Five tips for finding the ideal space to open a restaurantTips of the Trade — By Randy Sokol on November 14, 2011 at 8:00 am
The majority of my restaurant experience comes from growing up in my family’s restaurants: Tee Jaye’s Country Place. From age 10 through college and all the way up to 2005, I worked at Tee Jaye’s. You could find me working every position, from dishwasher to general manager.
Following my mother’s passing in 1989, and my dad growing dark with sorrow, I was thrown into the position of president at the age of 30. After spending several years learning how to lead a company, I directed our growth from four to 13 stores. After my father’s passing, my sister and I fell into ownership of Tee Jaye’s Country Place.
Throughout the years, I have found locations for new Tee Jaye’s restaurants, negotiated our leases, supervised the building of many restaurants, and sold some of our locations. Those experiences are where I gained the expertise to achieve success in my current work: finding locations, negotiating leases, and selling restaurants.
I realized a long time ago that the most important piece to producing a successful restaurant is to find the ideal location for your concept and, next, negotiate a lease that will be 6 to 8 percent of gross sales. I constantly recall one thing my father taught me: It is vital that you control the costs coming in the “back door.”
Below are a few pointers to help you negotiate a restaurant lease and find a location.
1) First, ask yourself a few questions:
- What is your restaurant’s concept?
- Who is your customer?
- Where do your customers live and work?
2) Then, find a knowledgeable real estate agent who has experience working with restaurants, and work with them to search for a location.
3) After finding a possible location, meet with both the real estate agent and landlord to discuss your concept and business goals.
4) Find out whether the landlord is willing to offer any of the following:
- Tenant Improvement Allowance− money given to a tenant to build out a space
- Rent per square foot
- Common Area Maintenance and/or Pass-Through Expenses− common area maintenance covers snow removal, parking lot care, etc.
- Free rent while the space is being built out
- Lease options after the first term
- Lease increases per month
5) After committing to a location, hire a lawyer to review the lease. Again, make sure the lawyer has experience in this area.
When all is worked out, you are ready to build and open your restaurant!
However, it is important to note that in some cases it’s worth it to buy an existing business, as you may be able to find a perfect location that is cheaper to buy rather than build out.
Randy Sokol is owner of Sokol & Associates. He has extensive experience locating restaurant sites, negotiating leases, building, opening and managing restaurants, as well as closing and selling them. He has served as President of the Ohio Restaurant Association and the Central Ohio Restaurant Association, and is currently a member of the Central Ohio Restaurant Association’s executive board. Randy can be reached at 614-204-4904 or at email@example.com.
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