RENT???

Pizza Shop Talk The Think Tank
1

I am negoitiating a restaurant lease right now. 2500 ft. for $500/mo. the first year, $750/mo the second year, and $1000 the 3rd year. They originally wanted $800 flat for all three years. Its a great deal, but I am always looking to lower my overhead more. We talked about connect rent to a percentage of gross, so if business is slower than expected he get less, and if its greater than expected he get more. I mentioned this Idea cause this location is in a ski resort town, and has a winter tourist season, and a summer tourist season, but the fall and spring can be a little slack.

Has anyone had a stricked percentage of gross based rent?

2

U want, where YOU can make $, keep negotiating…Good Lucki worked for a guy a while back who did an interesting thing with percent of sales lease. he got the landlord to base the entire rent on a percent of sales.
basically pitched it to the landlord that sales should be 20k / month and he was willing to pay 4% which would be $800 / mo rent and as sales increases the rent increases. however it wasnt making the profit he wanted after a year so he closed up…4% of 0 is 0, so basically got out of his lease.

a lot of restaurants though do the kind of partial % of sales. i believe that the way most of them work is that you want them to be a % of sales over a certain amount, like 2% of sales over $28k avg. so if you only avg 27k your first year no extra would be due. your second year you avg 29k so you would owe $240 for year extra or $20/mo however you set it up.

main thing to keep in mind is that before you sign it, you can negotiate any part of the lease…if you don’t get the terms that YOU want, that make YOU $, … keep negotiating! …Good Luck

3

GT, that landlord must of been an idiot b/c anybody would have a base amount regardless of sales, not profit

Tommy, you are lucky you are not on the east coast you would be looking at $2500/month and up.

I am not sure why you would like to base rent as a % of sales…besides the issues of verifying sales from the landlord’s perspective (assuming you are not a franchise that could provide “real” numbers form corporate or something). Wouldn’t it make sense to negotiate a reasonable monthly amount based upon WORST-CASE scenarios instead.

4

im waiting for my store to go up in a strip mall and my rent is a flat rate
your lucky at 800 a month. my store is going to be new but the rent in n.j. is 1600 sq ft 3,000 month. why is your rent so low? is it in the country or not many people. what would your sales be with that type of rent? just curious since i see that the east coast is much more expensive but what is the difference sales wise?i never liked the idea of sales increases rent
it makes it feel like a franchise.

5

I was paying last year $1000 a month for 2600 sq ft in Grantville GA on $14000 sales. It was robbery (real robbery as it jumped from $600 the previous year), but the only game in town as far as restaurant feasible space. They told us it was $1000 or pack our bags and leave. they meant it, so we paid them.

This year, we are moving to a 5100 sqft space and going to pay $1600 a month as we expect huge increase in sales due to increased dining room and alcohol sales and upscale menu items. We are paying part of the build out costs, but it will turn out to be a decent deal all told.

6

yeah… try New Yorks rent. its ridiculous.

7

Or rents over here in Australia.

We are in a suburbian shopping centre with a major supermarket, 6 theatre cinema complex and 27 specialty shops/kiosks.

Our shop is 122sq metres (1130 sq ft) and we pay AU$4456 per month, plus $100 tenants contributions (advertising the centre), plus gas and electricity, approx $1,000 per month.

I looked at a similar size shop from a closed down franchise outlet in a far less socio-economic area, not in a shopping centre, tucked away in a corner of a set of commercial shop fronts and the rent there was slightly lower per sq ft (acme in at $3,800 per month) but it also had rates and land taxes of about $7k p.a. - another $580 per month plus gas and electricity.

No wonder we struggle to make a living over here compared to the rents you guys pay. Then again you have 12 times the population we have in Australia. In Western Australia we only have 2 million people in a state the size that Texas would fit into one corner.

Dave

8

It sound like your all paying CRAZY money for rents.

I am in Rural Northern Idaho. Ever see the movie “A River Runs Through It” with Brad Pitt, Tom Skerritt, and Craig Sheffer?

I am right there in some of the most beautiful lands in the U.S. (Westside of the Rockies)

Idaho is the 3rd fastest growing state in the nation, so I imagine I will be seeing some of you soon.

I have several restaurants in small towns, that were very large lumber, and mining towns about 50 to 80 years ago. For most of them these industries have died off, or have shrunk to meet the market. Leaving behind tremendous amounts of commercial inventory for cheap.

I am currently looking at leasing in a town that has turned to Tourism as its base economy, and old mining town, is now a ski resort in the winter, and a mountain biking playground in the summer.

The populations are probably not as dense as they are in the East, but neither is the competition. When I show up in a town, there is generally nothing but gratitude, as I am usually the only one that will deliver food.

I usually deliver up to 8 miles in one direction, out on some of the most dangerous mountain roads, its a regular occurence to spot Deer, Elk, Bear, Cougar, Coyote, Wolf, or Moose. While delivering, last week a parade of 20 deer just sauntered through our town, a logging town of 2500 people.

I provide a top end product, and my average order for 2 ~ 16" Pizzas, Breadsticks, Wings, and 2-Liter, is about $50. and they generally tip well too.

I can get full value for my product, I don’t have too discount, but I do just to create strong loyalty. I had a competitor try to come into one of my towns, I just did 2 for 1 pizza’s until he ran out of money.

Rents are cheap, minimum wage is still $5.15, and the tip wage is still $2.12 The average home cost $70,000 and the average household income is $34,000/yr. I have a 4 bedroom, 2 bathroom, old colonial style home 2400 sq. ft. on 50 acres, I bought 3 years ago for $180,000.

I have learned if you focus on creating situations with low overhead, you can give alot more to the customer, with out diminishing your profit.

Most of my restaurants average $5000 to $10,000 a week. I believe average last period was $8200. My Food Cost ran 32% and my labor ran 16%, I spend about 2% on advetising, 1% on delivery, and 2% on merchant fees, and my Fixed Cost Average about $500 a week per store.

I do pretty well even though some of my restaurants are in bars, and bowling alley. I was thinking of changing my company name to Unconvential Pizza!!!

9

shit the cheapest rent i have seen on LI is 2200 for a 1100sqft store…

10

just a thought tommie, but have you considered purchasing the real estate to put your new store? in those kind of towns you may be able to pick up something cheap wher a mortgage will cost you less than rent and you build equity. ( and the money you shell out for it monthly won’t keep goin up every year )

11

You guys don’t know how good you have it. We pay $3800/month for 2,000 sf, plus $800/month in CAM. And, we’re one of the lower priced units for our area!

12

Glad to see I’m not the only one in the " make the landloards rich" club :smiley:

13

Forgot to log in.
:smiley:

Dave

14

I hear ya, I m in NY too. To supplement I rent out my store to a guy who runs it as a poker hall after hours. They pull down the steel gates so no one can see in and enter the back door. Sometimes some soda is missing, but I could care less what they do. The money he leaves for me is insane.

15

GT,

That is my next move. I have found alot of 5000 sq ft. buildings over here for about $100,000.

The great thing about owning the building is the ability to take a 2nd against the property for repairs, and equipment upgrades, etc. etc.