
new building is up or the remodel is completed,”
according to Christine Cutler, director of
business development at Window Interiors in
Altamonte Springs. “Instead of leaving many
of the decisions to the designers or architects,
we’re being brought in at the earliest
planning stages to incorporate money-saving
ideas from the beginning.”
Early involvement is taking place in both new
construction and remodeling projects by Window
interiors's restaurant clients, and just as
it is at Schmid Construction, the shift toward
renovation business is significant.
“Our largest fast-food client predicted several
years ago that renovation of current stores
would be a major focus in 2010 and 2011,”
Christine says. “As such, about one-third of
our business with that client now occurs at
existing locations. There will always be new
vertical construction projects, but the new
emphasis on buildout work is huge, and I expect
the mindset to continue even after the
economy rebounds. Owners have discovered
that smart use of existing facilities can be
profitable and cost-effective. Together with
the desire to be more environmentally conscious
and energy efficient, we expect clients
to make expansion via buildout a major part
of their growth plans from here on out.”
At the same time, a merger involving one of
Window interiors's largest sit-down restaurant
clients is creating even more opportunities
for remodel work as newly acquired locations
are renovated to incorporate the style
and branding of the new parent company.
“Mergers are happening often right now
because acquisition prices are so attractive,”
Christine says. “For us and many of the subcontractors
we work with, it’s providing a lot
of much-needed work.”
For those general- and sub-contractors who
rely heavily on the restaurant business, the
new emphasis on retrofit construction is helping
to keep the doors open and staff levels
stable, but it also means smaller contracts
per project. Consequently, a greater number
of remodel projects are needed to match the
revenue-generating power of traditional vertical
construction. Both Schmid Construction
and Window Interiors have seen a decline
in dollars per contract bid, but a spike in the
number of contracts in-house and those in
the bidding pipeline. Competitors, no doubt,
are in the same boat. Therefore, while the
supply of renovation jobs is up, demand
among all the competing contractors is higher
still. The natural result is severe downward
pressure on pricing, making remodel business
far from ideal, but necessary in today’s environment
to keep revenue streams flowing.
“It’s aggressive, no doubt about it,” says
Brian, who reports that Schmid Construction
has been able to hold steady at around
25 employees through the last several lean
years. They’ve even added a couple of superintendents
to the payroll to accommodate
the larger number of open projects. “Talk to
ten clients, and pricing is at the top of each
of their lists of concerns, and it can’t come
at the expense of job quality, either. Smaller,
more nimble contractors can be aggressive
in the bidding and still deliver high-quality
work with a lot of value. We’ve seen a lot of
medium and large-sized contractors go out of
business, but we’ve managed not to fall into
any big holes.” ■
NOVEMBER 2010 BUILDING CENTRAL FLORIDA 19