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How Cost Segregation Delivered $20M in Savings for a Leading Restaurant Group

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In today’s competitive market, businesses are constantly searching for ways to optimize their financial strategies and maximize tax savings. For a leading restaurant group with a $750M+ portfolio, the solution came in the form of cost segregation, a strategic tax planning tool that accelerates depreciation for commercial properties.

Unlocking Tax Savings in a Complex Portfolio

With multiple restaurant locations and substantial property investments, the restaurant group faced a unique challenge: how could they accelerate depreciation and optimize their tax strategy across a wide range of properties? While they understood the value of tax savings, expert guidance was needed to identify eligible assets and navigate the complex world of accelerated depreciation. The goal was clear: improve cash flow, reduce tax liability and create financial flexibility to reinvest in future growth.

A Strategic Approach to Cost Segregation

At Frazier & Deeter, we took a comprehensive approach to help the restaurant group unlock their potential tax savings. Our team began with a detailed cost segregation study, analyzing every facet of the restaurant group’s portfolio.

In-Depth Property Analysis

We began by conducting a thorough review of the restaurant group’s properties. This involved a close inspection of construction costs, renovation expenses and asset classifications. Collaborating with engineers, we identified key components of each property that could be reclassified as personal property or land improvements. These reclassifications would enable the restaurant group to take advantage of shorter depreciation schedules, allowing them to accelerate depreciation and significantly reduce their taxable income in the early years of ownership.

Reclassification for Accelerated Depreciation

By reclassifying assets like lighting systems, flooring and specialized restaurant equipment, we helped the restaurant group unlock the full potential of accelerated depreciation. These adjustments resulted in tax deductions spread over 5, 7 and 15 years, instead of the usual 27.5 or 39 years for commercial property.

Comprehensive Documentation and Compliance

To ensure the process was fully compliant with IRS guidelines and protected from potential audits, we provided the restaurant group with thorough documentation. Our detailed reports and calculations not only supported their tax filings but also served as a safeguard, confirming that every reclassification was legitimate and in line with tax regulations.

$20M in Tax Savings and Expanded Growth

Thanks to the cost segregation study, the restaurant group realized an impressive $20 million in tax savings. These savings not only improved their cash flow but also gave them the financial flexibility to reinvest in property upgrades and expand their business. With the capital freed up, they were able to open new restaurant locations, strengthening their market position and accelerating growth.

Maximize Your Tax Strategy with Frazier & Deeter

If you’re a commercial property owner looking to enhance your tax strategy and maximize savings through cost segregation, Frazier & Deeter is here to help. Contact us today to discover how our strategic approach can accelerate depreciation deductions, reduce your tax liability and improve your bottom line.

Contributors

Tommy Zavieh, Partner and National Practice Leader, Federal Credits & Incentives

Sheila Anderson, Partner

Allen Tobin, Principal

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