10 Questions with Restaurant Realtor Houston Jones

A bar furniture supplier turned restaurant owner, Houston Jones got his real estate license in 1992. Since then, as president and broker of The Houston Group, he's been helping restaurants such as Zephyr Cove, Wild Eggs and Hiko-A-Mon find sites, broker their purchases, design their new spaces and build them out. Here he shares his thoughts on how to buy a restaurant, how to sell one and what Lousiville neighborhoods are hot.

How did you get into this particular aspect of commercial real estate?

I was a partner with a furniture manufacturer back in the late 70s and he wanted to go after the restaurant supply houses, things like that with bar furniture. And so we set up a showroom at Third and Broadway. His manufacturing was in Breckenridge County and a couple of years after we were in business he went belly up with his manufacturing, so I just re-leased the space and here I am.

Anyway I did a lot of design work and a lot of supply of furniture fixtures and equipment for restaurants and discos in the late 70s. And then [I] opened a restaurant in Old Louisville called By the Park in '79 with a couple of guys. I was the absentee investor and they never came up with their part of the money, so I ended up managing that place for three or four years. Then after that I went back in the equipment business and I was an equipment contractor doing schools, nursing homes and hospitals from '86-'92. Didn't like that aspect of being a plumber, basically a plumber just bidding on work. I like the design side and the development side, so I got my real estate broker's license in '92 and decided to focus on helping restaurateurs that were looking for a site, to help them find a site, help them build it out, design it, build it, broker it. You know, all of the above. Help them get designing it too and just be the development guy. So that's what I've been doing since '92 and have enjoyed it. So I've been called The Restaurant Guy in Louisville, to a degree. But that's all I focus on, is the restaurant industry in this town.

What are some of the restaurants that you have worked with?

Ones that are still open or closed?

Either one. If they're still notable. We did a post recently on favorite closed restaurants and it got a ton of attention, so big names work for that as well.

One notable one that I did was the Zephyr Cove over on Frankfort Avenue. Took that old, rocky building and turned it into Zephyr Cove and he did quite well there for a long time. Designed and built out Winston's Restaurant over at Sullivan University. Was involved with, I guess recently, Hiko-A-Mon over at Westport Village. We designed and built that out for him and then I did all the leases for all of the restaurants over at Westport Village. Brought Napa River Grill from Dupont over there. Did the lease for Westport Whiskey and Wine. Worked with those guys to bring them over there. The Chocolate Martini Bar that just opened two months ago, I was involved in that project. Let's see. What else? Lots of them! Wild Eggs, I was involved in helping them get started in the beginning over there in Dupont and Pig City BBQ out in Middletown. Designed and built that place out back in something like 2005.

What's the market like these days for restaurants?

I see it as very, very exciting. I'm working on three or four different projects right now. Just leased that Tony Roma's space to Guy Genoud, he's going to open up a French brasserie there, 5,000 square feet. Got the Maido space on Frankfort Avenue, I'm working on a couple of groups there. Hilltop right across the street from it, I've been developing that out as a restaurant/lounge venue with a very exciting chef here in town I can't name.

But the industry, as a whole in Louisville, I think is pretty healthy. I know that there is a couple of them that are struggling, but for the most part, I see it looking very good for the next 15 to 20 years in this town because of the aging population and the people that are retiring. What do you do for entertainment? You go out and eat and drink, go to a movie or go shopping or something like that. I just see it getting better all the time.

Say, for example, I was a budding restaurateur and I came to you and asked for your help. How would that whole process work?

Well, depending on if you want me to do a business plan for you, I would charge you for the business plan. If you already knew what you wanted to do and were looking for a location, then I'm either gonna help you look at what I've got under my listings or take you maybe to someplace else that's listed by another real estate broker. I don't have any problem with taking my clients and the people I am working with to a place that I don't have listed and splitting commissions or doing whatever. And then help them through the process, if they need it, of getting their liquor license, getting financing, of working through the red tape of city hall—all of the above. And help them get open.

What are some key ways that the process of buying or leasing space differs for a restaurant versus residential housing?

Well, it's commercial and commercial differs from residential in the fact that there's not nearly as much paperwork involved as there is in a residential sale. When you buy a house, you've got that form that they fill out which tells you all about the house. In commercial you don't do that. People figure you've got a brain, if you're going into business for yourself, you know what you're doing.

But in the aspect of leasing versus buying, it depends on where it is and what the landlord wants to do or not do. Like the French brasserie space, he got $100,000 worth of tenant finish money to bring him in there and help him get started. Some of them do that and some of them don't. In the financing realm, most of the independents in this town that are start ups have to have pretty much their own financing. Banks are still tight on opening up their wallets to the start ups if they don't own the real estate. If they own the real estate or want to buy the real estate, then it is a piece of cake for getting their finance. Not a piece of cake but it's a lot easier that way.

What would be three tips you would give to somebody looking to open up a restaurant to consider regarding the real estate aspect of it?

They always say location, location, location. But that's not always true. I think that one tip I would always is what's your point of difference? You know, what makes you different than anybody else in opening a restaurant, number one. Number two is the concept I feel like has to fit the space. I don't know quite how to explain that, but if it's a brick building and it's down in Butchertown and it's called the Blind Pig, then it kind of fits the space. If you put the Blind Pig in a strip center, in the middle of the strip center it probably wouldn't do very well. It's picking the right location and the demographics, making sure the demographics work for you. The other tip I would give would probably be don't put it on the street. Try to get close to a stop light or something that slows traffic down where you're not whizzing by at 45 miles an hour.

That makes sense. I would have never even thought about that. What about if you're going to sell your restaurant? I know that some of the restaurants that have been on the market have been up there for a while and I assume that it's not like a house, there's not nearly as much demand for restaurants. But what can a restaurant owner do to try to improve their chances of selling their space?

Well what they can do, number one, is keep really good records, if they're selling their business. I mean like if I'm just going to name one for instance: Smokehouse BBQ, I had that for sale at Fern Creek. He kept and had real good records. Another one I had was a pizza place over in Lyndon. He had lousy records and I had a buyer, but the guy wouldn't pay for what he wanted because he didn't have the records.

What types of records are you referring to?

I'm talking about P&L statements, tax returns. Reporting all of your income instead of putting the cash in your pocket and then trying to sell the business for what you're putting in your pocket. Not all of them do that, but that makes it really easy to sell is when you keep good records. That's the biggest point. And the place is clean.

What neighborhoods right now do you think are gonna attract new restaurants? Obviously, NuLU has done real well but it's expensive...

Yeah, the cheap prices in NuLu are over. I'd look at what's going on Frankfort Avenue at lower Frankfort Avenue down in that Clifton neighborhood. Silver Dollar just opened-they're doing fantastic. Varanese, I was involved in with that deal when John bought the Red Lounge from me. He's done very well over there. Bourbon's Bistro has done pretty well. Of course, Porcini's, nothing but good you can say about Tim Corey at Porcini's.

What everybody's looking for these days in the independent restaurant world, most of them are looking for existing restaurants that have gone out of business and they don't have to blow a whole bunch of money on infrastructure to get reopened so some of the places like the Tony Roma's, Guaca Mole—I was involved in that deal with Fernando [Martinez], that was an old Applebee's. I leased it to Shoney's and they didn't make it so I re-leased it to Fernando. And he had an infrastructure there that he didn't have to put a whole lot of money into.

As far as areas go, I worked on feasibilities study for Colonial Gardens on New Cut Road near Iroquois Park, I think that area out there will be beginning to be built up a little bit. I just met with an economic development guy for, Scott Love, at West Broadway. They're screaming for stuff down there, for places to eat. You know, that's what I see. Bardstown Road is built out. Frankfort is pretty well built out. In filling some of the different neighborhood places in the suburbs.

What about trends in restaurant concepts? Obviously, this city does New American really well. Do you think we're going to see more places with that sort of cuisine opening up or do you see it going in a different way?

What I see is a little bit more towards the Southern style of food. Some slow-cooked stuff. Small plates. I like what [Bistro] 1860's been doing with Ron Kayrouz and his crew down there with small, medium, and large plates. I was involved in Mojitos with Fernando and Marcos [Lorenzo]. I always thought that the first person that opens up a true tapas/Mexican restaurant here in this town is gonna knock it out of the park, and they have with their small plates. I think that is a big part of where the market is going is that people can choose what they want to eat instead of Olive Garden throw a ton of salad at you and a big bowl of pasta that you've got to take home with you.

Anything I should have asked you and didn't?

I don't know. I can't think of anything else other than if they're looking for a restaurant call me.

Good answer.

It's really true. If I were looking for an office space I wouldn't come to Houston. If I were looking for an industrial warehouse I wouldn't come to Houston. But if I'm looking for a
restaurant, that's where I should come.
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[Photos: Whitney Harrod Morris]