If you'd like to know how to negotiate a successful lease agreement for your new
restaurant or food business stay tuned and we're going to take you
through our step-by-step guide to the top tips for negotiating
a successful lease agreement for your new business
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Hi i'm Rowena i'm from Food Marketing in Sydney Australia.
We're a food consultancy who works with cafes and restaurants and other
food based businesses to really skyrocket their sales. So stay
tuned for our tips on negotiating a cracking lease for your
food business. Now negotiating a successful lease for
your business is absolutely crucial to the long-term sustainability of your
business. Now before we get into our top tips for
negotiating the one thing I'd like to start by
saying is really understand your obligations with the lease really
make sure you know and understand what the lease is specifying
it's not just about base rent you might have to pay
ongoing costs like if you're in a shopping centre there might be marketing
costs you might have outgoings like water
and electricity and gas there might be clauses like make good
clauses, return the property to its original
condition so if you've spent a whole lot of money
putting in an expensive fit out at the end of the lease if you're not
continuing with the lease you will have to spend tens of thousands
of thousands of dollars having that fit out removed.
So before we proceed about the top tips for negotiating a cracking list
I would really like to remind everyone you really understand
what the lease is specifying and saying and
the easiest way to understand your lease obligations
is have it reviewed by a lawyer. Okay, so our top tips for negotiating a
successful lease for your new food business or your restaurant cafe
whatever it might be. Tip number one is have a rental budget
in mind and really stick to it and be prepared
to walk away. So to give you an idea of what you can
afford when you're doing your numbers and projections for your new business
or when you're moving locations with an existing business -
The rule of thumb is you really don't want to be spending
more than 15% of your turnover on your rental costs because what you'll
find otherwise is the business is not sustainable.
By the time you add in your cost of goods sold and your wages and all the
other costs associated with running a business.
So try to stick to under 15 percent of your
projected sales create yourself a budget
and don't deviate from it and then you won't get yourself into financial stress.
Okay before we continue what type of tricks have you used when negotiating
leases before pop your thoughts in the comments and
let's have a look at what's working for other people.
Okay when you go to negotiate about a list what you want to do is reflect on
the attributes of the location and make sure
that the attributes of the location match
what you have already determined are the attributes that you need to be able to
run your business successfully on that site. So for example what are the
must haves and what are the non-negotiables for a
location. If you start looking at premises that
don't meet your needs you need to walk away stick to your guns
make sure you find something that really suits your purposes
before you even start to negotiate. Tip number three
is actually a really simple tip know who you are negotiating with
often who you're negotiating with is actually an agent they're not the
landlord and often they are not authorized
to negotiate on behalf of the landlord. So ask the question
and you know what - if you don't ask you don't get so
if you want to negotiate directly with the landlord if you feel like the agent
is not listening to you and not open to negotiation request a
meeting with the landlord they can only say no. Okay tip number
four is absolutely crucial you need to research the market
you need to be negotiating and looking at a number of different sites at any
one time so that you can walk away people get
emotionally invested in locations and they decide
this is the location that I just have to have it's perfect
and they lose all their powers of negotiation.
Don't get emotional determine if there are other alternatives out there and
also determine what the market value is for
the location when your judgment gets clouded by
emotion you're often willing to pay more just to secure
a location so make sure you're not getting clouded. Do your homework;
research the market and know what that location is really
worth. Okay tip number five is a great tip it's all
about looking around you at similar businesses that are operating
near to the location you're looking at. Look at how busy they are, determine the
average transaction value you can do that by being a paying
customer yourself and keeping your eyes open look how much people are spending
track the number of people that are coming in and out through the door and
then you will decide with your budgets for the location
you're looking at are really reasonable. Okay tip number six is a really
interesting on- always ask for a rent-free period for when
you're actually doing your fit out
after you've signed your lease now this is interesting because a lot of people
don't do i.t If you don't ask you don't get - you never
know the landlord might be under pressure they might be so happy to
secure a regular paying tenant that they're
happy to say okay i'm going to give you a rent-free
period for a month while you fit out your restaurant or a cafe. This
is going to make a big difference to you if you're not spending a whole lot of
money on rent before you're generating any
revenue. Okay tip number seven is a really interesting one and in keeping
with the don't ask and you don't get theory tip
number seven is ask for a contribution cost now this is commonplace in many
parts of the world but it might be new to many of you ask
the landlord for a contribution of say 10% that is an industry norm -
towards the cost of your fit out. We all know
fit outs cost an absolute fortune and a lot of people overspend on
fit-outs because they start working on a premises and there ends up being
problems with wiring and plumbing and then there's
arguments with landlords and costs start blowing out so before
you ever sign the lease let let's talk to them about
contribution costs and i tell you what if you don't ask
you don't get. Okay tip number eight is all about confirming that you are going
to take possession of a site so after you've done all your research
you've weighed up the pros and cons of multiple locations you've negotiated to
a point that both parties agree and you're happy
once you get verbal agreement make sure you get something in writing
asap. Now a memorandum of understanding will ensure that you know where you
stand you're not going to lose the site and you can confidently
continue planning your business to operate on
that site while lease agreements are being drawn up. And our final tip for today tip
number 10 is about permitted usage. So permitted usage is going to tell you
what you can and cannot do with the site it's also going to tell
you how you can operate right down to potential menu items
so it's really important that your permitted
usage allows you to operate your concept that you've already determined that you
would like to operate on that site it's absolutely crucial if
you sign a lease that does not uh you're not fully versed
in the permitted usage clause you could find yourself in a position where you
signed a lease where you can't operate the business on
that location it's there in black and white a lot of
people miss it in leases so make sure you know
and understand your obligations regarding permitted usage is so
important. Now if you'd like to access our lease negotiation checklist
make sure you click the link below and download the tool and it's absolutely
fabulous it's a checklist that will take you step by step all the
key considerations when you go to negotiate
over a location for your new business. As always if you've enjoyed this video make
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