Business lease

rude awakening

Hey Guys
Im looking to open a cafe, but the street Im looking to open in is becoming a dead street (11 out of 30 properties for sale there over m's)
The owner is looking for €50k P.A. for a one year lease with negotiations available.
I'm willing to offer 10k PA with a 10 year lease. In yeer opinion is this a reasonable offer?
All feedback welcome
RA

antoinolachtnai

I don't know if it's reasonable, it might be, but you are on a completely different page from the landlord in terms of term and rent. They are very unlikely to accept it.

Do you mind me asking why you want to open a cafe on a dead street?

rude awakening

Few Reasons:

• Small Town
• 3 Floors available
• Same size property few metres closer to the city is triple the cost PA
• Room to attract more people back to that part of the town

Howjoe1

11 properties for sale should be warning enough you might struggle. have you done the maths on this?

antoinolachtnai

Is this a city or a small town?

What good will 3 floors do? What you are really paying for is the frontage, especially in a small town, where you will never really fill a large cafe.

By triple, do you mean triple 10k (30k) or triple 50k (150k).

rude awakening

[FONT=tahoma,sans-serif]done the cash flow, Predicted TP&L and BL, breakeven analyisis etc.
The numbers add up, and it would be a draw,
cost of the lease at the current rate is the only drawback.[/FONT]

antoinolachtnai wrote: »

Is this a city or a small town?

What good will 3 floors do? What you are really paying for is the frontage, especially in a small town, where you will never really fill a large cafe.

By triple, do you mean triple 10k (30k) or triple 50k (150k).

Between counters, open kitchen, storage etc, the three floors will be fully used. By triple i mean 150k, not feasible for a cafe in any town I.M.O

RATM

rude awakening wrote: »

[FONT=tahoma,sans-serif]done the cash flow, Predicted TP&L and BL, breakeven analyisis etc.
The numbers add up, and it would be a draw,
cost of the lease at the current rate is the only drawback.[/FONT]



Have you checked out your rates too ? They can add up to 50% to the price of your rent, county councils are creaming small business.

I'd say the average spend in a cafe these days is about €5-6, at that rent you need to be very busy a lot of the time to cover labour costs, rent, rates, power, etc before you can take a profit. You would need a good brisk trade in the mornings and afternoons so footfall is everything here. Being on a street with a 35% vacancy rate makes it even tougher again tbh and if footfall has lowered substantially because of too many empty units then the rent should reflect that.

rude awakening

if footfall has lowered substantially because of too many empty units then the rent should reflect that.

Thats exactly what I was thinking. Was trying to get a general idea of what decent lease terms would be in this situation.
There would be 30% profits at the end of each month after rates, loan, labour etc

TerryGorry

Make sure you get a break clause (at least one) in any deal you do.

Good luck.

Chet Zar

rude awakening wrote: »

Few Reasons:

• Small Town
• 3 Floors available
• Same size property few metres closer to the city is triple the cost PA
• Room to attract more people back to that part of the town

How do you plan on attracting people back to that part of town?

rude awakening

Chet Zar wrote: »

How do you plan on attracting people back to that part of town?

There used to be shops down that area that would attract ppl down that part of town, with the recession most of them had to pull out, and with the amount of shops that have pulled out of the area, it is lookin like a no-confidence zone for investors. Hopefully it will just take someone with one good idea to liven the street up again... hence the cafe

Chet Zar

rude awakening wrote: »

There used to be shops down that area that would attract ppl down that part of town, with the recession most of them had to pull out

So they all had to pull out, what will make your cafe different?

rude awakening wrote: »

and with the amount of shops that have pulled out of the area, it is lookin like a no-confidence zone for investors. Hopefully it will just take someone with one good idea to liven the street up again... hence the cafe

But why would a cafe liven the street up? Plus you need footfall - how do you get footfall if the area is empty?

I'm not saying don't do it - just wondering what your thinking on the above is....

DubTony

I was going to write a long post about all the reasons why you shouldn't do this, but all I'll say is, a cafe will not attract people. Cafes need to be where the footfall is. They don't bring people into an area. A restaurant might, but a cafe won't. And you and the landlord are so far apart on the rent, it's laughable. If you wanted a grand for something and a guy offered you 200, would you take it?

Enough said, I think.

Chet Zar

DubTony wrote: »

I was going to write a long post about all the reasons why you shouldn't do this, but all I'll say is, a cafe will not attract people. Cafes need to be where the footfall is. They don't bring people into an area. A restaurant might, but a cafe won't. And you and the landlord are so far apart on the rent, it's laughable. If you wanted a grand for something and a guy offered you 200, would you take it?

Enough said, I think.

This is what I was asking the OP - why would you set up shop where everyone else has had to close up - plus as you say, a cafe is the type of business that benefits from footfall in an area - it doesn't create it (unless there is some sort of novel concept attached to it).

nager

DubTony wrote: »

Cafes need to be where the footfall is.

That's the key - footfall... don't expect to create it all.. you need to feed off other business.

Best of luck.

The Apprentice

You say yourself its a dying street.. give up the dream man, theres **** all momo in it at the moment..

dont do it