Is a foot high traffic shopping centre is the best place for a business?

Ange Kondos is an expert in determining the answer to this question for many.

“Business has become so hard, so prohibitive, so costly I can see true entrepreneurs taking to the strips.”

Our discussion came about following seeing a LinkedIn post by Ange where he highlighted the deal numbers and performance attributes of a food business in a strip mall location. Comparing it to some typical lease circumstances faced in a high traffic major shopping centre location, we thought the scenarios was worth digging a lot deeper into.

The key factors of the business focus on;

• Rent $50-$60k - no penalty for succeeding,
• Sales - who cares but probably over $2mil p/a,
• Fit-out costs circa $120-$130k and no interference by teams of shopping centre designers,
• NO ‘obscene’ Cat1 costs to endure
• They have a life as they trade 6 days according to customer opportunity,
• No further charges if trading late,
• ROI under 6 months and goodwill created in the business.

Ange has some very firm opinions on the circumstances of leasing and food retail in particular in the market.

0:00 Intro

0:23 What LeaseWise does - property tenants advocacy for managing retail property portfolios

1:54 A LinkedIn post by Ange a while ago highlighting key points on strip mall profitability

2:45 What Ange is seeing in the market in shopping centre v strip malls at present

4:00 Shopping centres have been spoilt for choice as centre owner and now a shift by many to drive thru

5:10 The impact of a bad decision in a shopping mall v strip site with lower rent

5:50 The LinkedIn post example of Luke’s Viet Rolls, Puckle Street Moonee Ponds

6:15 Rent and no penalty for succeeding in strip mall leasing

8:15 Achieving great sales on low rent makes it all work for the business

9:32 Fit-out costs and shopping centres demanding too much expense for no reason

13:01 Category 1 costs at zero $, as opposed to ‘obscene’ in shopping centres

15:24 Strip mall having little requirements on you to trade at specific times, unlike a shopping centre enforcing certain hours

18:48 No extra charges for trading late in a strip mall as opposed to a shopping centre where they often require to pay more costs pro-rata

19:46 ROI being created faster quite often in a strip mall, and particularly in this example with significant goodwill advantage

21:16 Shopping malls seeing an operator doing well and seeing that as an opportunity to add another competing in the same category

21:43 True entrepreneurs taking to the strip malls into the future, particularly those that don’t need complimentary brands around them

23:45 The message is not ‘no shopping centres at all’ but to be very aware and well-advised

24:39 Don’t underestimate the power ‘no’ in leasing deals

25:03 Wrap-up

 

Podcast Produced by: www.magneticbusinessmedia.com.au

Franchise Stories and Knowledge Base (our other website): www.franchisebuyer.com.au

 

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