SBA 504 restaurant financing: The Slanted Door

TMC closes quickly for top-grossing restauranteur in San Francisco

Award-winning chef Charles Phan is no stranger to risk.

“The restaurant business is very low margin and capital intensive. When you open a new restaurant, you might put in $500 per square foot for improvements on a building you don’t own,” Phan explains. “You have about three years to make your money back.”

Chef Charles Phan knows what it takes to build a successful empire from the ground up.

Chef Charles Phan knows what it takes to build a successful empire from the ground up.

Hailed as the inventor of modern Vietnamese cuisine, Phan owns, with his extended family, the Slanted Door Group, a family of food business, crowned by the James Beard Outstanding Restaurant of 2014, The Slanted Door, located in San Francisco’s famous Ferry Building. When you operate on the cutting edge, Phan says, not everything you try is an instant success.

“Owning a building diversifies your portfolio. Having an asset like that makes it easier to get a line of credit for cash when you need it,” he said. “Owning the real estate allows you to sustain a loss a little easier. Stuff happens in the restaurant business.”

Phan turned to TMC for an SBA 504 loan when he had to find new space for his growing restaurant group’s administrative offices.

“We’d been using our original Valencia Street location as a warehouse and office when the city kicked us out because the building was zoned for retail,” Phan said. “We had to find a new location fast or face fines of $500 a day. The low down payment of the SBA 504 loan just made so much sense for us.”

Phan said he had $900,000 invested in improving his first location. “If we didn’t own the building, we would have had to walk away from that loss,” he said. “Because we did, I could take a longer view, negotiate a lease, sell the business and have 15-30 years to amortize the building improvements.” Slanted Door Sign img_2862_25126409982_o

Once Phan found a building, TMC was able to close escrow in less than 30 days. 

“Working with TMC was like having an expert field guide taking you thought a thick jungle,” Phan said. “In the real estate business, you are working within a short window of time. In a hot market like San Francisco, I can’t tell someone I need six months. I need the right person to get the job done and that’s TMC.”