Your Restaurant Lease: After Your Offer Has Been Accepted
Your offer has been accepted for your restaurant/bar but what about the lease?
It's a very exciting day when your offer is accepted and the contract is ratified. However, that is just the beginning. As you know there are a lot of hoops to jump through before close of escrow happens. The transfer of the existing lease and or being accepted on a new lease is a big hurdle that many buyers are not prepared for. Your offer is accepted by the business owner but the lease is usually being approved by a landlord or property management company.
When you get to the point of getting approval for the lease you should be prepared and know a few tips that may boost your chances of being approved. It's a good thing to know that many leaseholders will not or are very wary of leasing to first time restaurant owners. They most certainly want to know that you have had bar and restaurant experience and in many aspects of the business. So it is good to have a resume ready with all of your bar and restaurant experience and any other job history that shows you have the business skills to run a restaurant.
Additionally a detailed and progressive business plan with projections of at least up to 5 years minimum. Your business plan should be very professional and show very strong confidence in your restaurant concept and plan. Also a showing of concrete reasons for your choices and visions. Additionally, your projections should be realistic and be in line with the investment you are putting into the business and your working capital. It is important for every potential business owner to prepare this for any business they are considering opening as it will give you time to iron out kinks and be really well prepared for your venture. You will also need a list of all current financials and assets.
It is very important to show good stability in your banking history with enough working capitol to cover your lease if the going gets rough. Assets are also important. Especially in the very sought after San Francisco market. The San Francisco leaseholder wants a strong showing of financial back up and assets or they will happily wait for the next prospective tenant to come around. Having no tenant is better than a potential bad tenant. Assets that can be back up if something goes wrong gives the landlord added confidence for approving your lease.
If you don't have any assets or a decent amount of working capital then find a strong co-signer. A co-signer can help bridge the gap if your assets and financials are not strong.
Lastly, If you are a first time restaurant owner or there is some other factor that will make your lease hard to pre-approve offer to pay multiple month rents up front or increase the required security deposit. In many instances this shows the land lord your commitment and diligence to succeed and be a good tenant. Often times the landlord won't require you go through with the inflated payments but the fact that you were willing and able is enough to show your trustworthiness.
Have all of the above ready when the time comes so you are not scrambling and you have had time to present a very compelling package for the lease holder to happily accept you as a tenant!