What You Need to Know About Renting a Restaurant

Leasing a eatery is a serious business concern. A restaurant lease tends to last for three to five years, and in one case yous're in and you've invested money and time into the space, there's no turning back.

Whether you lot're an enthusiastic new restaurateur ready to sign your first-e'er eating place leasing agreement, or a seasoned entrepreneur considering a new location, leasing a restaurant is one of the near of import commitments yous will make.

Before you sign on the dotted line, it's of import to consider your options carefully. To help you navigate the process this article will cover:

The distinctions betwixt buying a restaurant vs. leasing a restaurant
How to prepare a budget for your eating place lease
Tips on researching the neighborhood to assess your location
How to measure out your space and appraise its potential
The key questions to ask when leasing a eatery
How to negotiate a restaurant lease when you rent a restaurant space

Here are our acme 5 considerations to help y'all brand the right choices and get the best bargain possible.

Buying a Eating place vs. Leasing a Eatery

Eatery leasing means entering into a long-term rental agreement where yous can make the space your own and you lot are responsible for certain maintenance and repairs as agreed.
Buying a restaurant means purchasing restaurant existent estate outright so you take consummate control and you tin can continue it as an asset.

Ownership a eating place makes sense if yous are sure that you will be successful in the long-term there – if you have several other outlets that perform well in like locations, for instance. If you plan to stay in the same spot for seven years or more and yous are certain that the location won't change as well much over that period, ownership may be the right pick.

In contrast, leasing makes more sense if you lot are opening up a new business, if yous take expansion plans, or if yous are trialing a concept and may need a larger space in the most future.

While some people are fatigued to the security and value of a long-term lease, others may be wary of the potential liabilities if their business doesn't take off as they hoped.

There's likewise the possibility of getting intermittent renewal options to accompany your initial lease menstruation. This is something y'all tin discuss during your negotiations, which we'll become to later.

For a handy listing of negotiation fundamentals, download our Restaurant Lease Understanding Crook Sheet.

Hiring a Commercial Real Estate Amanuensis

Leasing a restaurant is a big commitment, which is why you should always start by enlisting the help of a professional.

Earlier you fifty-fifty get-go looking at restaurants to lease, you should always hire a licensed and experienced Commercial Existent Estate Amanuensis equally your "Tenant Rep." These agents not just help you better understand the real manor marketplace in your expanse, only they also represent you and your best interests throughout the execution of the contract. This is especially crucial as there are many legal trappings and fine print in a lease agreement that can sink your business concern if you don't have an expert on your side.

Superlative v Tips for Leasing a Restaurant

Once you lot accept a Commercial Real Estate Agent in your corner, you lot tin begin your hunt for the perfect identify. Below are our top five tips for finding and leasing a eating place.

1. Prepare a Budget

Setting a realistic budget to work with is essential when you are assessing different spaces to lease. If you lot don't have a clear idea of the costs, yous won't have a reference bespeak for making decisions and negotiating.

If you take already written a eating house business organisation program, y'all will exist familiar with how to carry out a market assay, in which you thoroughly research the market to make up one's mind how much revenue you lot could potentially bring in.

During the process, you await at similar businesses and competitors in the areas you desire to open the restaurant. You can even interview business organisation owners to get some realistic expectations.

Restaurant Business organisation Program Template

Download this customizable eatery business organisation plan template to create a professional business organization plan for your new venture.

Once you accept an thought of your projected revenue, you lot tin can figure out what you can beget to spend on rent, utility bills, and boosted costs like insurance, belongings taxes, and maintenance costs. Typically, restaurateurs budget five-x% of revenue on these fixed costs. Financial spreadsheets can help you continue runway of all the numbers and automate calculations.

Depending on your majuscule avails, you can then decide how much wiggle room you can leave in your upkeep. Remember to leave a buffer merely in case of unexpected circumstances. We can all appreciate the importance of preparing for a rainy mean solar day given the final few years.

two. Inquiry the Neighborhood

If yous're looking at a certain neighborhood, chances are you accept an idea of the foot traffic and demographics of the people who live there. But when leasing a eating place for three to five years, it's important to dig into the details and plan for the future.

Be patient and don't rush this footstep. It could take months to properly research a neighborhood and recollect of all eventualities.

Is the neighborhood a well-established dining district with lots of competition, or are you moving into an upwards-and-coming destination where you'll accept to set the trend and bring customers to the area? Restaurant real estate prices can increase rapidly when an area becomes a dining hotspot.

Information technology'south not merely about what the neighborhood is like now. You must think about how it will modify over the grade of your charter. Enquire yourself: what will the neighborhood look like in three years' time? Are there any trends developing?

The key factors to dig into include:

The competition – who are your main competitors? Are there local businesses that will complement your eating place? For example, a gym total of fitness enthusiasts would be a neat neighbor for your smoothie shop.
Business organization turnover – do businesses come and go or are there a number of well-established restaurants in the expanse? If the street, building, or entire neighborhood has a transient business crowd, this is a major red flag.
Human foot traffic – is there plenty pedestrian traffic to sustain your restaurant? Or is it more important that there are residential areas nearby for commitment orders?
Atmosphere – make sure know the area inside out, at different times of the day, and every day of the week. Does it become a rowdy expanse on Friday nights? Is information technology a lazy Sunday spot?
Access – is your space easy to find? Can you offer parking or, if not, is it near enough to public transport links? Think about whether it's easy enough for your customers to find.

3. Measure Your Space

Be sure to take authentic measurements of your potential eatery space. Agents have been known to exaggerate or sell 'phantom space' which can jack upwardly the rent. Make sure you're not paying for more infinite than you can actually use.

Remember about how much space you need for the kitchen, bar, and back-of-house areas, likewise as how much you lot need for dine-in customers (if whatsoever). Most restaurants allocate around 40% for service and back-of-house areas.

Obviously, this depends on the type of eatery, with quick service restaurants requiring trivial customer infinite and fine-dining restaurants allocating up to xx foursquare feet per seated customer.

4. Assess the Potential of the Infinite

Many restaurateurs are great to make their mark on a restaurant space, while others want to hit the ground running and start making acquirement immediately. Make up one's mind what your primary goals are every bit yous appraise your eating house lease.

Questions to Ask When Leasing a Restaurant

Here are the key questions to consider when assessing your eating house'southward potential new habitation:

Can you save money by taking on a infinite that needs more work? In other words, exercise you want to lock in a low rent and so practise the renovations yourself to make information technology every bit yous desire? Or do you lot demand a turnkey space that is ready to go on 24-hour interval i?
Look at the condition of the space. Is it up to fire and rubber standards? Or does it need investment?
Are you lot converting an industrial or retail space to become a eatery? Or is it already set upwards to serve food? Does the kitchen need upgrades or unlike equipment?
How much time and money will y'all need to invest to become a eating place space client-ready?
Does the lease include an annual rent increase? If and then, negotiate a cap on how much the landlord can increment the hire.
Who is responsible for renovations, maintenance, belongings taxes, insurance, and other costs associated with the building? Make certain this is clear upfront to avert subconscious costs downwards the road.
Are you allowed to sublet the lease if you need to leave early on?
Practice you have the option to negotiate the terms of the charter at certain points?
Tin yous negotiate a suspension clause then that y'all can get out early if things aren't working out?

The answers to these questions should play a office in determining your budget. Make certain you know the answers before embarking on the side by side step: negotiating a eatery lease.

v. How to Negotiate a Eating house Charter

At present that you have your restaurant finances in order, y'all've completed your research, and you lot've decided the infinite is right for you, it's time to go down to business concern. Simply before you sign this important contract, it's essential to gear up for negotiations.

Some people are natural bargainers, but many people observe information technology difficult or awkward to fight for the all-time deal. The trouble is, if you don't negotiate and stand up up for yourself, you volition be taken advantage of.

Go the Pinnacle Tips for Negotiating Your Lease

Not sure what you can inquire for when negotiating your lease? Get the best bargain with these tips!

Hither are some superlative tips to help yous get over the fear and take command of the negotiations to ensure you go the best deal possible when you lot rent a restaurant space.

1. No one is going to negotiate for yous

You can be certain that the landlord or amanuensis will negotiate hard to get the all-time deal, and then you better exist prepared to do the aforementioned. Don't be cautious; be bold and stand up up for yourself. Get your caput around the finances, know your budget and how far you're prepared to stretch it, then become out and get the all-time deal you can.

2. Be prepared to walk away

This is easier said than washed, especially if yous have fallen in love with a space and started imagining your future success at that place. But it's crucial to remain rational and not clouded by emotions if the deal is not right for you.

3. Ask for more than than y'all need – leave wiggle room

Always ask for more you ideally want, so there's room for a trivial negotiation and compromise. You lot tin be sure the other side won't have your first offer.

4. Talk to other tenants

If you tin, accept a chat with other tenants in the edifice to get an thought of what the landlord is really similar. Inquire plenty of questions almost the reality of leasing from the landlord.

5. Never accept the first offer

It can exist tempting to rush to get the deal done if the initial offer seems reasonable. But the agent will always leave wiggle room, only as y'all have, so you lot should always come back with a counter-offering.

6. Take your time

You lot've spent months carefully deciding on a budget, researching the neighborhood and the eating place space, in that location'due south no need to rush into signing a restaurant lease at this stage. E'er retrieve your decisions through carefully, consult with friends and colleagues, and so accept your time in making the adjacent move.

vii. If in incertitude, rent a professional

A qualified real estate attorney will comb through your lease for whatsoever potential carmine flags to brand sure you're signing off on the all-time possible charter terms. The upfront investment is likely to pay in the long run if you tin negotiate improve terms over a multi-year eating house charter.

For a convenient condensed guide to negotiating a restaurant lease: download our Restaurant Lease Agreement Crook Sheet.

Get the Peak Tips for Negotiating Your Lease

Non certain what y'all tin can ask for when negotiating your lease? Get the best bargain with these tips!

Without wanting to put as well fine a point on it, leasing a eatery is 1 of the nigh important commitments yous will brand.

While you don't desire to dilly-dally and create unnecessary delays, information technology's important to give enough time for budgeting, assessing potential spaces, and negotiating to become the best deal possible.

Putting the right foundations in place at this stage will save you lot fourth dimension, money, and hassle in the long run. Your eatery's success depends on it.

by Jackie Prange

Jackie was a Content Marketing Specialist and Social Media strategist at TouchBistro before moving into business evolution role. She covered the latest nutrient, dining, and engineering trends for the eatery industry. A lover of all things coffee, Jackie's hobbies include breakfast, luncheon and dinner.

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Source: https://www.touchbistro.com/blog/5-things-to-consider-before-signing-your-restaurant-lease/