If you are in the market for a restaurant for rent, you probably already understand the high costs and long lead times associated with building a restaurant from scratch. Leasing a pre-existing restaurant can cut down on some of the lead time and reduce startup costs if there is remaining infrastructure or equipment in place. Keep in mind however that a restaurant for rent or for lease could also have greater costs than you realize. Before you decide whether to buy an existing restaurant or rent a restaurant space, consider these costs.
Restaurant spaces for lease on WeSellRestaurants.com are advertised with a $0 price tag. That sounds like a great deal! However, it is because you are not buying an existing business. Instead, you are negotiating a lease with the landlord for a vacant space. While the initial zero-dollar cost for a restaurant for rent is enticing, you should still anticipate plenty of costs before opening your doors. Here are just a few.
Time is money, and the longer your restaurant waits to open, the more sales and earnings you miss. Your concept, which seems like a standout from the crowd today, may be lost in the masses by the time it opens next year. That is why you must factor both time to open and the speed you get to market as important considerations when looking at a restaurant for rent.
Negotiating a restaurant for rent lease agreement can take several weeks or months, depending on the landlord’s requirements. Expect to meet several hurdles in the application process and be prepared to most of the following information before you get a lease for review.
The exact details of the application package may differ slightly, but most often landlords require the following:
Submitting a complete application package to the landlord is the first step to beginning lease negotiations on that restaurant for rent. An incomplete package will hurt your chances of being approved, costing you valuable time and money in the process. Luckily, a Certified Restaurant Broker® is equipped to help you assemble and deliver this package to the landlord in a timely manner. The sooner lease negotiations can begin, the sooner you can open your restaurant and start making money.
Once you have successfully signed a lease with the help of your Certified Restaurant Broker®, it’s time to equip the restaurant space and furnish it with everything you need for your restaurant concept. When you sign a lease on a restaurant for rent, there will likely be basic infrastructure such as a grease trap and walk-in refrigeration already in place. To prepare the space for your concept, you will need to bring in equipment and furnishings. Depending on your concept, you will need to fund and supply equipment such as:
More specialized concepts will call for equipment such as pizza ovens and espresso machines. Then it’s time to organize a collection of cooking equipment and utensils needed to prepare your menu items. This includes things like spatulas, bowls, pots, pans, and more.
Once your back of house equipment is in place, you’ll need to equip the front of house. Your customers will need a place to sit and enjoy your menu. In a restaurant for rent, you’ll need to supply important things like the silverware, plates, chairs, counters, display cases, table décor, highchairs, booster chairs, booths, tables, and more. You will need a technology platform or point of Point of Sale (POS) system to keep track of everything from inventory to ordering. You will also need payment processing help.
All of these incremental costs and steps add up, especially if you have plans to physically transform the space, too. While budgets vary, you can easily spend from $50,000 to $250,000 to furnish your restaurant for lease space.
→Read Also: How to Turn a Restaurant Space for Lease into the Restaurant of Your Dreams
Maintaining a restaurant space involves more than just paying rent. Other costs to keep in mind include Common Area Maintenance (CAM), repairs, and licenses and permits.
Common Area Maintenance (CAM) Fees - Common Area Maintenance fees cover the costs of maintaining shared spaces within a property, such as parking lots and landscaping. Are the CAM Fees included in the monthly rent? These fees can vary, and tenants should be aware of their responsibilities vs. the landlord’s.
Repair Responsibilities - Understanding who is responsible for repairs and maintenance tasks is crucial. Lease agreements may stipulate whether the tenant or the landlord is responsible for specific repairs. Especially if there is used or old equipment already in the lease space, you will want to know ahead of time what it could cost you to fix or replace equipment in the future.
Licenses and Permits - Even if the restaurant for rent was previously permitted, you will need to reapply for a license to serve food. That will include health inspections and obtaining ServSafe food handler permits for yourself or your staff.
If your dream is to convert a restaurant space for lease into a bar or restaurant that serves alcohol, then another cost to keep in mind is the cost to apply for the appropriate liquor license. This varies state to state, so be sure to visit your state’s liquor license agency online to confirm the process and fees.
Now that you know the costs to keep in mind before renting a restaurant space for lease, you are better prepared for success. For many restaurant owners, a restaurant for rent is a great cost-effective option to bring their concept to life, while others may decide that a low-cost restaurant for sale better suits their budget. Discover spaces that align with your vision and budget at WeSellRestaurants.com, where we post new listings every day. Our Certified Restaurant Brokers are ready to help you make your dream of restaurant ownership a reality!
Robin is the Chair of the Women’s Franchise Committee of IFA and is a member of the IFA Board of Directors. She is also an MBA and Certified Franchise Executive (CFE) and has her CBI (Certified Business Intermediary) designation from the International Business Brokers Association. She co-authored Appetite for Acquisition, a small business book award winner in 2012 and contributes frequently to industry press appearing in Forbes, QSR, Modern Restaurant Management, Franchise Update, and others. She has appeared on The TODAY Show as a restaurant expert and Entrepreneur Magazine has named her to their list of the “Top Influential Women in Franchising.”