How to Lease a Restaurant
If you are planning to lease a restaurant, there are dozens of details that can go wrong. With a little planning and insider knowledge, you can minimize your risk.
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If you are planning to lease a restaurant, there are dozens of details that can go wrong. With a little planning and insider knowledge, you can minimize your risk.
Selling a restaurant is similar to cooking: For the best results, follow a proven recipe.
The French phrase mise en place, “Putting everything in its place,” is just as relevant when selling a restaurant as it is in your kitchen. Careful preparation and order are key to a smooth transaction.
In this first stage of the sales process, you’ll:
This is the most time-intensive part of selling a restaurant, but following these steps now will save you a lot of time later. By the end of this section, you’ll have your documents prepared and you’ll be ready to begin the search for a buyer.
Anyone who has been to Las Vegas knows that the house usually wins. If the house did not win most of the time, they could not stay in business, let alone give away all the freebies.
Negotiating a restaurant lease is similar to gambling in Vegas. The cards are often stacked against you.
What is effective rent?
Effective rent is a term used to describe the actual rent paid for restaurant leases after factoring in concessions received by a tenant or paid by a landlord.
For example as a tenant you may receive free rent and a tenant improvement allowance. In addition, the landlord may be required to perform work to the building prior to delivering possession of the premises.
Understanding and calculating the effective rent will help you understand both the actual cost of your restaurant’s lease over the lease term, as well as help you understand how the landlord is analyzing the deal from their side of the table.
Just as there are different methods in cooking there are different methods to acquire a location for your new restaurant.
There are basically three options when you open a new restaurant:
1) Purchase or lease a property and build a restaurant to your specifications
2) Buy an existing restaurant and assume their lease agreement
3) Lease a former restaurant space that has been vacated.
There are pros and cons to each approach.
The method you choose will be determined primarily by your budget to build and the monthly rent you can afford based on your projected sales.