Restaurant Construction Costs in San Francisco

If you are interested in opening a new restaurant, you will need to include certain items in your budget.  Having enough money for construction, permits, equipment, furniture and design fees is vital.   We have seen the cost of construction and equipment rise quite substantially in the last two years.  In this post we will focus on construction costs alone, which do not include any of the other items mentioned above.  People new to building a restaurant from scratch often lump construction costs in with the costs of permits, kitchen equipment, and furniture, but in reality, those costs are all different, and must be line-itemed separately from the get-go. It may not be obvious at first, but the money for each type of item goes to different parties, and seen in that light, you should get it right from the start. 

According to the RS Means Construction Cost Data Report, which is where most of the industry (including building departments) reference construction costs, building a restaurant costs on average $350.00 per square foot (and let me repeat… this does not include equipment, furniture, permits or design fees).

We have found that amount to be fairly accurate in buildings that do not require a lot of work prior to the tenant improvement portion of the project.  Due to the rise in cost of materials, for a completely “vanilla” space (nothing you’d see on our website) the cost seems to hover around $200.00-$250.00 per square foot, and for a space made to a moderate design level you can expect to pay $350.00-$550.00 per square foot, at the very least. In buildings that need a lot of base building work along with the tenant improvement, we have seen pricing coming in at approximately $750.00 per square foot.

The one segment of construction where we have seen the highest increase in cost has been mechanical, which includes hoods and ducting, air conditioning and heating, gas lines and plumbing. This portion of work can take up to 40% of your budget if you have to start with a space not already fitted with this work.   This wasn’t always the case but, the shortage of mechanical contractors has driven up the cost.

Another thing to keep in mind is that the smaller your space, the higher the cost per square foot for construction. You will most likely pay more per square foot than a larger space because you won’t be able to take advantage of quantity discounts. 

There are a lot of factors that make up a construction budget so once you have a space in mind, contact a design professional to walk through the space and help you understand what is necessary to get the it up to code, and how much work it will take to get you operational.  Later, once a design is in place, architectural drawings can go out to bid to a few general contractors to firm up the price.  

We suggest that when you are working on your business plan that you budget with a 10-20% contingency margin so that you have the opportunity to build out the space how you want it.  Very often, construction budgets are too small and we have to bear the bad news that the owner can’t afford their vision, or that they need to find additional investors.  All in all, allowing for the tenant improvement average per square foot cost of $350.00 in your front-end planning is a good idea for the healthy completion of your project. 

ADA Compliance - Valuable tips

ADA (American Disabilities Act) compliance is an important component in our society and since there are a lot of older buildings in San Francisco disabled access upgrades are often necessary. Opening a business does not necessarily trigger doing the upgrades. Doing permitted construction in the space is what triggers the upgrades and the amount of upgrades (20% -vs.- 100%) the owner is responsible for.

Do not assume that if you move into a space "as is" and are not doing any construction that you are exempt from meeting ADA compliance. Look into it, ask questions and protect yourself from potential lawsuits. 

Here is some basic information about ADA compliance that you should understand.

1. The 20% rule: In short, if your construction costs excluding disabled access upgrades are below $203,611.00 you must provide disabled access upgrades up to only 20% of the cost of construction. If your construction costs are above that number you are required to provide 100% of disabled access upgrades to your project.  The amount of $203,611.00 only applies to construction that receives permits in 2025. The amount may change every year. Check sfdbi.org/forms-handouts for the disabled access compliance checklist to see if the amount has been updated. All new construction shall be ADA compliant.

2. Evaluating construction costs: The cost of construction is something the Department of Building Inspection can evaluate and revise to meet the Marshall & Swift Construction Cost Index based on the square footage of your project. if they think your estimate is too low they will use their this method to come up with the cost of construction for your project.  We have seen documentation at the Department of Building Inspection that lists commercial construction to be valued at $218.00/square foot.  This number is subject to change.

3. Order of priority: Disabled access upgrades are to be completed in order of priority which are based on California Building Code Section 1134B.2.1 Ex1.  Basically the order makes sense.  Your entrance is the first priority, the route is the second priority, restrooms are third and then it goes on to pay phones, drinking fountains, signage, visual alarms, parking, paths from parking and then showers.

4. Unreasonable Hardship: You may file for an unreasonable hardship if there are areas that will not be in compliance with the disabled access laws due to financial, physical and/or other constraints that create unreasonable cost in proportion to the scope and estimated construction cost of your project.

5. Technical Infeasibility: You may file for a technical infeasibility if for example you would have to remove or alter a load bearing member that is an essential part of the structural frame or if there are physical or site constraints. Of course, they ask that you meet ADA compliance to the maximum extent feasible.

6. Upgrades are already completed: If your space is already completely ADA compliant you are not obligated to spend any portion of your construction costs on disabled access upgrades but you still need to complete a form and include it in the permit documents.

7. Risk of being sued by a person with disabilities: Many business owners are rightfully concerned that if they meet the 20% rule they are still left wide open for law suits for the portions of their space that are not ADA compliant.  In an effort to help small businesses San Francisco Supervisors led by Carmen Chu launched a pilot program in 2012 to stop predatory ADA lawsuits and to educate business owners about what their responsibilities are and how they can be protected from lawsuits that may be frivolous. In addition, the state started a program involving Certified Access Specialists (CASp) who can inspect your facility and write a report that will provide you with a schedule of improvements towards compliance before a construction-related claim is filed against you. A CASp can provide services that offer you “qualified defendant” status in a construction-related access lawsuit once you’ve received your inspection and report. That is a good thing.

Please, in any case ask a lot of questions of your designers, architects and building officials so that you completely understand your risks and responsibilities.

Green, or Greenwash?

According to the masses, via Wikipedia, “Greenwashing is a form of spin in which green PR or green marketing is deceptively used to promote the perception that an organization's aims and policies are environmentally friendly. Whether it is to increase profits or gain political support, greenwashing may be used to manipulate popular opinion to support otherwise questionable aims.”

The New York Times published an article about this on October 17th 2015, exposing many companies’ failed attempts at greenwashing their products. From innocuous attempts like Lulu Lemon Athletica claiming their seaweed fabric apparel had health benefits, to diabolical attempts like Volkswagen rigging their diesel engine cars to trick emissions testing. Needless to say, there are many levels and many types of greenwashing, so we decided to take a closer look.

In our industry, Leadership in Energy and Environmental Design or “LEED” Certification is the gold standard for green building. From 1994 to 2006, the LEED certification program went from one categorical classification to a comprehensive system of interrelated standards. While this program has had a robust impact on building large projects, it doesn’t always make an impact on small to medium size projects. Many of our clients would love to build a LEED certified restaurant, home or office but don’t have the opportunity with constraints on time and budget. This leaves much of the selection of environmentally green products and finishes to our discretion. Though we don’t often get to build LEED certified spaces, we try to understand what’s really “green” and select accordingly. Many times however, we’re in the same position as any other consumer, left trying to figure out whether a product or finish is actually green, or just greenwashed.  

We discovered a very helpful website about green washing recently for day-to-day situations, www.sinsofgreenwashing.org that has a lot of valuable information on this subject. It is also very well put together with fun, colorful characters, games and fact cards.

Sinsofgreenwashing.org describes green washing in a series of "sins" that are accurate and something we deal with every week as we specify products for our projects. These "sins" are as follows: 

1. Sin of the hidden trade off  

2. Sin of no proof 

3. Sin of vagueness 

4. Sin of worshiping false labels 

5. Sin of irrelevance 

6. Sin of lesser of two evils 

7. Sin of fibbing 

To see an explanation of each of these "sins," go to their website,  

www.sinsofgreenwashing.org It’s definitely worth your time! Also, Green Peace has launched a website dealing with green washing as well. http://stopgreenwash.org/. They give the following advice should you come across green washing:   

Corporations must play a central role in helping solve the world's environmental challenges. They must do this by making real changes to their policies and practices.  At the same time, consumers, policy makers and journalists must be able to look beneath the green veneer and hold corporations accountable for the impacts their core business decisions and investments are having on our planet. The Greenpeace Greenwash Criteria can help consumers and journalists distinguish between green and greenwash. Consumers can take action when they witness greenwash by contacting corporations and policymakers to voice concerns, or by drawing attention to misleading claims via blogs, websites, and other outreach. They can also contact the Federal Trade Commission or the Better Business Bureau to register complaints. 

Legally, the Federal Trade Commission (FTC) has the responsibility and authority to take action against misleading ads and claims. Consumers can register complaints online, or boycott manufacturers known to greenwash. Most importantly, remember to take action yourself by being more green in your everyday activities. Your ability to contribute to a greener environment by avoiding wasting water, electricity, gas, and food, and by recycling and reusing has a huge impact, and at a critical mass, the network effects will make everyone’s world a lot greener.

The History of Gi Paoletti's Career In Design

I’d like to tell you about myself and how I came to start Gi Paoletti Design Lab.  I spent the first fifteen years of my career working for large architectural firms focusing on high-end corporate office interiors, Silicon Valley corporate campuses and mixes-use development projects.   Here are a few of my clients from those years:  KPMG, Hewlett-Packard, Microsoft, Cisco, Sybase, TNT, Agilent, NHN. It was an exciting experience to work on multimillion dollar projects all over the United States, Australia and South Korea.  I got to travel to many places and often, experiencing the culture of many different companies and neighborhoods.  I believe that familiarizing yourself with the neighborhood that surrounds a design project is very important for the success of the design.  Once you understand the neighborhood, you can decide how best to incorporate it or contrast it.

During this time, I took two years and went to live in Australia to work for an Australian architectural firm.  I had the unique opportunity of designing the new offices for the firm I worked for, which was a fun challenge and a great compliment.  I also worked on several other projects like two eight-story buildings with a connecting breezeway and several high-rise remodels.  I loved the opportunity to learn the Australian construction methods, building codes, the metric system and their architectural software.  I won an international lighting award while working in Australia, which was a great honor.

Upon my return, I had the opportunity to work for NBBJ as one of their design leaders.  I worked on projects in Seattle, San Francisco, New York, Los Angeles and South Korea.  Utilizing my international experience at home is a nice benefit.  As a design leader, I traveled to a different destination once a quarter to spend three days with the rest of the design leaders in the company focusing on how we would change, lead, contribute to and inspire the design world and encourage the people who reported to us to do the same.  These charrettes were truly inspirational, and I was proud to be a part of this prestigious group within the firm.

So, why would I choose to give up working on multi-million dollar projects all over the world to open a boutique firm?  When I was 15 years old, I told my sister that I was going to start my own design firm and focus on restaurants, bars, resorts and beautiful office interiors (I didn’t know back then that there would be cannabis dispensaries, but we design those as well).   This desire burned in my subconscious mind for years and I decided I needed to make it a reality, which I did on April 23, 2007 when I launched the business.   It has been a great ride and having large architectural firm experience has been a huge benefit.  I have been able to take my “big firm” experience and that business model and utilize it with my company.  Most boutique firms don’t cover all the bases under one roof like we do.   Here at Gi Paoletti Design Lab, we do the architecture, interior design, interior decorating, permit documents and construction administration so you don’t have to hire multiple firms and have things fall through the cracks.  It’s the way I learned to do it at the large firms I worked for in the past, so I am very well versed in doing it and frankly, I think it’s the best way to do business. 

So, that is how Gi Paoletti Design Lab became a reality.  I hope to design more office interiors in the future since I have so much experience in that area and since I mentioned this in an article several years ago, it’s probably worth mentioning again.  I would absolutely love to design the interiors of a yacht so if you own one that needs remodeling, give me a call.  I already designed an elevated helicopter port for Blackhawks so it's obvious I love a challenge.  Other than that, we continue having a great time designing restaurants, bars, nightclubs, retail stores, consumption lounges and MDC facilities. We designed a 56-suite private resort and spa which I can’t show you, but l really enjoyed designing it.  I would welcome the opportunity to design another resort anytime.

If you have any questions, feel free to call at 415-999-1506 or email at gp@gpdesignlab.com. We also have all of our social media pages linked at the top of the page on this website.

So you want to open a restaurant?

I am sure you have heard that restaurants have a large turn over so it might be obvious to say you should do your due diligence prior to getting into the restaurant business.   Perhaps not everyone knows what that due diligence entails. Here are some tips for you.

1. Know how much you can afford per month. Rents are normally figured on a per square foot basis. If a 1000 square foot space goes for $100 per square foot, per year, that will cost you $100,000.00 per year. Divide that by twelve to get your per month rent. Talk to your real estate broker about utility and maintenance costs in "like" spaces if there is no history of these costs in the space you are considering.

2. Estimate construction costs. We advise that you don't do this by having a contractor walk the space with you prior to having design drawings. If the space isn't designed yet, it is likely the contractor will make an estimate on lessor materials in hopes to get the work. This could put you in a position where you don't budget enough money for the design you actually want. Your research should be based on average per square foot construction costs for the area you are considering. Understand that construction costs don't include furniture or equipment.

3. Study the traffic of the space you are considering. Sit there at every time of the day, for several hours at a time and observe the pedestrian traffic, see how many people drive and park for basic errands and understand the visibility and accessibility of the space you are considering, How close is the space to public transportation? Is it a busy bus or train stop? Do a large number of locals walk their dogs on that street? Are there other restaurants that are getting a lot of walk in customers?

4. Identify your target audience. Look only in areas where they exist. Don't get caught up in looking at all spaces in all neighborhoods without finding out if your business will thrive there.

5. Have a design professional walk through the space to evaluate code compliance which includes local, state and federal codes, proper zoning and ADA compliance.

6. Be an investigator. Find out why the space is vacant or why the current tenant is leaving. Find out if the landlord is easy to work with and responds to issues quickly. Ask the neighbors what the pros and cons of doing business in that neighborhood are. Find out if there are known complainers in that neighborhood.

7. Count on experts to lead you though the process. Don't try to do it on your own. Real estate brokers and real estate lawyers are very useful. They will make the process go more quickly and will advise you on what you should be doing. This isn't something you should choose to learn the hard way. It will cost you time and money which most new restaurateurs do not have.

Balance

Do you ever notice that there are certain spaces that just feel right as soon as you enter them, but you can’t quite put your finger on it?  The secret is that these spaces have a balanced composition of elements.  Balance promotes a sense of stability. A lack of balance creates tension.  You may not know what it is about any particular element or feature that results in this sense of stability, but most of the time, the proper arrangement of many elements working in concert create a balance of positive and negative space. As a wise man once said, “the secret to a collage is knowing when you’re through.”

Most design professionals study composition theory and the psychological perception of elements that comprise the supporting features of a main subject. Of particular note is the study of how to piece elements together to achieve a sense of balance.  Rudolf Arnheim, a German-born author and perceptual psychologist theorized that vision and perception are an actively creative understanding, such that we subconsciously attempt to organize our perception of elements into recognizable structures and forms in order to understand them.

The corollary is that a space without balance is not easily understood, so our minds try to apply order to what it sees.  The human brain is amazing at making this work, but if a certain threshold of balance is not met, this subconscious "organization" cannot be accomplished. When this happens, confusion is created and tension is the end result.

Here are some practical tips to achieving balance in your space with common elements that end up in most rooms:

1. Create a strong focal point and make it the subject of your space. This will anchor the room. Sometimes it’s a sofa, sometimes it’s a fireplace. Just remember that other elements should complement it.

2. Get your furniture spayed or neutered! Resist the urge to over-populate your space. If you are furnishing a space and there seems to be some spare room, remember that’s where you, your friends, your family, and your pets go. Give your space some room to live in it. 

3. Layer your lighting. When everything is lit with the same tone, temperature, and luminosity, your space will lack depth. Play with your dimmers, under-light your cabinets and remember that one large fixture will not create a well-lit space. (But do keep in mind the dramatic effect of a large fixture.)

4. Outlet covers and switch plates should be made from the same material and color.  They should be installed at the same height and they should be level. 

5. Your doors and windows should be the same height and aligned at the top edge, so, any large art pieces should be guided by this top line.

6. Artwork should align with a strong line in the room.  Try to hang artwork so that the top of each piece aligns with a strong line, or you can align the artwork with window and door frames in the room. If none of these can be accomplished, at least try to keep #7 below, in mind.

7. When placing artwork, be aware of the fact that the eyes’ automatic focal point is almost always ¾ up from the bottom of the piece.

8. Accent colors should be used throughout the room in small doses. These pieces don’t need to be the same size or shape, but should give a sense of congruence to the space.

9. Balance the main feature or an overpowering element with other elements in the room so that it does not dominate the composition. The goal is to see the whole composition, even if the main subject is a pink elephant.

10. Follow Jan Tschichold’s rule that “white space is to be regarded as an active element, not a passive background.” Tschichold was a German typographer, book designer and writer, who had a great understanding for dividing spaces into pleasing proportions. Don’t neglect your background.

Design professionals can provide more insight and a great contribution in designing your space.  Beyond having good taste, most are trained in spatial elements and relationships.  A large part of the profession is applying design principles to spaces of any shape or size to achieve that sense of balance. Try these tips at home and get a sense of how you can do this too. 

TED "Talks"

TED Talks recently printed a list of the greatest quotes about design, some of which were displayed at the Target Design Café at TED2014. The space features cloth strips that form a canopy over the café where hundreds of quotes about design are printed. Here are ten of our favorites at Gi Paoletti Design Lab:

“As an architect you design for the present, with an awareness of the past, for a future which is essentially unknown.” — Norman Foster

“As architects we’re trained to solve problems, but I don’t really believe in architectural problems. I only believe in opportunities.” — Magnus Larsson

“[Designs] have a moral component just in the vision of ‘the good life’ that they present to us.”— Sebastian Deterding

“Architecture is not based on concrete and steel and the elements of the soil. It’s based on wonder.” — Daniel Libeskind

“Design [is] the emerging ethos formulating and then answering a very new question: What shall we do now, in the face of the chaos that we have created?”— John Hockenberry

“If we had no bias, if we had no preconceptions, what kind of forms could we design?” — Michael Hansmeyer

“An innovator is one who does not know it cannot be done.” — R.A. Mashelkar

“Design truly is a contact sport. It demands that we bring all of our senses to the task, and that we apply the very best of our thinking, our feeling and our doing to the challenge that we have at hand.” — Tom Wujec

“Find out what the next thing is that you can push, that you can invent, that you can be ignorant about, that you can be arrogant about, that you can fail with, and that you can be a fool with. Because in the end, that’s how you grow.” — Paula Scher

“The idea of being able to build things bottom up, atom by atom, has made [scientists] all into tinkerers. And all of a sudden scientists are seeking designers, just like designers are seeking scientists.” — Paola Antonelli

The Holiday Spirit

During the holiday season especially, but all year round helping others is in vogue, so we would like to take this opportunity to share ideas of how you can help others either with your cash donations or your personal efforts. Below we have listed some of our favorite charities where you have several options for donating or participation. So, have fun, give where you can and be thankful for all that makes you smile. 

Donation and/or participation opportunities: 

1. CITY OF DREAMS SF:  This group offers mentoring and youth development programs to our City's low-income youth.  For more information please visit this website.

www.cityofdreams.org

2.  ONE DAY'S WAGES: If you want to help in a more global sense this is a great organization.  They are a new grassroots movement of people, stories and actions to alleviate extreme global poverty and we've been following their successes.  They are making things happen.

www.onedayswages.org

3.  SAN FRANCISCO-MARIN FOOD BANK: You can drop off your food donations at their warehouse at 900 Pennsylvania Avenue (at 23rd Street) Monday through Friday 8:30 AM - 3 PM or you can call to schedule a Saturday drop off. 415.282.1900. To see other ways of getting involved please visit their website.

www.sfmfoodbank.org

4.  GLIDE MEMORIAL VOLUNTEER PROGRAM: They have a free meal program daily and always need servers.  It's easy to sign up on their website.  Over the holidays they will need volunteers for food preparation the day before Thanksgiving and Christmas, people to assemble bag lunches and the grocery bag giveaway; or if you would rather you could help with sorting toys.

www.glide.org/volunteer-holidays-2015

5. MARTIN de PORRES HOUSE OF HOSPITALITY: We have volunteered here on many Sunday mornings between 8:00 and 11:30 to work their Sunday brunch.  The meals are vegan and the guests may take the extra food for later at the end of the meal.  Offer to volunteer on the less popular days over the holiday season since those are the days they need the most help.

www.martindeporres.org

6.  It is also very fun to assemble a group of friends in your home to make bag lunches, followed by driving around town to hand deliver bag lunches to people in need. The surprise on their faces along with the gratitude they express will warm your heart.  You will feel like celebrating once you finish.

Happy Giving!