9 minute read
Build Better Podcast
The Emergence of Ghost Kitchens and the Future of Restaurant Design
by Emily Langner
On season 2, episode 14 of the Build Better podcast, Anastasia welcomed Meredith Sandland, co-author of the book, “Delivering the Digital Restaurant.” Previously, she served as the chief development officer at Taco Bell, and as the COO of Kitchen United.
Sandland has created and driven disruptive growth at both Fortune 100 and start-up companies, and has spent a decade navigating changing consumer demands and real estate environments for restaurants. She shared more about the recent shifts in consumer behavior, and how the emergence of ghost kitchens and other methods of food delivery are impacting the restaurant industry.
Sandland sited three major changes occurring in consumer behavior. The first is that the economics of eating at restaurants vs. eating at home have changed, and that food “away from home” continues to grow. Second, consumers’ tastes are changing and they are starting to demand better nutrition and greater diversity in their diets. Third, the new generation expects the convenience of quick, on-demand service.
In response, restaurants are adapting parking lots for curbside pickup and incorporating mobile ordering forms. Additionally, ghost kitchens have emerged as a cost-effective and efficient way to fulfill customer orders through off-site production. According to Sandland, ghost kitchens are restaurants that are optimized for off-premise consumption. They typically do not have a front of house or sit-down environment, and often have multiple restaurants operating out of them. They are designed to be compact and efficient in their use of space, and feature less electrical, gas and water consumption.
Sandland explained that her book, “Delivering the Digital Restaurant,” is designed to help restaurant operators and owners navigate the changes in the industry, and to help everyone migrate the changes successfully and come out on the other side better for it. She and co-author Carl Orsbourn interviewed restaurateurs, food industry veterans and start up entrepreneurs about the changes that are happening and what they see coming in the future.
She emphasized that this is an important topic for real estate owners, landlords, builders, developers, and city planners to understand. “As much as retail changed and you saw things like dark stores and micro-fulfillment centers and all those types of things come into the retail world where there had been big boxes, the same thing is going to be happening in restaurants, so understanding why these changes are happening and what’s likely to result and what it will look like, I think, is an important part of navigating through
Meredith Sandland
the change, Sandland said. “There’s a lot of stakeholders involved in making the physical built world enable all of these changes that are occurring.”
Emily Langner is editor at HighProfile Monthly.
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A Place to Live: Creating Long-term Solutions for Homelessness
by Emily Langner
On season 2, episode 15 of the Build Better podcast, Anastasia welcomed Marc Margulies, principal and senior partner at Margulies Peruzzi, and Joe Finn, president and executive director of the Massachusetts Housing & Shelter Alliance (MHSA). They are working to change the ways in which homelessness is addressed in Massachusetts, something that continues to be a complex issue and one that demands immediate solutions.
They talked about their mission to create an efficient, cost-effective, and replicable model of new construction designed specifically to address the needs of long-term and chronically homeless people in the state.
Finn and Margulies pointed out that, at the root of homelessness is the lack
Marc Margulies of appropriate housing for a significant part of the population, so creating that available housing is the first step. They are creating low-threshold housing that first invites a person in and then applies the appropriate resources and services particularly as that person feels they need them. They also emphasized that if you design the structure right from the start with everything it needs to serve its purpose, the building can be smaller and the units can be larger because all those things can be built into a cost-effective model.
In 2018, MHSA launched the “A Place to Live” initiative, a scalable, cost-effective and permanent supportive housing solution consisting of models that can be replicated in communities across the Commonwealth to provide housing to people with highest need and who have been homeless for many years. The model is based on a design concept by Margulies Perruzzi and consists of modular housing, constructed off-site. Margulies said the energy efficiency of these buildings, built to Passive House standards, far exceeds what can be built in the field. Additionally, they cost 30% less than a traditional construction model and take half the time to build.
The first of the pilot projects will be completed in September. Margulies said the pilot project includes important aspects that are key to understanding how to move forward with the concept; most important are the ability to develop a delivery system that includes the right kind of leadership, the right kind of procurement processes, the right kinds of relationships with the modular manufacturers, and the right understanding of what each of their abilities are and how to coordinate them.
Finn and Margulies said it is important to provide housing that is respectful and set up for independent living. Prioritizing a “housing first” approach ensures that residents achieve the stability they need to be successful in the long term.
For more information on the “A Place to Live” initiative, visit https://mhsa.net/.
Emily Langner is editor at HighProfile Monthly.
Joe Finn
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Trends and Hot Topics Best Practices for Material Volatility Mitigation
by Ronald D. Ciotti
COVID-19 disruptions to supply chains created volatility in the pricing and availability of building materials. These risks will continue in global markets susceptible to natural disaster, political upheaval, and climate change. This article is a collaboration of the Associated General Contractors of Massachusetts (AGC MA), the Associated Subcontractors of Massachusetts (ASM), public and institutional owners, owner’s project managers, and legal counsel. It is intended to provide stakeholders with best practices to mitigate material volatility.
Owners
Although some owners believe lump sum bidding protects them from material volatility, projects can be severely impacted when these risks are pushed down to contractors and subcontractors.
Pushing the risk down results in inflated bids because contractors build the risk of material volatility into their bid price. Moreover, owners may find that many reputable contractors decline bidding if owners are unyielding on
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material volatility. Finally, owners may have to accelerate their decision-making processes from bids that quickly expire due to inability to hold material prices.
Communication between stakeholders is critical to limiting the risk of material volatility. At inception, owners should identify volatile materials and consider alternative project delivery such as CM at Risk, design-build, or integrated project delivery, to encourage collaboration between design and construction teams. This allows those with direct knowledge of materials’ volatility to provide input as soon as possible.
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Design Professionals
Design professionals may not face direct financial risk of material volatility, but are a critical part in mitigating that risk. Owners reward design professionals who account for material volatility. Design professionals looking to build client trust must recognize and address material volatility before it affects their projects.
Design professionals must communicate with contractors, subcontractors, and suppliers to discuss material volatility and address potential impacts with owners. Design professionals need to be flexible in material selection and be open to suggested alternatives for volatile materials. Finally, design professionals can mitigate risk by expediting submittal approvals on highrisk material packages.
Contractors and Subcontractors
Contractors and subcontractors face substantial financial exposure from material volatility when working under fixed price or guaranteed maximum price contracts. Construction firms under these traditional contract forms bear the risk if material prices escalate.
At the time of bid, contractors can mitigate risk by: • Identifying material volatility and potential solutions with subcontractors and suppliers; • Submitting Requests for Information (RFIs) for alternative materials; • «Discussing the potential benefits of a material price escalation clause; • Attempting to lock in material prices with suppliers; • Shortening bid duration; • Accounting for volatility in estimates through a cost index, or include a bid contingency.
In the contract phase, mitigating material volatility risk requires negotiating material price escalation clauses into the contracts such as: • “Day One Escalation Clauses,” requiring the upstream party to pay for increases in material costs; • “Threshold Escalation Clauses,” requiring the upstream party to pay for increases in material costs above a defined threshold; • “Delay Escalation Clauses,” holding a fixed price for a limited period, but require the upstream party to pay for increases in material costs if the project or material procurement is delayed; • “Bilateral Threshold Clauses,” defining a threshold for both increase and decrease in material prices that trigger the upstream or downstream party to pay the difference.
In anticipation of buyout, stakeholders should discuss early procurement of volatile materials. While this depends on the certainty of the final design, the benefits of predictability and avoiding future escalation can outweigh storage costs. Warehousing of regularly used volatile materials also brings some cost and schedule certainty to projects.
Conclusion
The volatility of materials is a significant risk to all parties on a construction project. Open communication, understanding, and shared risk are key factors leading to a successful project for all. Without such communication and collaboration, projects face delay, suspension or collapse, and firms face the disastrous reality of massive financial losses.
Ronald D. Ciotti is partner at Hinckley Allen, a member of the Associated General Contractors of America’s board of governors, and a national director for the Associated Builders and Contractors.
