Anyone experience with a food commissary

7 Replies

Complete newbie to the warehouse world, so I am hoping fellow BPers can point me in the right direction and start asking the right questions, point me to the right people, podcasts, and books that can help.

I am considering a new business venture in a small commercial warehouse space for a food commissary. My business partner and I run a small chain of restaurants in the Atlanta that has done pretty well over the last few years with steady growth. We are in need of both dry and cold storage and a centralized location for logistics and quality food preparation that we can use for the long and supply the stores.

I am a real estate investor, and stay busy on BP to focus on my residential properties. So I ask myself why rent a warehouse space when I can own the building. One big reason for me is the commercial restaurant equipment, walk-in freezer/coolers, ovens, and kitchen space would have to be converted into a rental unit and will get costly into a building I do not own. We do enough converting with rental store fronts, and this situation doesn’t quite fit the same bill.

Any investors go down the path of opening any food commissary? I am familiar with apartment units, but would this follow the same logic in regards to appreciation? Will equipment and NOI increase the appreciation on a warehouse space? Better to start from scratch to place my modifications, or buy a pre-existing building? My plan would be to essentially leverage the appreciation capital to open other store fronts.

Have not reached too far with banks on the commercial side yet, but wanted to make this its own LLC identity separate since it essentially is a new business model for us. Would they even consider lending without any track record? The credit, salary, and down payment is there to be qualified.

Thanks in advance

that sounds interesting and challenging. good luck.

Greetings Mike,

if you want PM and I will forward you one of my brothers info who has looked deeply into the food commissary business but with a slightly different angle, food trucks in the Chicago area.  If nothing you guys might have a good talk about restaurant life, He has been a professional chef for 20 years and helped get the new food truck laws passed in Chicago.

Cheers,

Darin

@Mike Carino

Sounds like a interesting business.  You might want to try a SBA loan for the commercial financing.


Frank

@Darin M. yeah I would love to pick your brother's brain. Essentially on the side of my business use, I would like rent out to the kitchen to vendors/ bakers/food trucks that need to commissary space for food prep. Not my main focus but would be nice little additional revenue.

@Frank Romine My first thought is sba loans. My experience is was very tough for the restaurants but was able to get one and we are watched like a hawk... Than again I am in the restaurant business. This would be a different business plan.   I am hoping to get answers that there are easier ways to financing, more along the lines of getting a mortgage guidelines.

@Mike Carino

My experience with SBA is that it is easier for financing if you are purchasing a commercial property for the business. You get a 90% LTV. If you are using SBA to fund equipment, inventory and operating cost.. I hear it is more difficult.

Frank

Originally posted by @Frank Romine :

@Mike Carino

My experience with SBA is that it is easier for financing if you are purchasing a commercial property for the business. You get a 90% LTV. If you are using SBA to fund equipment, inventory and operating cost.. I hear it is more difficult.

Frank

 Thanks Frank I will look into it. 90% ltv is very appealing 

Hey Mike

With what you are proposing you could get 90% financing on both the real estate, build out and equipment through the SBA programs. Since you have existing operations there may be ways to structure the deal very creatively to limit your cash injection. 

I have done SBA lending across the US and have worked with restaurant operators including a micro brewery restaurant where there was a bunch of equipment worked into the transaction.

PM me if I can help.

Thanks, Dan

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here