Should Restaurateurs Buy or Lease a Location?

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When opening a new location—or even their first—restaurateurs must make
a variety of decisions before even choosing their restaurant dining
chairs. One of the most important
considerations is the location of the new eatery. Even when a great area is picked out,
however, there still exists a very important decision. Every budding culinary entrepreneur must
decide whether to buy or lease their new restaurant space.

Consider
Initial Capital
From having a permanent home for commercial restaurant equipment to
never experiencing rent hikes, owning an establishment has a variety of
benefits. Of course, this doesn’t always
mean it’s the right choice. One must
first consider the fact that a novice restaurateur might have trouble securing
funding for the purchase. After all,
banks might not want to take a chance on someone who doesn’t have excessive
experience.

Additionally, leasing a building allows startups to spend more money on
things like their restaurant dining chairs, kitchen equipment, décor and dining
area design. This isn’t to say that
leasing is the right move in every situation, but these are all important
considerations before making a decision.

The
First Location Doesn’t Have to Be Permanent
When deciding whether to lease or buy a restaurant space, owners often
think of the long-term costs. It’s
certainly true that leasing could end up costing more than purchasing over
several years, but restaurateurs need to remember that their first location
doesn’t have to be a permanent spot.

Instead, they can lease a building to get their eatery off the ground
and running. Once the bar tables are
getting filled every Friday night, banks are more likely to consider offering a
loan. Starting at the bottom is never a
bad thing, and by recognizing that a lease doesn’t have to be permanent,
restaurateurs can build up their clientele and eventually purchase a space that
better serves their purposes.

Will
Additional Work Be Necessary?
Let’s pretend for a moment that a restaurateur finds the perfect spot
to lease. It’s in a great area, has
plenty of room for restaurant dining chairs and booths, the scenery is
beautiful and past businesses in the building have done well. Even with this all being the case, the
property might still not be right. Restaurant owners must consider any additional work that will be
necessary.

Any restaurant space will obviously need things like plumbing and
ventilation, and fortunately, that’s not usually difficult to find in a
building that’s for lease or sale. It’s
essential to remember that all restaurants in an area must also be up to
code. This means food-and-beverage
entrepreneurs will need to get up to date on local codes and figure out how
much it’ll cost to bring their new building up to par.

Purchasing or leasing a restaurant both have great benefits, and a
great owner can fill the restaurant dining chairs in either situation. Like every big decision in life, though, it’s
important to really consider the implications of both. There is no single right answer for everyone,
but for restaurateurs who put time and thought into the decision, they’ll
likely find the right answer for themselves.