The Real Estate Investing Club

Retail & Restaurant Commercial Real Estate with Paul Fetscher | The Real Estate Investing Club #12

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Transcript of “Retail & Restaurant Commercial Real Estate with Paul Fetscher”

Gabriel Petersen 0:02
And we are live. Paul, thank you for joining us. How are you doing over there? New York. You said, right.

Paul Fetscher 0:10
Yeah, we’re pretty well, locked down right now with the COVID. I live in Long Beach, New York. We have as of this morning 867 cases.

Unknown Speaker 0:24
Yeah, that’s a relatively

Paul Fetscher 0:26
small island.

Gabriel Petersen 0:28
Okay. Yeah. So hopefully, hopefully you’re staying indoors and staying safe out there.

Paul Fetscher 0:33
Correct. I’m getting out in the morning, getting a five mile run in with a face mask, you know, pull up. And

I want others around me to feel comfortable as well.

Gabriel Petersen 0:45
I’m with you there. This is definitely a completely new experience for everybody. So we’re taking one day at a time for sure. To get us started though. So why don’t you to just tell everybody you know who you are, where you’re from, and how you got started in real estate. Investing in first place.

Paul Fetscher 1:01
Sure. I started out I went to Citadel, Charleston, South Carolina. I originally from Long Island, New York, went to the Citadel, studied civil engineering did it for a year and I wasn’t having fun. So I figured I should do something different. And with that, I gotta tell you, I’m so glad I had the engineering background. Because now when I’m trying to do a deal, I find out what can and can’t be done with a property I can do about all that. So real quick, I can dismiss the ones that aren’t going to work are going to be prohibitively costly, or the ones that can be done and here’s how. So the engineering background is priceless. I’m so glad I had it. But I in engineering, I really didn’t find anybody there that I’d want to go out and have dinner with. So I decided to make a shift. And I had an opportunity to join a small upcoming company called photo mat in the first year. I did I had 55 signed lease deals my first year, and 55 deals in the first year. I haven’t done more than 35 deals in a year since, but the total GLA was less than 2000 square feet. Guys was 32 square feet wide. It was a great training. I was the first person I knew who knew the word demographics. I’m going back to the 1960s. So from there, somebody told me you could actually get paid per deal if you were a broker. That was interesting. So I joined new marketing company, which now is an international firm at that point, we had one office. So I started with new marketing company and then I got recruited away by Cushman and Wakefield. And I spent a decade with them. And with them, I was top retail producer out of the headquarters office in New York. Wasn’t that I was that good? They were that bad. And I was continued to focus on restaurants and retail. That’s where my real passion lies. So with that, I then had an opportunity to step out, start my own firm, great American brokerage that I did. And we’re now in our 41st year.

Gabriel Petersen 3:18
Wow, congratulations on long running

Paul Fetscher 3:21
on route I was asked to come in now with that there are a number of segments to that. If you want my elevator speech and what I do, I’ve got four basic lines of business. Number one, I find location for restaurants in retail. Number two, I buy and sell existing restaurants and chains. So so much of that works with investment analysis, and whether or not the real estate is involved. I value the business I value the real estate and I try to make the best application of available dollars. third line of business is the concept that Design and development of food service operations. You may have heard of little thing called Boston chicken, which became Boston Market. I started working with them when they had one unit. I will roll, walk and roll started with them with one unit. We went out and developed units as far away as Euston, Minneapolis, South Carolina, North Carolina, New York, New Jersey, Connecticut. So that was a growth as well. We took a core competency and put it into a series of different envelopes. Take something that’s core competency wrapped four walls around it. So putting them into everything from regional malls to factory outlet centers, to shared spaces in midtown Manhattan to airports. So all of that was growth strategy for them. And we’ve taken a number of companies like that The earlier we get involved with somebody who really wants to grow, the better we can do, because I’ve also taken that as far afield as Thailand. I was hired by Majeed Alpha team for the development of Dubai festival city. Wow. Okay. If we did the restaurant merchandising, now the restaurant merchandising there was pretty interesting. It was a matter of taking and creating the largest collection of restaurants under one roof. anywhere in the world. We put together 62 restaurants varying in size from 80 square feet, up to eight square feet to 42,000 square feet. Subsequently, I was asked to consult on Dubai Mall. Now dubai mall is interesting. 4 million square feet, average sales in excess of $1,000 a square foot and over 100 20 restaurants in that project,

Gabriel Petersen 6:02
Wow, that is absurd. 1000 a square foot that is

Paul Fetscher 6:06
in excess of is closer to 1200 a square foot now that is

Gabriel Petersen 6:10
that is unheard of.

Paul Fetscher 6:11
That’s terrific stuff. That’s very, very productive. No question about it. Yeah, for sure I fourth line of business is. So third is concept design and development of emerging food service operations. And number four, is where I work with landlords to put food into their projects and a few other odds and ends business valuation expert witness work, public speaking, a number of those come into that fourth category. It’s a lot of fun if you can help other people grow. Yep. And the biggest thing I can do is, hopefully tell people what not to do.

Gabriel Petersen 6:57
That’s important to know it’s both important to know What to do and what not to do.

Paul Fetscher 7:02
It’s also very important. It’s also very important to work with people who know what they don’t know.

Gabriel Petersen 7:07
That’s true. That is

Paul Fetscher 7:09
the ones who think they know everything are not open to different ideas, a different perspective. And after all, I have never seen anybody put a business plan on my desk that didn’t show success.

Gabriel Petersen 7:20
Well, there you go.

That’s a good track record there, for sure. Well, I’d like to I’d like to a few things you said so far, especially, you know, you got started. You’re an engineer, but you didn’t like the people you didn’t want to take anybody to dinner that you were working with. And I’ve heard this time and time again on this show. One of the reasons most people like, you know, real estate is they like just meeting the people in real estate. They like other investors, they like their clients, all those things. So I love that you touched on that. And then you’re talking about you had four core core core, four different competencies all into one core competency of the restaurant industry. Correct.

Paul Fetscher 8:00
Then I’ve worked with other retailers as well, I’ve helped a even people that don’t have full walls around who just need to market themselves then services and help them grow and build their businesses. So the better your business is part of what we do.

Gabriel Petersen 8:17
Gotcha. Okay. So is there do you do you own real estate as well? Or do you operate real estate properties individually or do you do a lot of

Paul Fetscher 8:26
I have, I’ve touched base in all of those areas. There was a regional mall in New York City. As a matter of fact, it was the first enclosed regional mall in New York City. And in a way it was poorly planned. It was in Staten Island. And at that point, I was with Cushman and Wakefield and we were asked to take over the management of the Staten Island mall from the Chase Manhattan real estate investment trust. That was the first go round with real estate investment, trust back around 7374 75 so in there, one of the things that was interesting, well, Cushman and Wakefield certainly had a background in building management, they didn’t understand percentage rents and how they work. So, explain to them kind of how that is, how it’s calculated, how we go about building it, and how we help the tenants improve their sales so that we get more in percentage rent. Gotcha. Okay.

Gabriel Petersen 9:31
So So it sounds like you do a lot of things in your business in the great American brokerage all of them all the different lines of business, you know, you have to get a lead in from somewhere they that you have to have at least one point of contact or initial point of contact to make them a client. So, so how is it you go about lead generation, how is it you go about getting new leads, I’m sure. I mean, you’ve been in this for 30 plus years. A lot of it has to do with, you know, repeat customers and word of mouth. But so what what are the main ways that you generate new leads in your business? Okay?

Paul Fetscher 10:13
networking, hey, that’s an overused term. What does that working really mean? How do we go about doing that? I am involved. For instance, I go to where the customers are. If I’m going to do a lot of work with restaurants, then I’m going to be involved in the restaurant industry so that I don’t read women’s wear daily. I read nation’s restaurant news, restaurant business and deep dive with those. I’m going to learn more about the business. It’s it’s Stephen Dubner hours, 10,000 hours to become an expert. Well, by the time you hit 30,000 hours, you pretty much got that stuff cold. And you have both success stories and failure stories that you’ve garnered from others. So So I would say where it works best for me. Somebody says, hey, I’ve got a restaurateur with a problem. It doesn’t know how to play it. Does he own the real estate? Does he own the business? How do we make the business or my job is to maximize the value of their assets? How do we go about doing that? So, in doing that, there are a number of pieces that we need to look at. And what I try to do is figure out if there’s a real estate play, is there a business play? For instance, here’s a real simple analogy. If I go out and I buy a restaurant business, or I invest a million dollars in a restaurant business, what sort of rate of return Am I going to get? Well, if I spend a million dollars and build out, hopefully I’m doing a million and a half to $2 million in sales. If I’m doing that, ideally, if I have a 10% bottom line, I can have $200,000 a year cash flow out of this million dollar investment. Therefore, my ROI see a return on invested cash is going to be 20%. However, five to 10 year lease I get in 20 2020 2020 and come year 11 the end of a 10 year lease. What’s my equity? Zero. My lease is up. I’m not there. So it’s good that I was able to scrape more chips off the table early on. Now, if I go out and buy a regional mall, I’m going to take you through three scenarios. Number one is operating business hopefully hit 20% ROI see number two, if I go out and buy a regional mall, why are regional mall selling its 3% rate of return. Because what you get isn’t just the rate of return annually. It’s what you’re going to get long term. So if I buy a regional mall at 3% and my average length of tenancy in a regional mall is seven years. I have an opportunity To reprice my property, every year, that tenants roll over and I can get a little more, get a little more get a little more. So 10 years from now, I have a measurable appreciation. So if I have a 10% appreciation, plus the 3% annual return, my total return on invested capital over the 10 year hold period is going to be significantly better than just the 3% cash flow. If I go out and buy real estate, I’m going to have a lower return. If I take a million dollars and buy a free standing building that I turn into a restaurant, hopefully I’m gonna have about a 10% return but I am no longer limited to just what I get during the first 10 years. At the end of 10 years. I still have equity and hopefully I’ve been paying down my mortgage A bit. So now I am not nearly as heavily leveraged. So to summarize the choices, if I have somebody who owns a business and a real estate, he has a cash flow, some goes to his left pocket, some goes to his right pocket, you are a very foolish to have both of those in the same entity. Why? Hey, somebody goes out has too many drinks, runs down, somebody gets sued. 135 years from now, you can lose the business. You don’t want to lose the real estate. You don’t want to put all your chips and go all in on every single deal.

Gabriel Petersen 14:38
That is good advice. Different different LLC for both the real estate and the business. Okay,

Paul Fetscher 14:44
right. So you separate the two. Now, if I have $1 out of cash flow from that business, and I put it on the bottom line, the net operating income of the restaurant, how much can I sell it for? If I’m poor enough to be bulletproof and moving forward. And this is not going to happen in the market we’re looking at now, if somebody will take it at a 20%. Well, they want to make something on top of just that 20%. So chances are I can take that dollar and sell it for about a three multiple. So if I’ve got 100,000 net income, I can buy the business for $300,000. Generally, not all cash typically these will carry 50% down and 50% seller financing. So if a buyer a prospect is buying a restaurant business, for it with 100,000 cash flow, a million dollars in sales, 100,000 net operating income after all salaries, it’s worth 300,000, I buy it for 150 down and the rest notes out of the business while I have to pay those notes, which may be 20% of my cash flow reducing me to 80,000 in cash flow. But I now have Have a strong return which is going to come back to me many times over during the term, remaining term of that lease. If I take that same dollar and put it over into the rent category, I can sell that dollar for 10 or 11 or $12. Because that’s a real estate investment. So what I often do is say, Okay, Mr. Landlord, you got this restaurant that operates and does a million dollars a year with 100,000 cash flow, and you’re paying yourself 100,000 in rent during that period. This is what I want you to do. Let’s sell the business for 200,000 but charge 10,000 a month 120,000 a year on the cash flow. You now sell the business for less than it appears to be worth. But you are going to increase your return that extra dollar that you’re going to get year. after year after year after year on the rust.

Gabriel Petersen 17:04
Interesting i’ve i’ve never heard of put put that way that is a so that that would require you owning the business that is in the real estate that you purchased.

Paul Fetscher 17:15
That’s for the people that own both. Yep. Okay, let me give you another scenario. had somebody an ex football player got involved in a place that was a neighborhood tavern, let’s call it I mean it was decent. It was maybe 4000 square feet, but burgers and beers were burgers and beers were 50% of their sales. Okay. He invested 1,000,002 and operated it poorly. He then comes along now Fortunately, he had a very favorable lease sales for 1,000,002 but his lease was only $40,000 a year. Not bad, not bad. I was able to sell his restaurant for what didn’t appear to be much $200,000 On a business that was doing 1,000,002 that appears to be low. But I then had the tenant pay 150,000 a year in income, meaning he netted $110,000 is 150 coming from the subtenant. He turns around and pays the overland board 40,000 he net 110,000

Gabriel Petersen 18:27
Okay, so it’s kind of like subletting your, like a single family home that you rent or that you own subletting it out. It so if you’re renting an apartment building subletting it out and basically subletting it for more than you’re getting the rent for, correct.

Paul Fetscher 18:44
Gotcha. Okay, that way. So if he nets 110,000 a year, then over 10 years, he’ll get 1,000,001 back on his million to investment plus the 200,000 ahead of prime guess what is ahead of the game.

Unknown Speaker 18:59
I like it.

Paul Fetscher 19:00
I like it. Let’s take it an even step further. I now take the assemblies. And I mark that up at a 3% annual increase the underlying also as a 3% per year, but what happens is 3% of 40,000 is a lot less than 3% of 120 110,000. So the gap between the two meaning the net to the sub less or becomes greater a year after year after year. So by the time you get finished, he wound up actually netting $1.6 million on this one.

Gabriel Petersen 19:41
That is that is a level of strategy when it comes to real estate that I am I am not there yet, but I loved I loved hearing about it. That’s,

Paul Fetscher 19:49
well now you are

Gabriel Petersen 19:51
now I am I just got to implement it. That’s great. So you just gave everybody a lot, a lot to think about. Yeah, I’m just going to leave it at that. So when it comes to commercial real estate, I’m going to move us on to one other topic here. If someone were interested in getting involved in investing in commercial real estate purchasing, whatever it may be, what is the what? What piece of advice would you give that person just starting out who hasn’t done commercial real estate yet?

Paul Fetscher 20:23
Get a partner who is experienced in the area. There are real estate investing clubs everywhere. Now, just because people like to have the pride of ownership, be able to drive down the street and go, that’s my investment. For a novice investor. They are certainly better off starting with local partners getting into a real estate investment club. And with that, they are ready to move with someone else. borrow their experience benefit from that provide care capital and enjoy return on capital that works not only with the judgment through your eyes, but the judgment of somebody who’s been around the block previously.

Gabriel Petersen 21:11
I like it. That’s that’s very sage advice for sure. And when you’re dealing with, with commercial real estate, I mean, I’ve so personally, I’ve only done single family, multifamily, and now mobile home parks. So mostly, you know, where people you know, live and sleep. I’ve never dealt with, with businesses with real commercial real estate. So when you’re dealing with purchasing real commercial real estate, what I’m assuming you’ve already do you also have experience with residential real estate.

Paul Fetscher 21:41
Fortunately, no. Okay. Okay. Here’s the joy.

Gabriel Petersen 21:44
I’ll ask the question either way. If it’s Columbia,

Paul Fetscher 21:48
let me suggest that this way, when you are dealing in commercial real estate, people understand it’s a business they understand business obligations. I don’t have the time, effort or energy to try to answer Educate every residential user, his full obligations, hey, the I don’t like the color of the wallpaper, or I saw a cockroach in my place. So I’m not paying rent this month, or there was a leak in the faucet in the bathroom. And and these are the kind of things that would drive me crazy. I want to deal with people who are professionals, they understand this and obligation to pay rent.

Gabriel Petersen 22:28
That makes absolute sense. I mean, personally, me I’ve been I’ve been very interested in commercial real estate for a while now, I’m definitely not going to pull the trigger yet because I don’t have the experience. I don’t have a knowledge especially as like somebody like you, but it’s something that has been interested. It just has interested me precisely for that reason, because you’re dealing with people who, who are business owners, they’re they understand this is a business and you are part of their business model. They’re renting a property from you and so, so I like that as well. Switching gears just a little bit here, we all know real estate is, you know, it’s cyclical, both economically and emotionally. There’s times when you feel like you’re in the valley when you’re, you know, you don’t know what the next, the next step is. And there’s times when you’re on the top or in the mountain, and you’re feeling great. kind of take us to what is the hardest thing that you’ve experienced so far? And what’s the lesson that you’ve learned? I mean, you’ve had, you know, 30 plus years of experience here. I’m sure you got plenty of stories. So what’s the hardest thing you’ve you’ve experienced? And then also, what’s the peak? What’s the thing that you absolutely love about real estate? Give us some of those stories.

Paul Fetscher 23:36
The hardest thing goes over to a residential project. Of course, of course, in Manhattan, and in the courts in Manhattan and landlord tenant card, here are the rules. You’re the landlord, you you you lose any questions. Simple as that. Tenants move into a space now. Some of these people Came expensive lessons for me and my partner’s. Someone moves into a space it is a loft space. You sign a lease, oh, I’m in photography, I need to place my studio and everything else okay. But this is zoned as a loft space. You are not permitted to reside in this space. You cannot live here. You will not live here. Sign here. Okay. They sign there. They move in. I ready for this. They install a stove. The stove breaks down. Guess who has to replace it? Of course

Unknown Speaker 24:37
the landlord,

Paul Fetscher 24:39
the landlord.

But wait a minute. It is not properly zoned. Oh, that’s right. It’s not properly zoned for residential. Therefore I don’t have to pay your rent.

Unknown Speaker 24:51
Oh, interesting.

Paul Fetscher 24:52
spend the next two and a half years in court. Where the court I said look pay The money into the court and then later figure out who gets it. No, there’s no reason to spend two and a half months in court, you got 14 units and everyone winds up owning owing $40,000 in rent over the 30 months. You’ve been there.

Oh, yeah, that’s a big if you’re the tenant, I got it.

I, I hesitate to call a tenant, let’s call on the squatter, because they’re not allowed to live there. They signed an agreement that they wouldn’t live there and let’s call him a squatter. They have a choice now, either they pay $40,000 in background or move out.

What how many of them do you think pay $40,000?

Unknown Speaker 25:42

Paul Fetscher 25:44
Very well. And

that’s my experience with residential real estate, which is not a lot of fun.

Gabriel Petersen 25:52
Make sense? So, so you kind of got kind of got your shirt taken, taken there in residential. So what was that? lesson I guess the lesson was you don’t deal in residential? Is that is that what you took from that one?

Paul Fetscher 26:04
That’s one. The other is that the cards are definitely stacked against you in the city of New York and residential.

Gabriel Petersen 26:10
Yeah, so, so know your local, local real estate rules

Paul Fetscher 26:15
are the rules. I can play the game.

Gabriel Petersen 26:17
Yep. I agree with that one as well. I’ve kind of have run into that myself. Sometimes. Not as bad as New York here in Seattle. But, um, but we’re getting that way. So we’ll see how it goes.

Paul Fetscher 26:29
Well, hey, here’s something that’s interesting. Let’s look at the difference between residential and, and commercial in residential, in a way it’s supply and demand, how much can I get for this apartment? Right? It’s going to be pretty much supply and demand within any given market. If I want to be in South Dakota with an oil drilling boom. rates are going to go sky high. If I’m in Silicon Valley, where everybody wants to be there to me become their next cyber millionaire, that’s going to drive up prices. So it’s pretty much supply and demand. If I go to retail real estate, the value of retail real estate is very simply the ability to do business at that location. If I can do $2 million in sales rather than a million dollars in sales, I can pay substantially more in rent. But upstairs, the attorney that’s sitting there in 2000 Square Feet doesn’t matter if he built 1,000,003 million or $5 million last year. That does not affect the value of the real estate. It is simply a matter of market supply and demand. So before you get into a project, look at what the demand is look at something that you’re you can come to market at a price lower than replacement cost, lower than somebody coming across the street and building a new shoe Shopping Center. I’m in here I can get a better cash flow because I can ever better cash flow. I can afford to pay a little more for this than the guy who’s got to start from scratch. I have a fella right now that I had worked with mine I’d worked with. This was going to be about a $600 million project. And the $600 million project was going to be a collection of retail office and principally residential luxury residential apartments. He had all permits ready to go. He had gotten over the community objections gotten over everything else he’s ready to go. Well, along comes somebody with an article 78 saying you have to prove to us that this will not harm our environment will not harm our community will not cause any of the minority people jobs. And he has now been held up. He is in a position where it’s ready to go. shovel ready permits in hand, and then gets held up for another 18 months. And the people who bring in articles like that there’s no penalty. In other words, if it’s baseless, doesn’t matter still work its way through its courts. I know somebody that got into in the city of New York, and the judge says, maybe you want to go to arbitration. The arbitrator came in and his first pronouncement was we’re in the city of New York, there are X number of judges. Every judge has a workload of 1200 cases who want to wait until this comes up, or do you want to sit down and negotiate?

negotiated Thank you very much.

Gabriel Petersen 29:49
Yeah, that’s uh, that would be whenever stuff like that comes up. You definitely do not want to go to court in any situation. At least that’s my opinion court is

Paul Fetscher 29:58
I never want to go to court. period, I want to work things out unless the other guy’s just totally off base. But basically what you want to do is to make sure that you Let’s be something that both parties can live with. And just because courts are so expensive, it’s time, effort, energy. And it’s a matter of how much each party loses. There’s no win win. Yep, there’s no win win. Look at the 3000 cases of people who have sued Trump personally, how many of them collected how many of them are still in court? It’s the court system is not as efficient as it should be. If the loser had to pay court costs, we’d see a fraction of the number of cases that are out there. I’m always in favor of negotiating a settled agreement. And where we are right now we’re in a situation. I spoke to one fella who is the president of a company that’s a real estate investment trust, and I was speaking on behalf With one of my clients who has three food operations within his enclosed regional mall, he’s 1% of the tendency and less than 1% of the GLA gross leasable area. In his case, he has a very hefty situation where it’s 300 individual tenants. The courts have a phrase called use and occupancy, meaning you got to pay your rent. But wait, I didn’t have us. And that was judged by the government. So do I have to pay if you’re a bank, the bank is still doing business online. If I’m the restaurant, if I’m a car dealer, and I want to sell cars, and somebody doesn’t buy it this month because it’s closed down, they’ll come back next month and buy the car. There’s no way I can sell the dinner you didn’t have last Saturday night. There is no shelf life to do. Man, I’ve already gone to KFC and got myself a frozen pizza. That’ll work. That’ll work. So you can see that the cases are different category by category. But it would be a lot simpler. I said, Joe, you got to go back to your lender. Speak to your lender about forbearance. speak to them about waiting for the principal and maybe interest accrues, or wait for the principal, so your people can still afford to pay rent, it would make more sense for you to do that. Then try to have 300 individual negotiations with each of the tenants in the mall.

Gabriel Petersen 32:41
That makes absolute sense. So I’m going to I’m going to move us along here because we are stuck at 20 to 30 minutes for each each episode. So I want to ask real quick. First, what is your favorite project that you’ve done? Just give us a real brief, brief summary and you know why that was so special to you. Then, if you could give yourself starting out so many years ago, however many years that was just one piece of advice, what would that one piece of advice be?

Paul Fetscher 33:09
Okay, good question. So I say my most favorite project was Dubai festival city. Because how do you put together 62 restaurants that don’t step on each other’s toes are fight for the same or as our Chinese friends would say, eat out of my rice bowl. What I was able to do is come up with different things. And also one of the most fascinating things about that was the homework I got to do. And that men getting into a Range Rover and driving to Abu Dhabi and Shasha and Hodgman and room all contain and Ellen, and seeing each one, the oldest retail so I understand their framework, their basis, their understanding and their heritage. And on the other end, looking at the most recent retail, so I can kind of see where it’s going. At the time I did that project. They weren’t quite ready for sushi yet. There were a lot of things they could embrace. Next you get to the point of where do you serve alcohol? Where do you not serve alcohol in a Muslim country? Jake shake Rashid Al Maktoum, who was the father of the present ruler. He was the Benjamin Franklin of his time he saw what the assets were in Dubai. Number one, we’re in the middle of the English speaking world or halfway between Australia and England. Number two, most airports will shut down between 11pm and 6am. He said this would be an ideal time for us to open when I fly into Dubai and get there nine and 10 o’clock at night to go Oh, thank heavens you got here before it got busy. Because it gets busy in the overnight with the connections that connects the world. They have terminal three there is the largest building in the world. it’s larger than the Mall of America is the largest building in the world. One The things they have there is you don’t walk into the duty free store. The common areas are the duty free store.

So as you’re going from one

airplane to another gate, you are passing through merchandise. It is the highest grossing store in the world, this retail sales of that are over $1 billion in one store. It’s good. They can make up their own rules as they go along. And he created Dubai financial city in the financial city. How would you as a banker like to operate under Sharia law?

Crazy, I don’t want to do that.

So what you do instead, is in that area, British law governs. Every International Bank in the world has a branch in London, same rules. I don’t have learned any rules just come here. Next comes alcohol. The shake said you know what, if people can Tourists drink more on vacation than they do when they’re at home. So you’ve got to have alcohol. If I’m going to build tourism, we only have 10% of the oil

Unknown Speaker 36:09
of Abu Dhabi.

Paul Fetscher 36:10
So we got to build something else. And we have beautiful beaches, and we speak English. And we got a great airport. So what else do we need to do? We’re going to get tourism, we got to have alcohol, well, if it’s alcohol, that would be in the hotels. So it’s okay for a hotel to have alcohol. In Dubai festival city, we put in a hotel and called the whole thing of hotels, so you could sell alcohol anywhere, however, you don’t want to offend the Muslims. So on the street level, there’s no alcohol. You can’t see it. It’s interesting when you see the first TGI Fridays over there, which had the traditional on the side had a greenhouse section, but you can’t see it because there might be alcohol on the table so you can’t look and there’s he can’t do it. Now, if I go to what was at one point, though, The largest hotel in the world was the Hilton Hotel in Las Vegas 3500 rooms they had nine

Unknown Speaker 37:09

Paul Fetscher 37:10
now I go to the Marriott in Dubai 350 rooms one 10th the size so how many restaurants so they have 11 Wow

Unknown Speaker 37:21
Lobby Day sir.

Paul Fetscher 37:22
Oh now the rule is you don’t serve anyone in national dress in the dosh the and the headgear. But if they put on their Western garb and walk in, they’ll serve.

Unknown Speaker 37:36
Come on in, we’ll get you later.

Paul Fetscher 37:39
So that was the most fascinating learning, you know, tell me the rules. I can play the game and learning the rules and seeing what it is and helping them grow and doing something to put together 62 restaurants that don’t conflict. Now, I’ve got a magnet that will bring plenty of people to the area because there are so many offerings and excitement.

Gabriel Petersen 37:58
I love it that that would be that would be quite a quite the experience as far as dealing with international cultures and just creating something that is, you know, as large as 62 different restaurants for sure.

Paul Fetscher 38:10
So, so now the last question, answer your last question, which was what advice would I give? Number one, it’s a long game. Number two, I have had a number of projects where creativity insight served very well. For instance, I bought an interesting multi use building in Freeport, New York. It was ground floor retail second floor was residential. And in that place, I figured we got to do some things here to make this better. How do I take the quantum leap and I came up number one, they, the village had created this as a pedestrian area with bricks and nice old fashioned lamppost, but the problem was that prohibited the cars from seeing the storefronts. So I convinced the village to tear that up. It had worked very well in Ithaca, New York, which was 150 year old downtown with brick walks in the light. But you weren’t competing with highway retail. You didn’t have power centers, you didn’t have other things that you did have on Long Island. So I convinced them to tear that up. The other thing is I went to a local stonemason and came up with some renderings of what the front of it could look like. And therefore, I said, Look, they’re going to tear up this trade here, you’re going to significantly increase. Boom, here is what you can do with the storefront. I sold it on that promise. I had created the Quantum Leap within one year and I sold it for twice what I paid for it. Oh, wow. There was another project I was involved in on an equity basis on the lower end Side of Manhattan. Now, at the time, Lower East Side of Manhattan was a drug den. Mayor Koch came in operation pressure point. And on every other corner, there’s a cop so that if I have

a square block,

and on diagonal opposite corners of the block, I put a cop. Now, each one can look in four directions, each one can look in four directions, so that nothing no gatherings could take place without us. Number two, the building that we had, was built by someone with some foresight, the Lower East Side of Manhattan. You’ve seen it in the movies with Leo Gorski in the Bowery boys and the like. They were all tenements guy who had this building had some foresight. He built 10 to 11 foot ceiling heights and 18 inch concrete slabs, so that the fifth by the time you got to the sixth floor, that was over The other buildings, because they were shorter floors, they were eight foot These are 10 foot added up, boom, I got an extra floor. When I showed that, and I was showing it during the late fall, I would always show it starting at 430 in the afternoon, because if I started on the ground floor and then work my way up, by the time I got to the top floor, it was dusting down. And you could see the Empire State Building the Chrysler Building the New York Life building all illuminated and it was a view to die

for. That’s pretty cool. I

have plans on how to take each floor and make it two tendencies rather than one and sold it for twice

what we paid for it.

Gabriel Petersen 41:52
That’s great. So you got so creativity and keeping in mind that it’s a long game.

Paul Fetscher 41:58

And What the local government can do local government can remove the street which was an impediment. The local government got drugs out of the area, and now it’s a hot place for restaurants and nightclubs.

Gabriel Petersen 42:12
All right. I like it and making sure you are on the same side as the government as local government. That’s good.

Paul Fetscher 42:19
They’re the first ones that can hurt you. I remember Norman Brinker Brinker international Chili’s, remodels, Macaroni Grill a bunch of those. It said to me years ago, Paul, your competition isn’t the guy down the street. It’s the government and they’re the ones that can kill you.

Gabriel Petersen 42:36
And that is absolutely true. I’ve dealt with permitting myself and and the government. It’s got a you got to get them on your side. You gotta you got to be you got to be friends with them or else they’re going to be your worst nightmare for sure.

Paul Fetscher 42:49

Gabriel Petersen 42:51
All right, Paul. Well, thank you very much. We’re at the end of our time here. Before you leave though before we before we stop recording this go And tell people if they want to get in contact with you what’s the best way to reach out to you?

Paul Fetscher 43:04
Okay, similar our homepage is restaurant expert calm. That is one front door and but with that front door that finds people who want to buy restaurants. But there I also have an interesting article up there, which now has been picked up by three different magazines and newsletters, which is how to deal with your landlord in an age of COVID-19. And there’s a key on top their homepage, restaurant expert, email, Paul at restaurant,

Unknown Speaker 43:36
expert, calm. Perfect.

Gabriel Petersen 43:40
All right. Well, again, Paul, thank you very much for sharing your wisdom here. I learned a lot I’m sure everybody watching and listening learned a lot as well. If you guys watching listening, you want to get in contact with Paul. Reach out to him at his website, restaurant expert comm or reach out to them with the email that you just listed. And thanks for joining and we’ll see you you guys on the next episode

Paul Fetscher 44:02
thank you so much

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