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Advice about term offered for restaurant lease

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  • 29-11-2011 11:56am
    #1
    garrettf
    Closed Accounts Posts: 12 ✭


    Hello all,

    Just wondering if I could solicit some advice from you folks. I am negotiating the lease on a restaurant/cafe facility.

    The landlord is offering a lease of 10 years duration (break clauses for the tenant after 2.5 years and 5 years). I have to waiver tenancy rights (which normally accrue after 4 yrs 9 months and which would have allowed me the right to extend the lease beyond 10 years).

    My concerns is that 10 years does not seem reasonable - a restaurant is not like a shop - it involves considerable more investment and relies on reputation - and the margins are quite tight to say the least. Hence, 10 years is too short a term to allow you to earn back on your investment.

    Hence, to have the business cease potentially after 10 years (if i am lucky enough to survive that long in the first place) seems like it is too short a timeframe. Obviously, it would also restrict my ability to sell it on as a going concern after say 5 years as there would only be another 5 on the lease, which would be unattractive for any potential buyer.

    Any thoughts on what a decent tenancy would be or angles how I should best consider this? I doubt I will get 25 years but is 15 enough or 20? Any other relevant thoughts - all responses greatly appreciated!

    Thanks
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