How to Negotiate a Restaurant Lease: What you need to know to protect your business & get the best terms

Every operator has two overriding objectives when opening a new restaurant. 1) Create a good restaurant and 2) build a successful business. These two objectives are not mutually exclusive.

The industry is filled with good restaurants that have fabulous food and outstanding service that are (or were) lousy businesses. They're lousy businesses because they failed to make a profit or not enough of one to provide the owner a sufficient return on their invested time and money. One of the main reasons - a poorly negotiated lease that handcuffed the operator with excessive startup costs, high rent payments or other onerous terms.

In this article, we'll examine some key lease issues, provisions and rules of thumb that can have a major impact on whether your lease becomes an asset or liability for your business. Remember, signing a building lease leads to a long term relationship between you and a landlord and it's provisions will effect your business for years and maybe even decades to come.

Everything is Negotiable

In discussions with operators, leasing specialists and attorneys, a common theme regarding lease terms kept surfacing - everything is negotiable. Although there is a common framework or structure to most lease agreements, there is great variation in the specific terms. Don't think that just because something is in the landlords standard lease form that it's carved in granite. We learned of many operators who received concessions they never thought possible in the areas of personal liability, percentage rent, renewal options and more, essentially just because they asked for it. Although, what you can ultimately negotiate has a lot to do with supply and demand for lease space in your local market, landlords don't like having empty buildings. They want and need to lease space.