Should You Buy or Lease Your Restaurant Space?

1. Should You Buy or Lease Your Restaurant Space? Most restaurateurs, who need a brick and mortar location, ask the question of whether they should buy or lease their restaurant space. There are advantages and disadvantages either way. Here are some of the pros and cons to look at: Leasing Your Restaurant Space When you lease your restaurant space, it is for a specific amount of time and at a predefined monthly rate. Of course, there may be certain fees, recurring charges and various other expenses. But, for the most part, you can easily budget a specific amount to be designated for your leasing expense. Benefits of Leasing When you lease your restaurant space, you have a fixed cost for a specified amount of time. You also have the option to change your lease in the future. You will typically have a lower capital outlay. You may also have more flexibility to spend your initial investment funds on other start-up expenses, such as marketing, developing your menu and paying your employees. Challenges with Leasing If you lease your space, there may be some limits on the décor of your restaurant. This may be somewhat reliant upon the support of your landlord. It’s possible that your lease rate may increase when it’s time for renewal. There’s no opportunity to build equity. Also, the businesses next door may start out great, then move, and be replaced by neighbors who negatively impact your business. Buying Your Restaurant Space Many business owners specifically strive to own their own commercial property. For many, this is the ultimate challenge, and is a way to make sure they have stability for their restaurant. In fact, owning commercial real estate, where a restaurant is located, can be a very wise investment strategy. The owner can then lease the restaurant space to other tenants as a supplementary income. The upfront costs for buying commercial real estate should usually be higher than what it would cost for leasing space. Also, this is a long-term commitment and should only be undertaken after careful planning.

2. Further Reading This article is inspired and based by a blog post published by Restaurant Real Estate Advisor. For more information about whether to buy or lease your restaurant space in Los Angeles, I encourage you to click the link above and read that article. For any other questions about leasing or buying commercial real estate in California, please let me know. I’m always happy to help and look forward to speaking with you! Article Source: http://www.apsense.com/article/should-you-buy-or-lease-your-restaurant-space.html