He's
one of the only people in The City cashing in big on the
restaurant industry this year. After helping out in his father's
restaurant chain, Zim's -- a burger and milkshake joint in The
City -- Steve Zimmerman went on to work in real estate. Now he's
the president of
Restaurant
Realty Company, with close to 250 sales since 1996.
Nina Wu: How long does the
average restaurant last in The City?
Steve Zimmerman: I have heard that
close to 90 percent of independent restaurants that start out in
year one go out of business. The statistics are reversed for
franchise restaurants.
Q: What happens?
A: They can't make it. They have a
misconception as to what it takes to be successful. They
miscalculate.
Nobody can project all the future
variables. Who knew that 9/11 was coming? Restaurants have hurt
badly, especially South of Market.
Q: What's the most common mistake
that restaurateurs make?
A: I would say it's a combination
of under-capitalization -- they don't have enough money. They
opened a restaurant and don't have enough working capital to keep
going.
Q: They're all optimistic, of
course.
A: The ones that have a propensity
to succeed are certain ethnic groups, especially Asians.
Q: Really. Why?
A: Because they have a high work
ethic and they sort of join forces with the family.
Q: Do you relate to that work ethic?
Where does your work ethic come from?
A: It comes from the way I was
raised. When you're raised in the restaurant business, you work
all the time.
We had 24-hour restaurants open seven
days a week. Working weekend and nights was the norm. I didn't
think twice about that.
Q: Your father was the first one (in
your family) who got into the restaurant business.
A: He got drafted during World War
II. He went into the infantry in Germany and came back from the
war and had this great juicy burger/big milkshake idea that he
used to talk about with his buddies.
He raised $1,000 and opened this
22-seat counter restaurant with stools and a U-shaped counter with
a fountain in the middle and open kitchen. The original hamburger
price was 45 cents in 1948. Coffee was only a nickel. It really
took off.
Q: Did you want to work in the
restaurant business because you grew up with Zim's?
A: I wanted to work in restaurants
at an early age. I was the only son..... it's the
tradition to carry on the family business.
Q: What interested you in becoming a
broker?
A: I like doing deals. There's only
about 4,000 business brokers in the United States. It's a very
small field.
Q: So it's a small niche.
A: It's a small niche, but
actually, if you're good, there's plenty of business.
Q: But you have to be good.
A: You have to be very good. The
reality is that about 5 percent of the brokers do about 95 percent
of the business.
Q: What are the prime spots to open
a restaurant in The City?
A: Noe Valley, Upper Fillmore.
Castro, Inner Irving district, Chestnut Street, Union Street.
Q: How much does a restaurant go
for?
A: The average? Probably $150,000.
They will vary anywhere from $50,000 to a million dollars.
Q: The longest and shortest time
you've ever had a restaurant on the market?
A: Longest time is about two years.
The shortest time is one week.
Q: Are prices going down now because
of the economy?
A: When unemployment goes up, there
are more buyers in the market.
Q: Why?
A: Because they're unemployed.
People need a job. So, in a lot of cases, people who are
unemployed may join forces with a partner that has food service
experience and they end up being the buyer pool.
I have a lot of stockbrokers looking to
buy bars. There's a big demand for bars right now.
Q: So it's a good time for you.
A: What I do is recession-proof.
Because of the nature of the business, there's high turnover all
the time. This is going to be the best year I've ever had.
Q: Do most people buy a restaurant
because they've always dreamed of owning a restaurant?
A: It's a very ego-driven business.
But if that's the only reason they go into the business, it's the
wrong one.
Q: During the dot-com boom, what
happened to restaurant real estate?
A: With the dot-com boom, people
were just irrational, so there was a lot of money flying to every
segment of business probably.
There were a tremendous number of
restaurants that opened South of Market that are no longer there.
I'm trying to sell some restaurants South of Market right now.
It's very slow. Vacancy is tremendous.
Q: Have you ever thought of buying a
restaurant again?
A: Not at all. I like to do deals.
I enjoy the certain highs that go with putting a deal together --
and every deal is different.
Q: What percentage do you get out of
every sale?
A: 10 percent. That's standard.
Q: Do you go to five-star
restaurants?
A: I'm not a big foodie. I love
burgers, fries and milkshakes. I don't have a fancy palate.
Q: Is it smart to follow the trends
to stay competitive here?
A: I think you have to have a good
core concept and some of it can be according to trendiness, but
you have to have a good, solid base. Things that are strictly
trendy have a higher probability of failing.
Q: What was your best year and worst
year?
A: My best year is this year. My
worst year was the year I started.
E-mail: nwu@sfexaminer.com
