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Business Plans are Important When Acquiring the Right Real Estate – Here’s why!

restaurant business plan for real estate

You have a phenomenal idea for a new restaurant. You’ve perfected your recipes, designed your concept  and now you’re ready to lease the perfect space in which to make your dream a reality. But it isn’t as simple as handing over cash and signing paperwork. Landlords won’t let just any new business concept set up shop in their plazas. You have to pitch your restaurant idea to them so that they can decide whether or not it appeals to the market they are reaching and whether or not it will provide value to the retail space. The best way to pitch your concept is to formulate a business plan. It is the most widely used genre in business settings and an invaluable tool to have as an entrepreneur.

Here is a comprehensive template for creating a restaurant business plan. You can create a word document or a PowerPoint to display this information.

Concept Description

Begin by describing what it is you are offering at your restaurant – what type of food will you serve? Will it be a fast-food type of establishment, a casual sit-down eatery, or a fine dining experience?

Customer Type

Think about the demographics of the customers that shop in the plaza in which you are seeking to rent.  Why are they choosing this restaurant? (i.e. to drink and socialize…experience fine food…or unique coffee)?  What is their household income level? Their age bracket?

In addition, what will be the heaviest traffic time for customers (breakfast, happy hour, lunch, etc.)?

Sample Menu

Even if it isn’t artfully created by a graphic designer yet, provide the landlord with a rough draft of what your menu will look like so they can gain an even better understanding of the type of establishment you are opening.

Management Team Bios

Give a face to the people behind the concept. Who are they? What are their professional backgrounds? What unique skills are they bringing to your team? This will help build credibility and trust.

What type of improvements will be made to the property?

Get specific about the modifications you will be making to the building so that the landlord is aware in advance. Are you installing a grease trap and hood? Implementing an elegant interior design that requires a lot of painting, light fixtures, etc.? There may be some changes you need to make that they do not approve of, so it is best to be upfront about everything.

Market overview and why your concept will work

Do some research and find out what the market for your particular offerings looks like. Is it growing? Is there a demand? Use sites like IBISWorld, Upserve and Toast  to find the trends and market information. Then, based on your findings, explain how your concept addresses a need or gap in the market and why you have a unique value proposition that will lead your business to be successful.

Other locations?If you have a franchise or are looking to open multiple locations (or already have), mention that. If your other locations or planned locations are in close proximity to the space you are trying to lease, that may create an issue.

Business structure

Explain the hierarchy of your business. Who will be signing the paperwork? Whose name will be on the lease? What are your team members’ titles? Is it a partnership?

Financials

Where is the money coming from? What are your reserves? Do you have investors? Are you investing your own personal funds into the restaurant? Have your crowd-sourced funds? Be transparent about your financials so that the landlord knows they can trust you to keep up with your payments.

For this section, you may want to seek assistance from an accountant. Include documents such as a budget and profit and loss statement for the first five years of operation.

Your business plan doesn’t have to be a ten-page essay. Keep it simple and to the point so that the landlord knows exactly what your restaurant will be and how you will make it happen. Your business plan could be the difference between landing your dream restaurant real estate space and losing out on it.

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Things To Consider When Leasing Commercial Real Estate

commercial real estate leasing tips - things to remember when you lease commercial property

Commercial Real Estate Leasing Tips

A business can rent a commercial space from a commercial building owner by signing a rental agreement called commercial real estate lease. There are three main forms of commercial leases, namely full service, net, and modified gross leases.

It is important to understand how the entire process of identifying the right commercial lease works to avoid making costly mistakes. In this guide, we discuss the steps to follow and tips on how to choose, negotiate, and sign the right commercial lease.

Set your property parameters

With numerous commercial property options in the market, you need to set some commercial property parameters to help narrow down your search. In other words, the commercial space you are looking for should satisfy your business’s specific needs. Some of the important considerations you need to make when setting parameters include:

• Ideal customer: Businesses such as restaurants that are focused on attracting physical visitors should consider locations with high foot traffic. Also, you should know where your ideal customer is located. For example, while a Michelin Star restaurant will thrive in an affluent location, a fast-casual restaurant will do well in an area with people who have a preference for fast casual dining.

• Commercial property zoning: In the world of commercial real estate, zoning is done to dictate the type of business that can operate on a particular commercial property. Meaning, as a business owner, you cannot start a retail business in an area that is zoned for industrial use.

• Desired Size: You need to determine your workforce and the expected number of customers to derive the desired square footage. For instance, a restaurant requires 15 sq ft per customer, while offices may require up to 150 sq ft per employee.

• Maximum Budget: You have to determine your maximum monthly budget. With a predetermined budget, you can limit your searches to commercial spaces you can afford.

• Accessibility: It is important to ensure your restaurant or retail business is accessible, for you to do business. In fact, such businesses may need to have ample parking space.

Find the right broker

Leasing agents and tenant brokers facilitate most commercial real estate leases by representing landlords and tenants, respectively. Typically, the leasing agent is paid a commission of around 5% of the total lease by the landlord, while tenant brokers earn a percentage of the landlord’s overall commission called tenant broker’s fee. Remember, since the tenant benefits from the commission, he or she doesn’t have to work in the best interest of the tenant necessarily.

Although it is not mandatory to hire a tenant’s broker when searching for a commercial space, he or she can help you with a list of available options, give you potential financing options, and provide accurate marketing data and pricing.

Understand the types of commercial leases

• Full-Service Lease: The lease is commonly applied in leasing office space. This is an all-inclusive rent lease, which requires the landlord or property owner to pay for any expenses that may be associated with the commercial space including, utilities, repairs, maintenance, insurance, and taxes. The lease allows you to know and prepare for well your monthly or annual lease payments.
• Net Lease: This is an agreement where you pay a lower annual rent as compared to the actual lease amount of a full-service lease. However, the landlord may require you to pay the monthly “usual costs” of the commercial space such as property taxes and insurance. The net lease can be designed to be a single, double, or triple lease.
• Modified gross lease: This is a commercial lease that is considered as a compromise of the full service and net commercial leases. For instance, you may pay for the usual costs such as insurance and taxes, but in lump sum along with your rent. However, the landlord covers the cost of janitorial services and utilities.

It is possible to get caught up in a long-term commercial lease. ROI Commercial Property Brokerage is a leading provider of unmatchable commercial real estate services. We are focused on helping businesses scale their commercial spaces up or down depending on their current needs without the risk of facing penalties.

Our team of experienced restaurant property agents maintains close relationships in the Florida local markets, and thus a great source of valuable information. So, if you are looking for commercial real estate restaurants or help with negotiating favorable lease terms consider consulting with ROI Commercial Property Brokerage.