People love to eat and people love to have a place to go where they don’t have to cook the meals. Some restaurants are so important to people that they will covetously keep the best restaurants that they find secret so as to keep their favorite spot from getting overrun. Certain kinds of food and cooking methods or ingredients are so important to people in population centers, that they become cultural staples. Think of the beignet in New Orleans, Chicago style pizza, a New York bagel or the Philly cheesesteak. With the restaurant workforce making up 10% of the US. workforce and the industry on track to make more than $850 billion in 2019 alone, it seems that there will always be new people with new ideas for good places to eat. When a business owner elects to open a new spot, they have to answer that all too important real estate question: should I buy or lease my property? Considering that many of the people striking out on their own started at entry level positions within the restaurant industry, it’s probably that many don’t have the sheer volume of capital that’s needed to buy property, especially in the bigger cities. Since many restaurant owners will end up in a lease and the industry can be unwaveringly cruel at times, it’s vital that restaurant owners are aware of the following tips to avoid a nightmare restaurant lease. Take stock of the following tips and if you find that you might be in a nightmare lease or heading into one, contact the LCI Realty team to see how you can get back on the right track.

Make Sure The Property Works Well

If you have always had a spot in mind that’s right in what you feel is the heart of culture or an up-and-coming area, that’s great. That’s what will make you an inspired restaurant business owner. However, you have to do your homework when it comes to your restaurant lease and make sure the spot works for your business needs. Here are the things that far too many restaurateurs overlook that end up costing them their business:

  • Not enough bathrooms – Believe it or not, so many people forget this and customers hate when there aren’t enough bathrooms or bathrooms are hard to get to/ use. Not only that, but there are ADA requirements for bathrooms and if you can’t meet those, it can be a steep fine.

  • Garbage piles up – Restaurants produce a ton of garbage. That will eat into your costs and that’s only if you have enough room for your own dumpster. You can get creative with your solutions but the trash has to get taken out somehow.

  • Ventilation is an issue – Unless you’re only making cold salads, you need to provide ventilation for your kitchen so your workers aren’t in danger and so your customers don’t have to breathe smoke.

  • You need enough room to sit…unless you don’t – The customer does not want to come and spend upwards of an hour in your place if it’s a cramped little closet with no seating, unless that’s part of your appeal. In any case, you aren’t leasing a cute spot for you to live. You need to find a practical space and a restaurant lease that’s right for your business.

  • You’re in the wrong neighborhood – Part of generating a good restaurant lease is to know the neighborhood you want to operate in. Knowing your customer and their income profile or taste preference is vital to your survival.




These are just a few of the things that people overlook in their restaurant lease, especially if they aren’t paying attention because they are caught up in the dream. Keep your head level and make sure that a location has all of the above for your planned model. Then you get to do the fun part: negotiate your restaurant lease.

How To Negotiate Your Lease

A restaurant lease is really not too much different from any other commercial lease in many ways, but some landlords are either too inexperienced or too greedy to understand what your unique business will need, so you have to speak up for yourself. In any case, try to employ the following strategies into your restaurant lease negotiation strategy:

  • Read and re-read the fine print – This is where many landlords will hide certain stipulations that cost a lot of money and some bet on the relative inexperience of restaurant business owners.

  • Don’t take the first offer…ever – Never take the first offer laid on the table when it comes to your restaurant lease. A lot of people come into the situation with a high number, expecting to negotiate down. If you take the first offer, you will pay more than you should be for that space.

  • Negotiate a rent deal – Restaurants are different from a number businesses because of the service and product that they provide, which means the restaurant lease should be a little different too. If you can, try to negotiate a percentage rent deal for the first year, setting a base rent and then offering to pay more to the landlord if you make a certain amount throughout the first year. Now you’re both rooting for your restaurant to succeed so you can both make more money!

  • Negotiate with victory in mind – Don’t be timid. This is your dream and your livelihood after all! Don’t take a passive role in your restaurant lease negotiations or you could end up compromising and stuck in a suboptimal situation. If you are going to have a hard time negotiating to win, you can always contact the tenant representative team at LCI Realty and let them do the negotiating for you.

Now, here is a trade secret that landlords don’t want you to know…

Your lease is worth way more than you might think it is to a landlord. In terms of dollars earned currently or potential dollars a landlord could earn, your lease has an actual numbered value to your landlord and this is a bargaining chip you didn’t know you had. Want to find out how much your lease is actually worth? Check out the video below: