The general interest in owning a real vintage diner has continued into the new century, and since 2002, the market for these structures continues to grow after a brief respite. It seems that whenever the national media turns its attention to the charms of the great American diner, the idea of opening an authentic diner enters the mind of a new wave of prospects. While Roadside certainly welcomes the renewed interest in diners, we recognize the challenges of ownership and operation that often belie the romance.
The positive aspects of restoring and setting up a real diner remain compelling and potentially lucrative. A well-run diner can bring with it many rewards to both the owner of the diner and the community where the diner is located. Diners frequently serve as the focal point for their host communities and have often served as catalysts for their community’s revival. This is as true today as it has ever been.
Despite the perceived charm of owning an authentic American diner, anyone interested in taking this plunge must have a real passion for the trade and the willingness to commit a tremendous amount of time to plan and operate. If you are not willing to wholly devote yourself to the cause and focus your attention on the basics, you are more likely to become a statistic of failure in the restaurant industry.
When considering a used diner, it is important to evaluate the pros and cons of purchasing a structure 40 to 60 years old. There is no question that an authentic diner will provide a tremendous marketing opportunity for the new owner. Properly renovated, the look and atmosphere of the diner will be something that no other restaurant in the area could provide. However, the structure was built at a time when building codes were much less stringent than today. The same regulations, codes, competition, employee problems, and food costs apply to diners the same as any other restaurant. It is important that you have done your homework to understand the challenges you will face to set up and open the diner.
Facts and figures
So what’s a used diner worth, anyway? Like anything else, it’s worth what you decide to pay for it. What you should pay has as much to do with your own specific requirements as it does the size, condition, and/or vintage of the diner you want to buy. Three things will help you determine how much you should pay for that diner: 1. budget; 2. scale of operation; and 3. schedule.
Budget: We will be fairly blunt on this topic: Prepare a business plan and expect to spend at least $750,000 for a project that involves buying, moving, restoring, and site prep for a vintage diner before you factor in the costs of real estate.
Here is the average breakdown:
- Purchase of diner: $25,000
- Transport of diner: $35,000
- Storage fees: $2000/year
- Legal fees: $15,000
- Engineering fees: $50,000
- Site prep: $125,000
- Foundation: $50,000
- New Kitchen & Dining Area Annex: $350,000 (equipment and building)
- Diner restoration: $150,000 (upholstery, wiring, stainless replacement, etc.)
We know these numbers surprise some who come to us for advice, but we have yet to encounter anyone who has opened his or her doors without spending at least this amount. Opening a real diner was never an inexpensive proposition, and even with a relatively “cheap” vintage diner, the costs of such a project are substantial.
Scale: Conventional industry wisdom currently dictates a minimum-size restaurant of at least 80-85 seats. Most of the remaining 1950s vintage diners do not offer a seating capacity of this size. If they do, moving them can become more difficult, especially if the individual sections measure greater than 14-feet wide. Regulations governing wide loads on the highways are far more restrictive than they were in the 1950s, and in most states, it requires special permitting to get your diner moved. If you are looking at a diner that has a seating capacity of less than 80, you must also look at how the diner fits in to your concept and whether or not the marketing advantages equal the added expense that may be incurred. On the other hand, anything’s possible if you have the money.
Schedule: In our experience, it usually takes at least 18 months from the day an owner has secured a location to the time he/she opens the doors. This brings us to the most important rule for buying a vintage diner:
DO NOT BUY A DINER UNTIL YOU HAVE SECURED ITS LOCATION.
We cannot emphasize this rule enough. Recent diner history is littered with stories of unfortunate individuals who rushed into their purchases believing that their local community would eagerly welcome their splendid piece of Americana. In their overconfidence, they never planned for unexpected local opposition, environmental problems, or failure to get a critical variance. Faced with mounting expenses related to moving and storage, and with possible eviction from the storage space, many of these owners then faced selling their diner at a considerable loss.
Bottom Line
The market for vintage diners has had its ups and downs in the past decade or so, and some of the prices seem to defy reason. We’ve seen a well-preserved 80-seat stainless diner go for as little as $5,000 and we’ve seen smaller older units go for as much as $65,000. Since there simply is not a steady supply of these units, you must consider what you want and when you want it. You might balk at paying $45,000 for a 55-seater when you read about a 65-seater going for $35,000, but if waiting means adding another six months to your timeline, then you could lose more in lost receipts than in the price difference. We had one client who hesitated at the price of a diner he sought to purchase, though it was exactly the diner he wanted. We advised him to pay the price and not look back, because the difference would not sink the viability of his project. He got the diner of his dreams.
Roadside does believe that a few absolutes exist. The Americans with Disabilities Act has effectively rendered obsolete most diners built before 1940 or those that seat fewer than 40. Thus these units have little to no market value to anyone intending to put it back into full-service operation. If you really want a small diner as part of your concept you must thoroughly evaluate the feasibility of using such a structure.
Anyone considering the purchase of a diner facing demolition needs to consider that removing the unit from the site effectively saves the seller $15,000. In other words, a diner sold under those conditions for $20,000 actually nets the seller $35,000. You should keep this in mind during your negotiations.
Know the code
A prospective buyer needs to do a lot of homework. We like to tell prospects that a restaurant is as much a political challenge as it is a business challenge. It requires knowledge of the bureaucratic process that applies to any new business in most communities.
Does the town in which you plan to locate even allow diners? Does your site accommodate the parking dictated by local zoning? Will the fire marshal approve of the space between booth and stool? Do you have any issues in your past that might arise during a planning board hearing?
Moving day
Now that you bought the diner, you will need to move it. Keep in mind that you will need to find a rigger with experience moving 20-ton antiques. Roadside knows the best in the business and will readily give you a recommendation. If you choose to find your own rigger, check references and ask if the rigger has experience moving large buildings over long distances.
Typically, more experienced riggers will charge more, but think of that as cheap insurance. Over the course of your project, if hiring an experienced mover increases the total project cost by $5,000 to $10,000, it’s worth it.
Restoration pays
A thoughtful and intelligent diner operator such as yourself will want your diner to look as original as possible. Yet, you look at that remarkable stainless steel hood suspended behind the counter, and you just can’t figure out how those guys even put that together. Amazing thing, isn’t it? Well, right there, you see the difference between a true diner and the new-style reproductions. Those people who assembled these structures knew their craft, and unfortunately, most who practiced this trade took that knowledge to their graves. Using stainless steel as a decorative material is an expensive and delicate process and requires a qualified person to make it look like a single sculpted piece.
A proper restoration also means knowing where to find rare materials like rounded glass blocks, Flex-glass, laminate patterns, and porcelain enamel panels. Items like refrigerator hinges will forever elude your search if you don’t know where to look.
Yes, restoration might likely constitute the single largest expense of your project, but we believe that your customers will notice and appreciate the extra effort. A proper restoration shows your customers your attention to detail and commitment to quality. It also sends a clear message of your desire to create and operate a true landmark restaurant.
The New Diners
Yes, they do still build diners, though as we write this, the industry has all-but-disappeared in recent years. We know of three companies that continue to market diner-building services.
In theory, the advantages of brand-new prefab construction means getting exactly the diner you want delivered on site according to a predetermined schedule. These builders can build a completely authentic looking classic diner, completely code-compliant, and fully equipped in the same manner the industry has always promised. However, the cost to construct a truly authentic replica is a substantial investment, one which may be the best solution for your project.
Roadside wishes you the best of luck with your dream and stands ready to assist you at any stage of your planning. After all is said and done, we strongly believe in the idea of restoration, especially of these unique and special buildings. We see great potential for those owners with the right mix of talent, drive and resources in reaping great rewards, both financial and social, in creating and operating a truly great diner.
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