Controlling costs is critical when it comes to restaurant design and construction. Without the proper checks and balances, projects can go off the rails and budgets can reach astronomical proportions. However, too many budgetary limitations can have a negative impact on not only the design of a restaurant, but also its customer experience. This is where value engineering (should) step into the picture.
Value engineering gives restaurant operators the ability to scale back design elements that cross over budget lines while maintaining brand integrity and the overall customer experience. However easy that sounds, restaurant operators often find it difficult to balance design intent and the desired customer experience with the harsh realities of a budget.
“Value engineering comes in when something is designed or built that costs too much. If you design within a budget, the hope is that value engineering is happening throughout the process and not at the very end after you’ve already designed something. That is when value engineering gets a bad rap because you’ve already designed something and then you have to take costs out of it,” says Darren Medina, vice president of store design for MOD Pizza and former director of global store design concepts for Starbucks Coffee Company.
Medina advises restaurant operators to begin the design process with a budget in mind and to constantly review where things can be done cheaper or more efficiently, especially for brands looking to scale. “If you approach design and working within a budget as a requirement of the design process, you’re doing value engineering along the way,” he says. “And if you are doing value engineering at the end, look at where there are things that can be eliminated or achieved at less cost. What you’re trying to do in that exercise is not sacrifice the essence, experience, character or intent. As long as you’re capturing all of those things, value engineering can be done at the end.”
For Medina and other restaurant designers, focusing first on the customer experience remains essential when balancing design and budget. “I always start with the customer experience and specifically the customer journey,” he says. “How do you want the customer to experience your space, your design, and what does that journey look like in that space? Design actually supports the customer journey.”
Part of mapping out that customer experience also involves understanding the business side of the operation. This includes knowing how long you want customers to stay and making purchases that support that goal.
“One of our objectives is always to know the business end of things,” says Steve Starr, principal of starrdesign. “Then you get into design intent, and that is how you create the customer experience. That includes the design elements, the colors, the finishes, the materials, etc., and how you engage the different senses. All of that is going to be affected by the things you come up with in your design intent. So, it’s always objective first, and then design intent second. If not, you’re solving for the wrong problems.”
Understanding the business side of an operation should involve the development of a pro forma, a document that forecasts potential expenditures and sales once a business is in operation. “In my opinion, the owner should have a pro forma worked out so they can have both sides of the equation,” Starr says. “If the pro forma calls for $2.4 million in sales, their target budget is probably somewhere in the neighborhood of $800,000, so their return on capital is roughly a multiplier of three. The critical thing is that the owner/operator has to really understand how their operation is going to produce $2.4 million, and they have to be realistic in regard to what it’s going to cost to do that.”
All members of the project team should agree on the pro forma before moving forward with the design. “To do a certain amount of volume, you need a certain size facility and a certain number of transactions. All of these are not independent of one another — they’re all linked,” Starr says. “The biggest single driver of construction and project cost is infrastructure and then volume because the volume sets the quality level of all of the different materials. How we make that wall for a high-volume restaurant is going to be different than for a moderate-volume one. That is going to have more influence over cost than whether we use marble or granite, a wood floor or a tile one.”
The project team can use other means to turn the design intent and customer experience into one cohesive whole despite the expense of other, more infrastructural necessities. “Flooring, wall coverings, soft textiles, furnishings, and lighting all can be swapped for more cost-effective alternative products as long as the overall integrity of the story remains,” says Monika Nessbach, an interior
designer and founder of Designbar.
In order for value engineering to truly live up to its name, the process must do just that: add value to the process by maintaining the design intent and the customer experience while keeping expenditures in line. Anything short of a holistic approach could result in this process having the exact opposite impact than originally intended.
Seven Tricks to the Value Engineering Trade
Remaining true to a brand’s story and customer experience is paramount to navigating the dynamic between customer experience, design and budget. To help operators better understand how to balance budget, design intent and customer experience, restaurant designers have provided their top seven best practices:
1. Hire for the project, and bring in people who understand the process.
Be careful about hiring the shining star in design, says Doug Jacob, co-owner of Toro and CEO of JWALK, a design and brand development firm. That means sometimes working with local architects rather than the big design names. “Restaurant economics really can’t support large fees in design,” he says. “If you can lay out your space because you understand the customer journey, working with a local architect does not have to be an expensive thing.”
Jacob’s advice comes from firsthand experience as his first restaurant opening in New York involved an expensive firm that did not have the ability to execute his team’s vision. “In New York, we hired a design-build firm and they executed our design, but we still paid large design fees when that wasn’t really their specialty,” he says. “We work with a project manager on everything, and it’s really important to detail budgets. It’s something you watch throughout the process as budgets are being depleted based on spending, and there are projects or materials that can be revised. You may end up looking at materials that are a step below and that don’t impact design or customer experience. You can’t wing it.”
2. Stay involved in the design process, and get key vendors involved early.
Operators should check in throughout the design process so the end result is how they envisioned it, says Todd Sussman, an architect and co-founder of Open for Humans. “After construction is completed, do a walk-through with a punch list to make sure things were done correctly,” he says. “It is harder to change things if they were done incorrectly because people stayed uninvolved.”
Additionally, operators should make sure their key vendors are on board early on in the process to avoid miscommunication. “Use your key vendors for their core competencies and tap into their wealth of knowledge early,” says Starr. “Controlling costs and doing things the right way is critical. There is no room for error anymore.”
3. Start with the customer experience and design based on what you want to accomplish.
“The first thing operators should decide on is the customer experience,” says Starr. “What do you want the customer to feel and experience during their visit? Those should become the objectives, of which you should have 5 to 10 at the max.”
After determining the customer experience, restaurant operators should go about designing the space based on those objectives. “You’re not creating the design and then the customer experience out of that; you’re creating the customer experience and then you need to understand the budget you’re working toward, and then you can work on design,” says Starr. “Sometimes people get caught up thinking that everything has to be designed, but the one thing people need to understand is that the customer experience isn’t necessarily about every single thing that they see.”
Medina says operators should focus on what customers can actually see rather than center on the things that they don’t see, such as what is in the ceiling. “Focus on those things so you’re not spending money on things people don’t notice,” he says.
4. Know your ROI and square footage.
Knowing the restaurant’s business and profit model should play an important role in its design and customer experience. Restaurant operators should also know their return on investment once the establishment opens.
“You have to look at not just the budget, but why the budget has to be what it is. It is sales versus expense. A high-volume restaurant is going to take more abuse, and you have to take that into consideration,” Starr says.
Budgets can run high, for example, with the infrastructural items most customers do not think about but are absolute necessities to running an operation. These can include electrical, plumbing, HVAC and other elements that typically no one sees. “There is no way around having these items,” Starr says. “Yet these can be significantly more expensive than the rest of the other items.”
Knowing the square footage should also be a top priority when it comes to mapping out a space in preparation for design. Knowing how much space the kitchen will occupy should give operators a better understanding of how much front-of-house space is available to develop their intended customer experience, Jacob says.
“You start out by boxing out [the kitchen], and then you map out the customer experience based on the space that’s available,” Jacob says. “When you design the back of house, you still want to think about the customer experience, but there are more constraints with the back of house that need to be figured out first.”
5. Know what you want to stand out.
Whether it involves a centerpiece design or other details carried throughout the space, restaurant operators need to determine any wow factor early in the process so everyone knows what they want to accomplish. “For us, the goal we are looking to achieve is what is going to stand out and what isn’t or should not stand out,” Sussman says. “So we try to work with clients to figure out what they want that feature to be, and then we work within their budget to embed this feature throughout the restaurant.”
The budget ties into the creation of the wow factor because designers should first create a space without it and then work backward to make it a reality. “We design the space and determine everything that needs to go into it as if there is no feature element,” Sussman says. “Once we have that established, we go into the value engineering process in order to afford that wow factor. But everything else is conceived before that happens.”
6. Be open to alternative materials, and be flexible.
Most people equate value engineering with taking something away from a project. But you can take away things that aren’t seen by the public, Sussman says. Operators should be open to incorporating alternative methods or materials and be flexible when it comes to other aspects as well.
Operators can also look for opportunities to swap high-end materials for more cost-effective ones. “For the business to survive and continue, operators have to look at how they can do things cheaper or more efficiently, especially if they are with brands looking to scale,” Medina says. “That’s where it becomes even more important to go through the value engineering or design process within a budget.”
7. Understand and follow the project goal.
“Value engineering is an inevitable part of architecture and design and only becomes important when the design details haven’t been developed properly,” says Sussman. “In my experience, if the designer doesn’t understand how things are going to be detailed or installed, then that’s when you’re stuck with big-hit items. That hit is hard to come back from.”
By understanding the project goal, operators and designers can better work together to ensure the final outcome is the one everyone has agreed to. “Understanding what the project goal is means you don’t muddy the waters with other details, regardless of what other obstacles may arise. And you should trust the designer to deliver the overall goal,” Sussman says. “Don’t go changing your project midway through.”
Overall, the customer experience of a restaurant should continue long after patrons have left the physical space. “Design’s role should really be to provide a complementary backdrop to what is being served. People are willing to suffer through some horribly designed spaces for great food, but they’re not really willing to do the opposite,” Sussman says.