Leasing a restaurant or hotel - what should be considered

Learn how to successfully prepare, market, filter prospective customers, and draft a legally secure lease agreement in our guide to leasing a restaurant.

How to find the right tenant?

Every owner or restaurateur is faced with the same difficult task when looking for a tenant for his property or catering business: to find the right tenant.

1. Preparation

The tendering and illustration of the catering property must be professional and with a clear goal: the best possible representation of the catering property and the existing inventory. We also clean and polish our car, take pictures of it in the sunshine from all possible angles, before we put it on the common used car portals. So why not do the same for our restaurant or hotel ?! But not only the pictures are important, 360-degree tours are helpful, floor plans, etc. of the host's apartment, if any, a precise description of the competitive situation and the complete inventory list. Last but not least, the latest results also create trust and arouse interest! Especially since the outbreak of the pandemic, good restaurateurs have been very cautious about new projects. The financing of the start-up costs such as replacement or deposit for the existing inventory, as well as planned investments for the individual redesign, are very difficult to obtain from the house bank. The rating of the entire "gastronomy" industry has felt to have slipped again. It is all the more important to determine the expenses and the expected income with a well thought-out concept and associated business plan. It not only creates trust in its own company but also in the financing bank and, more importantly, in the lessor.

2. Marketing

Where do I reach potential tenants? Which media should I use for the advertisement? When leasing a restaurant, almost the same rule applies as when selling: It's not a residential property, and using portals like Immoscout, Immowelt, or eBay Classifieds alone is rarely successful. The response and quality of applicants aren't always guaranteed. In fact, these portals only reach restaurateurs who are actively looking. However, sometimes the right tenants, chefs, and sous-chefs are still employed and want to venture into self-employment with the right property. There are, of course, trade magazines like Hogapage, DEHOGA, or AHGZ. However, it's not exactly cheap to advertise in all these media, and it's no guarantee of top-notch applications. The costs, in particular, can quickly add up to several thousand euros, far exceeding the fees of a restaurant broker. Another asset for the professional broker: We are connected to many restaurateurs, both through our own database and via social media. This is currently the most efficient way to find suitable restaurateurs. With our campaigns on LinkedIn, Facebook, and Instagram, we generate 9 out of 10 subsequent tenants.

Applications from restaurateurs to lease a catering property

3. Applications

Applications from prospective buyers vary greatly. From a one-liner "I'm interested" to a detailed description of previous positions and about the buyer, everything is included. Assessing suitability through interviews and research requires considerable experience and time. We recommend making a preliminary selection based on these interviews and research and inviting only the "shortlist" to viewings. A real estate agent is also helpful here, as they already know many applicants or can conduct the preliminary selection more effectively and efficiently. This preliminary selection is very time-consuming, as dozens of interviews are required. As a hospitality broker, we first use a self-disclosure, which is mandatory before we begin further discussions with prospective buyers. Ultimately, as in many business processes, the decisive factor is not only the suitability of the candidate, but also the chemistry between the landlord and tenant, and thus the basis of trust. This is then put to the test in personal discussions during the viewing appointments. Many applicants don't really understand that leasing a restaurant isn't just about renting out the property and business operations, but involves much more for the lessor. Often, the lessor is dependent on the tenant's success. Only if the tenant is successful will they receive their rent on time and regularly. Which brings us to the topic: We've discussed how to determine an appropriate rent in a separate post:

• Rent times eight

  
  

The lease agreement should be checked for completeness and legal conformity

4. Lease Agreement

We strongly recommend having a lawyer check the lease for completeness and legal conformity. If you still want to draw up the contract yourself, you should at least use legally compliant templates. You can find one of these templates here>

This is another area where a professional broker offers added value. We have already drafted hundreds of leases, have already addressed all the specifics, and we write the initial draft for our clients. This saves the lawyer time and the client money. After the pandemic, further specifics must be considered. Good restaurateurs demand advance notice in the event of a resurgence. A graduated lease at the start should also be considered. In many cases, the new operator needs time to generate the target revenue. We have created two articles + fact sheets specifically on leases. Read more:

• The restaurant lease - Part 1

• the Restaurant lease agreement part 2

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Conclusion:

• Professional illustration of the catering business

• Documenting the last results achieved creates trust

• Reaching the right lease applicant at the right time via the right communal communion channel is the supreme discipline.

• Make pre-selection based on suitability

• Personal conversations are effective

• Draw up the lease contract in full and in accordance with the law

With a restaurant broker, you increase your reach and chances of success, save time and have the security of getting a good tenant.

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FAQ:

1. How do I lease a restaurant or hotel correctly?

A successful lease begins with thorough preparation: property analysis, determination of the rental value, and creation of a professional brochure. This is followed by targeted contact with tenants.

2. What legal aspects are important in a lease agreement?

The most important clauses include the term, notice periods, the amount and type of rent (e.g., fixed rent or turnover-based rent), security deposit, investment regulations, and a clear definition of the business purpose.

3. What is the difference between rent and lease?

While rent only allows the use of the property, a tenant is also permitted to receive income from the business operations. This makes leasing particularly relevant in the restaurant industry.

4. What mistakes should be avoided when leasing?

Common mistakes include unclear contractual clauses, a lack of credit checks on the tenant, or an overly optimistic rent calculation. A specialized restaurant broker helps avoid these risks.

5. Why is a restaurant broker worthwhile for leasing?

A specialized broker has market knowledge, vetted prospective buyers, and legal expertise. This significantly increases the chances of a quick and secure leasing deal.