| You've decided to open a restaurant and you've | | | | mind, this landlord wants you to find success also. |
| found a location that you simply love. Now it's | | | | If you do, he will have a steady stream of |
| time to sign the restaurant rental agreement. | | | | income. If you do not, you will be gone and he will |
| Before you do that, let's talk for a moment. | | | | have to start all over. |
| Keeping in mind that 90% of all new independent | | | | With that in mind, you may be able to negotiate a |
| restaurants fail within their first year of operation, | | | | lower rental amount the first year, if you will allow |
| your restaurant rental agreement becomes more | | | | the landlord to raise your rent the second year. |
| important than ever. I understand your | | | | This could be extremely beneficial to you during |
| excitement, but this agreement could be your | | | | that first critical year. Now, instead of signing a |
| first of many good decisions or bad decisions. | | | | restaurant rental agreement which will cost you |
| Understand, before you sign this restaurant rental | | | | $2,000 per month right out of the gate, maybe |
| agreement, that your monthly rental expense | | | | you can pay $1,500 per month the first year and |
| should not exceed 5% of your monthly net sales. | | | | then $2,000 beginning the second year. |
| Let's say that your monthly net sales end up at | | | | This method will allow you time to get your |
| $40,000 per month. 5% of $40,000 is $2,000. | | | | restaurant running smooth and give you a much |
| The problem for you is what happens if your | | | | better chance for success. Once you have signed |
| monthly net sales are $30,000 per month instead | | | | your restaurant rental agreement, you have little |
| of $40,000. If that were the case, your monthly | | | | recourse. |
| restaurant rental, with the same $2,000 per | | | | When it comes to a restaurant rental agreement, |
| month rental, has risen to 6.66%. | | | | landlords love a long term lease. Maybe you could |
| With $30,000 per month in sales and your | | | | negotiate a two year lease with a three year |
| restaurant rental costing 1.66% per month too | | | | extension. This means that you will guarantee the |
| much, you are wasting $498 per month. That | | | | rent for the first two years and if things work |
| may not seem like much to you today but keep | | | | out for you, you can then extend your rental |
| this in mind. Your restaurant will have nine | | | | agreement for three more years at the same |
| different accounts which you must control the | | | | terms as your last two year. |
| spending in order to survive. If you were to | | | | If things have not worked out, you are free to |
| waste $498 in each of those nine accounts, you | | | | leave after the initial two years. This method |
| will waste $4,482 each month. | | | | gives you more flexibility which could be beneficial |
| Regardless of how wonderful you may think this | | | | toward your restaurants success. |
| location is, here are my recommendations. | | | | Your restaurant rental agreement can be a |
| Before you sign this restaurant rental agreement, | | | | powerful weapon which could lead you toward |
| you should negotiate with your landlord. Keep in | | | | success. |