Here are the
things a tenant needs in negotiating a good
tenant’s lease:
1. A knowledge of the market rents for
comparable restaurant space which can be
obtained from a real estate broker.
2. A viable
concept that will motivate the landlord to lease
to the tenant.
3. A business plan
that includes the following: a.
operator/tenant’s resume, b. business financial
information including financial projections for
the new operation, (The landlord wants to make
sure that the tenant has enough working capital
to get him through his start up period with
several months of reserve capital to weather any
possible unanticipated negative events.), c.
copy of the proposed menu, d. proposed
remodeling plans and e. proposed hours of
operation.
4. A financial
package which should include:
a. a current
personal financial statement,
b. two years most current tax returns,
c. a current credit report and
d. a list of at least three business and
three personal references.
5. A past history
of successful restaurant experience to include:
a. past menus,
b. financial statements,
c. customer testimonials (complimentary
letters & comment cards)
d. the names, addresses and phone numbers of
past landlords.
Here are the
things a tenant needs for a landlord in
negotiating a renewal of an existing lease on
favorable terms for the tenant:
1. A past history with the landlord for being a
good tenant in terms of meeting all of the terms
and conditions of the lease including paying the
rent and other occupancy expenses on time.
2. A knowledge of the market rents for
comparable restaurant space.
3. In negotiating an existing lease the tenant
should negotiate the lease as far in advance as
possible from the expiration date of the lease.
The closer the tenant waits to the expiration
date of the lease the more difficult it could be
for the tenant to negotiate favorable terms, as
time increases usually rents increase. Also the
landlord knows that if the tenant wants to
continue his business at the same location, the
landlord has an advantage over the tenant in the
negotiating process. If the tenant waits to the
end of the lease to negotiate lease extensions
and if he can’t come to an agreement with the
landlord, the tenant could be forced to relocate
his business which could be economically
prohibitive. However, if the tenant is in good
standing with the landlord, the tenant will have
some leverage with a landlord in renewing his
lease. This is because most landlords would
rather work with a known quantity than be at
risk with a new tenant and with possibly no
rental income during the period the old tenant
leaves and the new tenant comes in.
