Post pandemic changes continue to take root in the commercial real estate space and especially with restaurants. It was inevitable that given the scare the American people were put through with the Covid hysteria that we’d see an increase in drive-thrus and pick up windows. Pick up windows have long been a thing in beach towns and resorts but they are now making their way to every day suburban America.
Smashburger is testing out virtual lanes whereby they create some space in their stores to cut out a pick up window. Customers place their orders on their app and pay for it electronically. They then just walk up and pick up their order. Panera does a lot of this as do other restaurants, but you have to go into their stores to get the food. That’s fine now, but for those looking to shave 30 seconds off their lives, they may like the pick up windows. This allows Smashburger to provide some additional convenience for customers without needing the real estate to double or triple their drive-thrus which of course also costs a significant amount of money.
Image: Google Street View of 1540 E Woodlawn Road, Charlotte, NC – Chick-Fil-A Restaurant
It’s a common issue many of us have seen whereever there is a Chick-Fil-A…cars backed up into the main roadway as they wait in line to place their order for food. Chick-Fil-A has really mastered the art of the drive-thru and during and after Covid, they were the first that I saw that doubled up their drive-thrus expanding capacity. McDonalds had kind of done that over the past few years but CFA had taken it to an entire new level.
Now they are looking at going 3 wide instead of 2 wide in their drive-thru lanes. This is an attempt to deal with the complaints of traffic being backed up along Woodlawn Road in Charlotte during meal time. Chick-Fil-A is proposing that they go full on drive-thru only operation and eliminate dining to only have room for 3 drive-thru lanes and keep more traffic on their property rather than spilling out onto Woodlawn. According to the article in Axios Charlotte, this has caused a conundrum for city planners and council because they want a community that is more walkable and less dependent upon the automobile. In this case, in order to possibly improve the situation of the traffic congestion, it only ends up making the business more dependent upon the automobile. That said though, I think the public has spoken regarding Chick-Fil-A and in most cases, people just can’t get enough of it and because CFA does such an awesome job with their service via the drive-thru that people continue to frequent their stores and opt to get their food that way.
Since this blog is about cost segregation, this project will be an exellent opportunity for partial asset disposition (PAD). Because part of the building will be removed, we would calculate what that value is and what the remaining basis is on the books and get that removed from the books. It’s an immediate tax deduction in the year in which the work was done and then that amount is also removed off the depreciation schedule for the building so the owner doesn’t have to worry about paying recapture tax on that property that is no longer part of the building. It’s kind of a double tax savings but it’s a use it or lose it tax benefit. A partial asset disposition must be taken in the tax year in which the work was done. If you don’t file it in that same tax year, you cannot amend your tax returns to claim the deduction.
The company that appears to own this Chick-Fil-A at 1540 E Woodlawn Road, Charlotte, NC looks to be Charter Venture LLC. I don’t know if they are considering doing a PAD or not.
