I like this thread, as I'm about to open the first of (hopefully) many of a new QSR concept here in L.A. and I've been looking for locations for the past few months with not much success. Rents here are $5-6 sq. ft./mo., although I've seen some landlords asking for as much as $10/sq. ft. in some cases (not areas where I want to go).

I think a lot of small locations are owned by landlords who have many different holdings. Each particular property doesn't really mean much, and they are willing to let spaces lay fallow for a year or two rather than commit to a new tenant with all the expected T.I. that they would have to put into the location to make it tenant-ready.

Hopefully I'll have better luck with some additional properties I'm looking at, and I'd be happy to keep the thread updated with all the fun negotiations!

The other thing to consider from a landlord's perspective is that sometime they have a vision of a particular set of businesses for the property, where each will be complimentary to the others. A landlord with that philosophy (which is not all that uncommon) would rather keep a place vacant than fill it with a business that doesn't fit the site plan.

That makes a lot more sense.
When I put the numbers in Excel I was dumbfounded.

I think a lot of independent restaurant owners underestimate how one-sided a typical business lease agreement is. The monthly rent is only one small piece of the overall puzzle. Obviously this is meant to be funny (albeit not much of an exaggeration), but this is how it feels for the little guy when it comes to signing a lease.

STANDARD RESTAURANT LEASE

1. You, the tenant, will pay me, the landlord, much more rent than I deserve for the square footage you have chosen to lease to operate your restaurant I will never dine in. The square footage that I will charge you for will be significantly more than the actual amount of space you will be able to use because I’ve decided to add in some imaginary space just so I can charge you more money. You will pay the rent on time every month or I will change the locks, sell all of your equipment and then still come after you for the money you owe me anyway.

2. I, the landlord, will assign as your point of contact from this point forward the least competent person I can find, typically a son-in-law who does not know how to answer a phone and has been given no decision-making authority of any kind.

3. If anything breaks, leaks, collapses, malfunctions, is found to be out-of-code, or disappoints you in any other fashion it is your problem and you will pay to fix it and I will enjoy the benefits of your upgrades for years to come.

4. If for any reason you go out of business you will still need to pay me rent for the duration of the lease so that not only do you have to suffer the loss of your business you can kiss away your retirement plan and anything you had hoped to leave to your children or grandchildren. I will not try very hard to find another tenant to take your place because you are already on the hook to pay and there’s nothing in it for me. In the event you find a tenant to take your place I will find them to be unworthy just because I can.

5. In addition to the rent I will charge you an inordinate amount of money to maintain the premises. I don’t actually have to do a good job maintaining the premises or justify how much the maintenance costs. You should expect to receive an extra bill every year that comes out of nowhere to pay for the maintenance I had to do that I didn’t budget for and did nothing to improve the part of the premises you actually occupy. You should also expect to receive this bill during your slowest month of the year.

6. Because I know you’re short on cash I’m going to require you to pay three months rent up front along with a security deposit equal to another three months rent that I will invent some reason not to give back to you even if you satisfy all of the other requirements of the lease.

7. If all of the above clauses are not bad enough, we reserve the right to come up with additional ways to screw you over that you could never imagine and by signing below you acknowledge this even though you know you shouldn’t.

Just to keep it alive for the sake of QSR LA project / Chitrader as the subject is falling to the bottom of the page slowly

I understand no one really cares and Highland Park, the capital of North Shore is more into bland unadventurous food instead of spicy and juicy ethnic food. Plus the bargain pricing is possibly a must to succeed in the capital.

So, could someone name few cuisines that could be considered ethnic here. Please, no more landlords.

BTW, the thread should be named "Why Restaurants DO NOT Close: Landlords". Because, landlords are currently accepting new low ball leases with existing restaurant tenants, making them stay instead of leave. This is the fact.

Lenny007 wrote:So, could someone name few cuisines that could be considered ethnic here. Please, no more landlords.

As the creator of this thread, I request that if you want to have a discussion that isn't about landlords, you start a new thread to do that.

If there is nothing more anyone has to say about the issues facing restaurateurs who lease their properties, then it's OK for this thread to sink slowly into the west. If there is, then this is the place for it.

Thanks.

riddlemay wrote:

Lenny007 wrote:So, could someone name few cuisines that could be considered ethnic here. Please, no more landlords.

As the creator of this thread, I request that if you want to have a discussion that isn't about landlords, you start a new thread to do that.

If there is nothing more anyone has to say about the issues facing restaurateurs who lease their properties, then it's OK for this thread to sink slowly into the west. If there is, then this is the place for it.

Thanks.

A capital idea!

=R=
for the Moderators

ronnie_suburban wrote:A capital idea!

I learn from the best.

I think a lot of independent restaurant owners underestimate how one-sided a typical business lease agreement is. The monthly rent is only one small piece of the overall puzzle. Obviously this is meant to be funny (albeit not much of an exaggeration), but this is how it feels for the little guy when it comes to signing a lease.

STANDARD RESTAURANT LEASE

1. You, the tenant, will pay me, the landlord, much more rent than I deserve for the square footage you have chosen to lease to operate your restaurant I will never dine in. The square footage that I will charge you for will be significantly more than the actual amount of space you will be able to use because I’ve decided to add in some imaginary space just so I can charge you more money. You will pay the rent on time every month or I will change the locks, sell all of your equipment and then still come after you for the money you owe me anyway.

2. I, the landlord, will assign as your point of contact from this point forward the least competent person I can find, typically a son-in-law who does not know how to answer a phone and has been given no decision-making authority of any kind.

3. If anything breaks, leaks, collapses, malfunctions, is found to be out-of-code, or disappoints you in any other fashion it is your problem and you will pay to fix it and I will enjoy the benefits of your upgrades for years to come.

4. If for any reason you go out of business you will still need to pay me rent for the duration of the lease so that not only do you have to suffer the loss of your business you can kiss away your retirement plan and anything you had hoped to leave to your children or grandchildren. I will not try very hard to find another tenant to take your place because you are already on the hook to pay and there’s nothing in it for me. In the event you find a tenant to take your place I will find them to be unworthy just because I can.

5. In addition to the rent I will charge you an inordinate amount of money to maintain the premises. I don’t actually have to do a good job maintaining the premises or justify how much the maintenance costs. You should expect to receive an extra bill every year that comes out of nowhere to pay for the maintenance I had to do that I didn’t budget for and did nothing to improve the part of the premises you actually occupy. You should also expect to receive this bill during your slowest month of the year.

6. Because I know you’re short on cash I’m going to require you to pay three months rent up front along with a security deposit equal to another three months rent that I will invent some reason not to give back to you even if you satisfy all of the other requirements of the lease.

7. If all of the above clauses are not bad enough, we reserve the right to come up with additional ways to screw you over that you could never imagine and by signing below you acknowledge this even though you know you shouldn’t.

This pretty much sums up my lease, down to the incompetent son-in-law "property manager". I fixed up and occupied 2 empty spaces in a neighborhood with tons of empty storefronts, and he continually tells me that means nothing to him - he would be just as fine to let them sit empty. I just don't get that mentality. I thought I was alone in having this awful landlord, but apparently not. When our A/C unit failed on the hottest day this summer, I approached my landlord about replacing it. His reply, "Air Conditioning is a luxury. In my country, most common folks don't use air conditioning - and most restaurants just use fans or no air circulation at all." I really hate his "in my country" references, you've lived here for 40 years - raised 4 kids here, and own about 10 million dollars of Real Estate here...when does your reality start referencing this as your country!!! AAAARGGG!

I spent over 5k to replace the air conditioner, and then he asked for the receipt/warranty for the unit I PAID FOR. I told him no thanks, and by the way - the old broken condenser is on the roof, and when I move into a bigger space that we OWN I will swap out the AC unit and leave the broken POS unit with you.

..6am rant finished, signing off

Did your original lease assure you that you'd have a working AC unit?

I'm curious to those who have current restaurant leases, did you use a commercial real estate broker on the deal and if so, how do you think they helped (or hurt!) you?

chitrader wrote:I'm curious to those who have current restaurant leases, did you use a commercial real estate broker on the deal and if so, how do you think they helped (or hurt!) you?

If they're working for the landlord (i.e. the listing agent) I'd say they border between hurtful and useless. If they are working on your behalf to find a place, the good one's can be helpful in that they can find out about opportunities you wouldn't know about otherwise and, if they're honest, can help you negotiate and/or steer you away from a bad deal.

angrychefmike wrote:I think a lot of independent restaurant owners underestimate how one-sided a typical business lease agreement is. The monthly rent is only one small piece of the overall puzzle. Obviously this is meant to be funny (albeit not much of an exaggeration), but this is how it feels for the little guy when it comes to signing a lease.

STANDARD RESTAURANT LEASE

1. You, the tenant, will pay me, the landlord, much more rent than I deserve for the square footage you have chosen to lease to operate your restaurant I will never dine in. The square footage that I will charge you for will be significantly more than the actual amount of space you will be able to use because I’ve decided to add in some imaginary space just so I can charge you more money. You will pay the rent on time every month or I will change the locks, sell all of your equipment and then still come after you for the money you owe me anyway.

2. I, the landlord, will assign as your point of contact from this point forward the least competent person I can find, typically a son-in-law who does not know how to answer a phone and has been given no decision-making authority of any kind.

3. If anything breaks, leaks, collapses, malfunctions, is found to be out-of-code, or disappoints you in any other fashion it is your problem and you will pay to fix it and I will enjoy the benefits of your upgrades for years to come.

4. If for any reason you go out of business you will still need to pay me rent for the duration of the lease so that not only do you have to suffer the loss of your business you can kiss away your retirement plan and anything you had hoped to leave to your children or grandchildren. I will not try very hard to find another tenant to take your place because you are already on the hook to pay and there’s nothing in it for me. In the event you find a tenant to take your place I will find them to be unworthy just because I can.

5. In addition to the rent I will charge you an inordinate amount of money to maintain the premises. I don’t actually have to do a good job maintaining the premises or justify how much the maintenance costs. You should expect to receive an extra bill every year that comes out of nowhere to pay for the maintenance I had to do that I didn’t budget for and did nothing to improve the part of the premises you actually occupy. You should also expect to receive this bill during your slowest month of the year.

6. Because I know you’re short on cash I’m going to require you to pay three months rent up front along with a security deposit equal to another three months rent that I will invent some reason not to give back to you even if you satisfy all of the other requirements of the lease.

7. If all of the above clauses are not bad enough, we reserve the right to come up with additional ways to screw you over that you could never imagine and by signing below you acknowledge this even though you know you shouldn’t.

You need a better broker.

chitrader wrote:I'm curious to those who have current restaurant leases, did you use a commercial real estate broker on the deal and if so, how do you think they helped (or hurt!) you?

@chitrader. For sure you need to have a decent real estate attorney who can guide you on the lease terms as that lease will likely be produced by the landlord in his best interests and brokers on both sides are often useless because all they are after is commission, so smoother the entry easier their fees make it to their pockets.

If you have a broker it may help or hurt depending on how hot is the property. At this point... broker really doesn't understand your concept intimately, but rather offers you listings that are available. So, I would think you really have to know what are you planning to do and what your revenues may look like at the certain location, because occupancy cost comes as percentage of your future gross sales and if you miscalculate something here you will be writing the new article about how landlords help restaurants to close. This is not a joke, and if you don't believe me you need to have your brains examined. Many big restaurant companies including public companies make such mistakes even if they have their own real estate departments. QSR is specifically important because you are counting on lower pricing and higher traffic.

Darren72 wrote:Did your original lease assure you that you'd have a working AC unit?

No, it doesn't mention the AC unit in my lease...it was a very generic "city of Chicago" standard lease. I didn't use a broker, I didn't have an attorney, and I had zero restaurant experience. We started out with a very small space and cheap rent so I didn't bother; but now we've expanded twice and occupy 1/2 the building (and the lease was simply amended each time to include the new addresses and the new price)...I've had a few problems with my landlord (including him asking me to remove pig pictures from the windows of MY space because he is muslim and thinks pigs are dirty), though I would never consider anything he did, or could do, enough to close or even severely hurt my business. I think sometimes failed business owners are quite jaded, and feel the need to blame someone other than themselves. Despite our landlord issues we're chuggin' along, and any issues with him have been a small blip of annoyance on an otherwise very fortunate restaurant story...

lesson learned and my advice to others: get everything in writing and don't expect anyone to be "fair" or "reasonable" because those two terms are wildly interpretive to ones own opinion. Do your best to plan everything out, but don't over-think things - fully expect almost everything you expect to be potentially wrong or misguided, your best prediction/planning should be that you must change your plan when needed...it's a fun business if you like to stay mentally occupied and problem solve!

http://www.dnainfo.com/chicago/20131115 ... ark-sunday

Starland is closing because they lost their lease. Disappointing.

http://www.zagat.com/b/chicago/badhappy ... &utm_term=

"Those seeking a squeaky clean cheese curd fix to start off the new year only have one day to do so. Popular poutine shop BadHappy will close its doors on Sunday, and is closed for the holidays until then. Eater reports that the decision to close is not a financial one, but rather because of a dispute with the building's landlord over some safety measures. Owner Tom Kern will close the location with a farewell Sunday brunch soaked in gravy tears."

As someone who frequently sees both sides, I have some thoughts that I'd like to share on this discussion. I know and am friends with restaurant owners, but I also happen to have a role at a small family owned real estate company that has been around for 30+ years (one generation), one that prides itself on beautiful, well maintained, unique property, with no middle management/outsourced property management and most importantly excellent relationships with the folks we rent to.

Many landlords fail to understand the symbiotic relationship that exists between a tenant and themselves. For a good tenant-landlord relationship to exist (they can exist), this is absolutely vital. Any financial relationship where one party feels slighted is not one to be a part of. I would have no interest in being in this kind of relationship as a restaurateur or building owner. It really needs to be beautiful well maintained space in exchange for a fair rental rate and the occasional freebie on the landlord's part.

This situation can exist with either an owner who bought the building and doesn't know what they are doing, or someone who inherited it or is a large large firm and is an absent manager and endlessly delegates. These are the worst types of landlords. Some people who are "in real estate" really do something else for a living - they are a doctor, lawyer, or professional of some sort (and may very well be good at their day job!) but do not know a thing about purchasing, rehabbing/reconcepting/repositioning, leasing, and maintaining a piece of property...but most important cultivating a positive relationship with the tenant.

Landlords in general are notoriously cheap and short sighted people and many just simply do not understand or care to understand and align themselves with people where a good relationship can exist. Another thing I frequently see is badly maintained or un-built out space and they are "waiting for the tenant." That is an absolute joke. They are either too cheap to pour money into the space and make it beautiful or they are thinking about yesterday's rates. Silly fools. They won't get it done.

A good operator of a building will take pride in their building. They will look at it like something they have created and are proud to maintain. They will first worry about reinvesting in maintenance and upgrades to their property before putting money in their pocket. All of these things are things that restaurateurs (or any business for that matter..) should investigate and examine before signing any lease agreement. Get to know who you really are doing business with. If you can't, or they seem incompetent or clueless, or don't care to understand your concept, or want to see how much money they can deny spending to make your space nice, chances are they are a crappy operator. This type of operator is not as common but worth seeking out because they are actually out there...

Drawing Room's landlord wants them out so they are closing
http://chicago.eater.com/2014/12/4/7331 ... om-shutter