What Do You See?

What do you think of when you see something like this? If your first thought is, “I wonder how I can use this location to make money,” you may be an entrepreneur.

This post originally appeared on the Hermit Haus Redevelopment website on 2017-04-25.

What do you see when you spot an abandoned building or a closed business?

The trick of being a successful entrepreneur, especially a commercial real estate investor, is to see opportunity where others see failure.

This fact was brought home to me by the recent closing of the Sonic Drive-In in the small town where I spend most of my time these days. This being a Small Town, the closure was a big deal and sent the small town grapevine into overtime. All kinds of reasons for the failure were floated until another business closed for failure to pay sales taxes to the state. (We know this because the state is auctioning off all their assets.)

But the one thing that nobody talked about in either case was: "What’s going to happen to the building?" Okay. Nobody talked about the loss of a handful of sub-minimum-wage jobs, either, and they certainly should have. Finding new jobs in a rural small town is no easy matter.

Spork intentionally reuses old Sonic locations to its special purpose niche. Photo source: Dallas News

In kind of a combination of those two thoughts, my initial reaction on seeing the sign at the Sonic (I learned about the other closure much later) was, "I wonder what kind of business could go in that location." You see, a drive-in is a very special-purpose building. There aren’t a lot of other options for using it. In fact, there are so few options and it is so costly to build that Sonic has a program to repurpose other commercial buildings as drive-ins.

So there aren’t many alternative uses for a defunct Sonic, but there are a few. I’m going to list some, and I invite you to add anything else you can think of to the comments. I’d like to figure out how to bring at least a few jobs back to the local economy.

• Another drive-in or eatery
  Okay. That’s kind of a no-brainer. I’ve seen several old Sonic locations recycled like this. There’s even a Dallas chain, Spork, that targets old Sonic locations to put in "high-end" drive-ins.
  But the question here, is why did the Sonic fail? Sonic, after all, has extremely well-honed systems and a national advertising budget. If a Sonic with these advantages fails in a given location, what are the chances of a one-off restaurant succeeding there? Restaurants have a higher initial failure rate that just about any other business. One reason may be that they are so easy and cheap to start. Like many mom-and-pop businesses, restaurants tend to be under-capitalized, making it difficult to survive until they can become profitable a few years down the road.
• A used car dealership or other business office
  As with any investment, having more than one exit strategy is key to success.
  I’ve seen this happen in South Texas. The used car inventory was parked under the awning, and the kitchen became the sales office. But that business eventually failed, and the location is now an insurance office with plenty of covered parking. The used car idea is also being tried again in Missouri.
• A flea market or art fair
  Wouldn’t this idea just be perfect, assuming you could get the location cheap enough to be profitable? Each stall could be a vendor’s booth. Customers could drive through the location and only stop if something caught their eye. Of course, parking might become a bit problematic if you had enough traffic.

There are reasons why I wouldn’t try any of these ideas myself in this location. Mostly because we already have more of each of these types of business than I believe the community can support. But I’m sure there is something that can be done. I just don’t know what it is yet. Maybe we can figure it out together.