Dominique Maddox of the EATS Broker Leases Fayetteville Space
Dominique Maddox of the EATS Broker leases vacant space. Mr. Everything Café will be opening in Banks Crossing Shopping Center in Fayetteville, GA. EATS Broker represented the franchisee during the transaction.
Mr. Everything Cafe has been serving great food since 1993, starting in the West End Atlanta Community. Mr. Everything Cafe has received national recognition with its recent appearance on the Today Show on 11/26/2019 featuring small businesses around the nation. Mr. Everything Café was chosen over thousands of restaurants to be featured on the show.
Mr. Everything is an innovative yet simple concept that focuses on Healthy Choice Rice dishes, subs and sandwiches, and low carb salads.
Dominique Maddox Founder and President of EATS Broker says, “this was a very difficult deal because we started negotiating before Covid-19 pandemic. The national shutdown delayed the closing and the landlord required various supporting financial documentation. Dominique believes tenants asking for Tenant Improvement (TI) for leases will be required to put much more money down as a security deposit than in the past.
The new Mr. Everything Café franchisee has worked in the Healthcare Industry for the past 15 years. She decided Fayetteville was the ideal city to open a Mr. Everything Café because Fayetteville ranks high in Most Diverse Suburbs in Georgia, and Most Diverse Places to Live in Georgia. This population mix has been the foundation of the success of Mr. Everything Café.
Mr. Everything has beginning franchising its brand. They currently have the 1st franchise location opened in Greenbriar Mall, 2nd location is located in Decatur, Fayetteville will be the 3rd franchise. Overall the franchise has 5 operating restaurants. Location should be open by September 2020.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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Commercial Lease is it an Asset or Liability?
Your current commercial lease is it an Asset or Liability? Most Restaurant Owners find a restaurant for lease and sign a commercial lease before they open their restaurant unless they are buying the building. The sad truth is that a large number of restaurant owners never really read the lease they signed, don’t understand the lease, can’t find the lease, and have no clue about the effect the lease has on their chances of selling in the future.
Restaurant Owners across the nation have to decide if they should reopen and operate, close the doors for good, or try to sell. Restaurant Valuations are not only about sales and profits, but a big factor is also if the lease is an Asset or Liability.
Dominique Maddox Founder and President of EATS Broker says, “ My biggest headaches and heart burns have been with the lease approval or language in the lease, this affects how marketable a restaurant is to another buyer.” One of the biggest secrets in Commercial Real Estate is that the landlord is not your companion and the lease is written to benefit the landlord.
EATS Broker provides lease negotiations consulting to clients. Find some of the keys points we found in a recent lease we reviewed for a potential seller that was in the process of renewing the lease.
- Radius-In the event that during the Lease Term either Tenant, or Tenant’s management, or any person or entity controlled by Tenant, or controlling tenant, or controlled by the same person or entity or persons entities who control Tenant, directly or indirectly, owns, operates, is employed in, directs or serve any other place of business, which is (i) the same, or similar to, or competitive with, Tenant’s business as set forth herein, (ii) with a radius of five (5) mile from the outside boundary of the shopping center.
EATS Restaurant Brokers recommendation: Change the radius to 1 mile, this will allow you to open another restaurant in the future within 2-5 miles from your current location.
- Assignment or Subletting-Tenant shall pay an “Assignment Administrative Fee” of $5,000 and shall not have to reimburse the Landlord for all out-of-pocket expenses.
EATS Restaurant Brokers recommendation: Reduce fee to $1,000 because if you have a buyer for your location you would have to pay the landlord $5,000 for a lease assignment when 75%-80% of landlords do lease assignments for free
- Relocation of the Demised Premises- If Landlord determines that it is necessary or desirable that Tenant vacate the Demised Premises or that the Demised Premises be altered, Landlord may require that Tenant surrender possessions of the Demised Premises to the landlord, in its sole and absolute discretion.
EATS Restaurant Brokers recommendation- Language needs to be removed from the lease. The landlord has the option to uproot you and relocate you without your permission.
- Exclusive use: Landlord will not lease space in the Shopping Center to a tenant (herein “Competing Use”) whose primary use shall be the sale of fresh-squeezed juices and smoothies(herein “Competing Use”). For purposes of this provision, use is primary when more than fifty percent (50%) of such tenant’s Gross Sales are derived from the Competing Use.
EATS Restaurant Brokers recommendation: Your current lease does not protect you from another concept opening up in the same shopping center with gross sales of up to 49% for Fresh squeezed juices and smoothies. Request exclusive on Fresh squeezed juices and smoothies or other businesses cannot have more than 10% of the tenant’s gross sales.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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Restaurant Industry effect on everyday life!
The Restaurant Industry has a profound and impacting effect on our everyday lives. Everyone has a story about a restaurant, it could be where they worked, 1st date, prom date, celebration dinner, or many other reasons. I believe I have one of the best careers in the world as a Restaurant Broker, I work with restaurant owners and buyers within an industry that has a massive economic impact in our world.
The Restaurant Industry has allowed 60% of adults to work in a restaurant at some point during their lives. According to the National Restaurant Association, 1 in 3 Americans got their first job experience in a restaurant. Restaurants are the top employers of teenagers in the economy. 1 in 3 employed teens works in the restaurant industry. Restaurants employ more women managers than any other industry.
The Economic Impact of the Restaurant Industry was projected to total $863 billion in 2019 and equal 4 percent of the U.S. gross domestic product. The Restaurant Industry is expected to add 1.6 million jobs over the next decade, with employment reaching 16.9 million by 2029. This is interesting because 90% of restaurants have fewer than 50 employees, and 70% are single-unit operations.
The 2019 Restaurant Industry Factbook has Consumer Trends by Numbers, EATS Broker has listed some of the most interesting findings:
- 62% Consumers who say the availability of locally sourced food would make them choose one restaurant over another.
- 61% Consumers who say they order more healthful options at restaurants than they did two years ago.
- 58% Consumers who say the primary reason they like locally sourced food in restaurants is that it supports farms and food producers in their community.
- 55% Consumers who say they would order breakfast items more often if restaurants offered them all day.
- 44% Consumers who say they placed a food order for takeout or delivery using a restaurant app or website during the past year.
- 52% Consumers who say they would rather spend money on an experience such as a restaurant or other activity, compared to purchasing an item from a store.
- 38% Consumers who say they are more likely to have restaurant food delivered than they were two years ago.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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3 Tips for Leasing a Restaurant Space– EATS Broker
3 Tips for Leasing a Restaurant Space
Restaurant leases can be complex and involve negotiations on some very important details to a lease. In general, restaurant commercial leases are generally much longer than a typical residential lease. The restaurant tenant is making a much larger financial commitment.
Regardless of whether you are an experienced restaurateur, franchise concept, or up-and-coming restaurateur, carefully review and consider the lease terms, and the language in the lease.
Even with the difficulty of negotiating lease terms, some restaurateurs try to negotiate with the landlord by themselves without professional representation. This practice sometimes leads to restaurant tenants signing lease agreements they fully don’t understand.
Leasing a restaurant can be a fairly straightforward process if you understand the steps required and seek help from a professional such as restaurant real estate advisors, attorney, contractors, and architects if you have questions. Finding a restaurant space can be the easy part, negotiating the lease terms can be the difficult part.
EATS Restaurant Brokers 3 Tips for Leasing a Restaurant Space
Don’t Call that For Lease Sign
Unless you have experience in negotiating multiple commercial real estate leasing contracts, don’t call that For Lease Sign without contacting a trained Restaurant Broker. The individual who is advertising the commercial real estate space is a trained professional in contract negotiations representing the landlord’s best interest. Once you have called the For Lease Sign directly, you are letting the leasing agent know that you are representing yourself in negotiations.
Why is this important? Once the landlord’s representative starts negotiating with you and sends you a Letter of Intent and then you contact a Restaurant Broker to represent you it’s too late. The landlord will not pay your professional representative a commission and you will be responsible. This will be a personal expense you will incur and have to decide if you want to pay.
Most people don’t know the landlord pays the leasing company usually a 6% commission to lease the space. This commission is usually split between a tenant representative and a landlord representative in a co-op deal.
Be prepared with your documentation
Today’s leasing agents want to know they are working with a quailed tenant before they open the doors to show the space or start negotiating on a lease. The worst feeling as a potential restaurant tenant is to find the ideal and perfect space but you are not ready to move forward. Before you start your restaurant search, you should have the following items ready to present to the landlord if needed.
- Business Plan with 3 years forecast
- Copy of Menu
- Resume or Bio
- Proof of liquid assets-Bank Statement, 401K statement, or letter from your bank
- Personal Financial Statement
- Copy of Tax Returns
Prepare Letter of Intent
The first step of the lease negotiation is the offer to lease, typically referred to as the Letter of Intent (LOI). The Letter of Intent is to facilitate the start of negotiations between the tenant and the landlord. The complexity of the Letter of Intent depends on the person drafting the form, the tenant’s demands, and the landlord’s willingness to negotiate. This documentation should cover the majority of the key points to the lease:
- Rent structure
- Term of Lease
- Options to extend
- Permitted Use/Exclusive Use
- Rent Commencement Date
- Landlords Delivery Condition
- Lease Assignment Rights
- Tenant Improvement Allowance (TI)
- Rent Abatement
- Personal Guaranty
For more information on restaurant leasing and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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5 Things Sellers should consider with the lease assignment
5 Things Sellers should consider with the lease assignment:
The best day of a Restaurant owner’s life in the business world is usually when they first open the doors to their restaurant! The Restaurant Industry can be a tough business and the second-best day for a Restaurant Owner is usually when they sell the restaurant. When it’s time to sell, the business owner will prepare docs to provide to a potential buyer and review the lease signed with the landlord.
Most Restaurant owners have to dusk off the original lease and review what obligations they have to the landlord, some don’t have a copy of the lease at all. A commercial lease can range from 1-90 pages or longer and contain some very specific language that can make it challenging for lease assignment approval.
Here are the top 5 issues a Restaurant Broker will find in a lease:
The Personal Guarantee:
Landlords want a blanket guarantee over the entire term of the lease, even if the seller completes a sale with a buyer. Someone buying or selling a restaurant should fully understand their obligations when it comes to a personal guarantee, and the financial obligations that come with the agreement. This clause allows the landlord to come after the original tenant’s personal assets long after they have sold their business if the current tenant defaults on the monthly rent. This is very important to negotiate upfront with the landlord so no surprises will come up when it’s time to sell.
Consent to Transfer:
As a restaurant broker interacting with landlords every single day on lease assignments, this clause can be very misleading. Landlords will write the vague language in the lease usually like “Shall not unreasonably withhold” or “Shall not unreasonably withhold” or “Same net worth as current”. This gives the landlord total control of who they will approve for the lease assignment. The lease needs to have specific, measured steps with a timeline in the event you ever transfer the store when leasing a restaurant.
Assignment Fee:
Landlords usually will have a legal team prepare the original lease and put protect themselves from future expenses of creating a lease assignment by adding an Assignment Fee. This is one of the biggest item sellers will overlook when reviewing a lease. This becomes a big issue when it’s time to sell and the landlord is asking for $5000 from the seller to have the right to assign the lease. Assignment fees range from $0-$10,000, negotiate this fee upfront before you sign the lease because you have the most leverage at that time.
Option Terms with no agreed rent amount:
The landlord is not your friend when it comes to your monthly rent amount and yearly increases. The landlord is looking out for only one person in the transaction. He/she wants to improve their checkbook, and the bottom line and his earnings. The tenant should protect themselves from future increases by having the numbers agreed upon upfront, the national average for yearly rent increases is 3%-5%, but tenants cannot assume a landlord will not increase rates by more
Security Deposit:
The security deposit is usually required from landlords and can be the amount for 1-3x times monthly rent. When it’s time to sell the restaurant, what happens to this security deposit? Tenant’s should get confirmation upfront on how their security deposit will be returned if a lease assignment is approved.
When it’s come to landlords, remember it’s business and not personal and protect yourself. Use what you learned to get the best deal possible for a leasing assignment or a new lease for a restaurant. If you need help, contact EATS Broker to help you negotiate a deal.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
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