by Jennifer LeClaire
Tom Prakas traded his restaurant license for
a broker’s license eight years ago. Will his new menu of divisions pay off or
water down his profitable niche
RESTAURANTS
MAY COME and go. but Tom Prakas makes money either way. His firm. The
Prakas Group Inc..
serves an ultra-specialized niche in commercial real estate, brokering
deals tor restaurant companies looking to buy. sell or rent space. Long
before a new restaurant holds its grand opening. Prakas is there
recommending ideal locations. And shortly after a restaurant fails, he
works
to get the owner the best possible price selling the facility.
The Deerfield Beach-based real
estate brokerage firm closed 55 deals last year and brought in $70
million in revenues. Prakas says
he is on pace 10 break the $100 million mark by 2009. thanks to
exclusive brokerage deals with growing restaurant brands, recent
geographic expansions, and vertical ventures
that add new revenue streams to the eight-year-old company.
“In the real estate industry, hospitality used to be the dog. Now. with
residential slumping and commercial growing, hospitality is the tail
wagging the dog.” says Prakas. noting that developers are much more
open to restaurant tenants today than they were five years ago. He says
he
is enjoying a snowball effect from a healthy restaurant industry and
high-profile clients such as Tavenia Opa. Chops Steaks and
Lobster Bar and DeVito’s South Beach, a new restaurant opened by actor
Danny DeVito and restaurateur David
Manero.
Prakas expects to gain further
momentum through two new divisions the
company launched this year. The first, called the Restaurant Placement
Group,
is a six-month-old Boca Raton-based venture which offers staffing
services to an
industry notorious for high
turnover. In June. Prakas launched the Finance Group to broker
commercial loans for his clients* multimillion-dollar deals. He plans
to open a restaurant
operation consulting division and an
insurance division during the next 12 months.
“We started these divisions bused on feedback from thousands of
clients, and we plan to be a one-stop shop ” Prakas says.
Restaurant brokerage still makes up 98 percent of revenue, but Prakas
estimates the recruiting arm will generate “millions of dollars a year.” It is too early, he says, to
gauge potential revenues from other divisions.
What Prakas views as a competitive
advantage could dilute his roundational
strength, warns Marty Koiis. president of the Council of International
Restaurant Real Estate Brokers, a network of independent
real estate brokers based in Greensboro. N.C.
“Prakas is a restaurant specialist, so recruiting, financing and insurance is counter to his initial
strategy.” Kotis argues. “He only
has so many hours in the day, and if he
starts focusing on five different
industries it might hurt his core business.”
Kotis hit on a challenge Prakas himself admits to: the number of hours in a day.
Prakas is currently on call for Two Liberty Place in Philadelphia, one of the firm’s many
national clients. In this case. Prakas Group is helping the prominent
skyscraper fill its retail
spaces with tenants. Those national clients expect to see him on-site, walking
the property.
“The new divisions will spread us out a little thinner.”
Prakas concedes. “But we’ll add staff to handle the volume.”
Besides the new divisions. Prakas also opened his second office last year, in
Orlando. To him, it was a low-risk proposition: He sees little
competition and a growing number of eateries in the tourist town. Developers in
the growing market are coming to Prakas Group and asking it to find
restaurants to fill their projects.
The Orlando office posted $10 million in revenue
in 2006. and is picking up clients
from Ybor City in Tampa and Ormond Beach on Florida’s east coast. Prakas expects to
double that in 2007,
and says the office could do even more if only he had more qualified brokers. Prakas says his biggest
problem
in Orlando
is finding brokers with hospitality industry experience. “These are
specialty clients and not just any broker can serve them,” says Prakas.
who owned 27 restaurants and nightclubs before launching his brokerage.
Staff is also the
“x” factor that keeps Prakas from moving into Atlanta, though he expects to break through that barrier in the next 12
months as his 16-broker firm grows to 20-plus. “Atlanta is a foody
town,” he says. “There is some competition there, but it would be a natural progression for us.”
John Melieharek, partner in the Orlando office
of Baker Hosteller LLP and team
leader of the firm’s hospitality practice, sees
healthy expansion prospects for the Prakas Group’s niche.
“Restaurants are one of the riskier businesses types, but today there are so many national chains playing
in the fine dining space that the risk is
lower.” he explains, adding that he sees no slowdown in the
market.
Prakas” biggest risk may be maintaining his reputation with the new
divisions and the geographic expansion in place. It’s a risk the 50-year-old
has considered, and one that would be far worse than losing the $200,000 he
says it costs to launch a new office. But he believes it’s worth it. “Subsisting
isn’t an option.”
he says. ″
Originally posted 2007-09-20 00:00:00. Republished by Blog Post Promoter
