Where is the perfect place for you?
Buying vs. RentingTypically first time restaurateurs will choose to lease space, since it requires less capital up front. Purchasing is possible, though and it gives you a hard, appreciable asset. The Small Business Administration (SBA) guarantees such purchase loans.
Purchasing a LocationDo your research! Scope out neighborhoods where your type of restaurant would fit in. Try out different restaurants in these areas at different times of the day. See what type of traffic passes by the term traffic refers to all potential customers who pass your location, whether by car, bike or on foot. This should also be done if you're leasing a space.
Work with a commercial real estate broker who is familiar with the restaurant business. Find out what existing restaurants have sold for. If you are purchasing an existing restaurant, look at their books and assets. Look at how much has been invested in the space. Is there much work to be done? Is the work that has been done recent? What are your potential earnings at this location?
Lease NegotiationsWorking with a landlord who is also comfortable with the restaurant business will make things easier.
What are the terms of the lease? Make sure you are working with lawyers who (yes, again) know the restaurant business! They will know what to look for in the fine print and find problems before you sign anything. Take your time at this step to have the most thorough understanding you can of everything in the lease.
Net vs. Triple NetA net lease is a lease in which the tenant or lessor pays a monthly rent which does not include additional costs such as taxes, maintenance and insurance. These costs would be paid by the lessee.
A triple net lease holds the tenant responsible for paying monthly rent plus all additional property and maintenance costs.
Free RentThere are landlords who are counting on your restaurant to increase the worth of his/her space. They may be willing to give you something known as rent abatement, which is a period of free rent, usually 2-3 months, while you get ready to open.
Some landlords are willing to be investors. Also ask if the landlord is willing to give money towards any improvements or upgrades that are needed.
ModificationsModifications are steps you will need to take to make the space restaurant-ready. It could be bringing a space up to code, or installing a whole new kitchen and exhaust system. You will have to hire a restaurant contractor to tell you what will be needed to construct a legal restaurant within your space.
Do all your research on zoning laws and regulations in your area. Hiring a local construction consultant who knows their way through all the red tape is usually worth the cost. There are many details that must be followed during construction to prevent delays from failing repeated inspections.
Location ConsiderationsFind out about past tenants of your space. Why did they leave? Ask neighboring businesses and the local chamber of commerce.
Do the people who frequent the area fit in to your concept, your proposed demographic and profile?
How is the neighborhood doing financially? Is it clean and kept well maintained? Is there much crime? Find out from the local police precinct.
Is your space easy to get to? Are there major construction deterrents that are ongoing? Is construction set to start nearby? Is the location visible from the road?
Most people won't hunt for a restaurant; they'll become impatient and go to a place that is well-lit and easy to spot.